atans1

DBS should take leaf from Temask’s book

In Corporate governance, Financial competency, Temasek on 10/04/2019 at 10:51 am

Too bad Hyflux and DBS (the bank issuing it’s securities) didn’t have in 2016, Temasek as a precedent to follow. Temasek in a letter to ST’s Forum (Ownself praise ownself) talked about its disclosure format for its bonds’ issues in 2018

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Temasek letter to ST’s Forum (Full text below)

Now go tell DBS how to try harder make sure greedy people read: though pigs will surely fly first. Perp investors were warned: Hyflux: Don’t cry for the investors

The letter in full:

Bond issues should be easy to understand for retail investors

Dr Jeremy Teo Chin Ghee raised interesting points in his letter (Timely to encourage retail bond market, April 5).

Our research showed that Singapore retail investors have very different risk capacities and appetites.

Younger investors look for growth, while older retirees may prefer a steady income stream. Others seek higher risk-reward opportunities.

We believe retail investors should have access to a wider range of risk-reward products, rather than be cut from riskier products through tighter regulations – the current regulations already require comprehensive disclosures of risks.

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

No two businesses will be the same, and all will have different risk and credit parameters.

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Stephen Forshaw

Head, Public Affairs

Temasek International

Temasek cares. Vote wisely.

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