Genting SP: OCBC is positive on Genting's $500m perpetual-securities issue as the ability to treat it as equity will increase net-tangible-assets and overall balance-sheet strength as well as not leading to net-gearing-ratio deterioration.
Add that the perpetuals offer flexibility as they are callable after 5.5 yrs on every interest-payment date. Expect GENS will be able to redeem the perpetuals as RWS is likely to be debt-free in 2017 and it should be able to generate about S$1.2b of free cash flow per year. Concerns GENS will defer interest payments are likely overdone due to the perpetuals' dividend-stopper feature, meaning the company can't pay dividends if interest payments aren't made. The perpetuals could further boost GENS growing cash hoard for potential overseas investments, possibly via acquisitions or greenfield projects in Japan or South Korea.
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