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QuestionsCategory: MiscellaneousSIA retail bond 3.03% 2019
alexyeo asked 3 years ago

Hi trainers,
I know that bond analysis is not taught in this module. Any thoughts on this bond? Can I use the interest coverage ratio analysis to see if SIA got the ability to pay off the coupons?
I know that SIA is operating in a cutthroat industry and its profitability is coming down over the years. But a default on our national airline is pretty unthinkable, even though there is a possibility…just look at our neighbor’s national airline =x
In term of portfolio diversification, if I’m a retiree looking for something “safe”…nowadays with the big hoo ha of hyflux, there’s no certainty, only high/low probability…would this bond be a good addition for income generation/protection?  

1 Answers
Victor Chng answered 3 years ago

Hi Alex,
When it comes to bond analysis is the same when you analyse the company. You need to analyse the following thing:
1.Cash flow 
2.Interest Coverage
3.Debt to equity ratio

alexyeo replied 3 years ago

Noted. Thanks for the suggestion. Will look thru this 3 factors.