worthwhile to buy isf debenture?

HKTHK

回復 Shrimpiggy 的帖子

I don't think I understand what you are trying to say.  Regulations are needed because there is money laundering? Or are you insinuating that there are some wrong-doings by the board?  And how would you distinguish this from a pure debt instrument issued by a company?

This is what I do know.  The school issues the debentures in batches though I don't think there is any batches being sold now.  The price of the various batches has been increasing with the latest at HK$4.5 mil.  There was a wait list to buy the debentures and you can get on the list by contacting the school.  I am not sure if there is another batch in the plan since many of the capital projects are funded already.
There are also secondary trading in the market.  For those, you have to find your own seller or ask the school to help.  All secondary trading have to go through the school since all transfer require their approval and there is also a gain sharing mechanism.  I have heard the price gone up to as much as HK$6mil but it is pure hearsay.  

Shrimpiggy

Hi HKTHK,
So far, no one knows how many debenture in the market and how many more it is going to issue. As you mentioned the secondary market transfer must go through the school and any price difference need to split with the school. As a result, the school taking the profit on the secondary market and controlling the number and price of new issues.
I am not a debenture holder but I doubt even the holders know how many debenture are sold and will be sold.

caa

Shrimpiggy 發表於 13-3-6 08:55
Yes, but who knows who trade it in the secondary market? Potential parents, the school, the board me .

ISF is registered as a tax-exempt organisation and so must be non-profit making to qualify as such. so why do you think ISF is different from HKIS, CDNIS etc.?

Shrimpiggy

Yes, as it must be a non profit making school, it is better to make their book more transparent to parents, debenture holders and potential parents.
I am here not to indict the school any wrongdoing but they can do more to let debenture stakeholders understand more.
For CDNIS, HKIS, the debenture can only purchase directly from the school, and in fact, there is not new issues for the last decades and there is a fixed price when u subscribe it.

caa

This is not a bank, and the debentures are not for investment as bond sold by banks.

Shrimpiggy

Yes, but the school is a non profit making organization, it must be more transparent than the banks should be. Otherwise, it is so risky to buy it as school has not much asset to liquidate for your money back if anything goes wrong.

caa

回復 Shrimpiggy 的帖子

Does any other non-profit making school open their entire accounts to parents, potential or existing, or public?

Shrimpiggy

ESF provides a very comprehensive annual report and CDNIS has also published its annual report with financial data you can check it on this website.
GSiS got yearbooks open to parents and alumni only and their debenture is one of the lowest among all top tier IS in HK, $375k only, but you can buy it when the school offer you a place. It puts ability before commercial....
I think all other IS should follow.

NoahArk

ISF's capital note is nothing.  Kellet School's corporate notes are trading at $10,000,000 to $10,500,000 (yes, around 10 million).  HKIS's are not as high but not too far behind.  There is simply too much money in the market.

NoahArk

Yes, schools' debentures can be good investment.  The guy in the room next to me purchased CIS's corporate note at $600k and ISF's capital note at $150k.  That means 1000% and 3000% increase in price respectively in less than 10 years.  Citigroup (my former employer) is still holding over 40 HKIS's corporate nomination rights, which it purchased many years ago for less than $400k each.  And now they are worth... Crazy!

NoahArk

Don't know about other schools.  But ISF needs over $240,000,000 to build the new block.  Chances are that they need to issue a few more capital notes to raise the money.

HKTHK

回復 Shrimpiggy 的帖子

I am still not sure what all the fuss is about.  It does seem to me that you don't understand how these debentures work, why they exist and what has happened in the past.
Let me first respond to your various comments:

- "As you mentioned the secondary market transfer must go through the school and any price difference need to split with the school. As a result, the school taking the profit on the secondary market and controlling the number and price of new issues."


This gain sharing is a new mechanism in recent debentures to make sure that schools benefit from part of the appreciation too as opposed to allowing all of it to be accrued to the debenture holder.  In the old days, debentures issued by HKIS and CIS do not carry gain sharing mechanisms and both of those were recalled at par.  I believe, though not 100% sure, HKIS recalled them at a low value and then issued new ones with gain sharing at higher values.  This gain sharing mechanism can protect the debenture holder to a certain extent as well since technically they are all callable at par at any time.  This also benefits the school by providing them with part of the appreciation.  For ISF debentures, prices have gone up substantially in recent years.  As a current parent, I think it is great that they can issue less debentures and receive more money to fund their capital plan (i.e. new buildings and facilities of the school).



- "it is better to make their book more transparent to parents, debenture holders and potential parents"


It would be nice to have but aside from CDNIS, whose annual report carries next to no financial info, and ESF, what other schools in HK disclose their books?  Even for those who issue debentures, CIS and HKIS do not disclose theirs either.  


- "For CDNIS, HKIS, the debenture can only purchase directly from the school, and in fact, there is not new issues for the last decades and there is a fixed price when u subscribe it."


Issuance of debentures are tied to the capital need of a school.  CIS, CDNIS and HKIS have most of their campuses built so why would they need to issue debentures?  Their debentures also trade in the secondary market at what the buyer and seller agree upon.


- "it is so risky to buy it as school has not much asset to liquidate for your money back if anything goes wrong"


These are NOT investments.  These are debentures held by either current or prospective parents who want to send their children to the school.  


- "GSiS got yearbooks open to parents and alumni only and their debenture is one of the lowest among all top tier IS in HK, $375k only, but you can buy it when the school offer you a place."


You should look at this page first (http://www.isf.edu.hk/en/admissions/fees-and-tuition/).  You are mixing up the "high value" debentures which carry certain rights with capital levy which all students have to pay.  ISF is actually cheaper at HK$200k.

HKTHK

回復 NoahArk 的帖子

Guess he still made money on the CIS debentures, but the recall must have been "painful"?

Shrimpiggy

I am talking about the capital note but not the capital levy  everyone should buy.
I think it is more clear about how the capital levy works and it is clear enough to me.
I really don't know how the capital note can be traded in the market which is more than the 4.5mio offered directly by the school.

HKTHK

回復 Shrimpiggy 的帖子

But you are comparing the ISF Capital Note with the GSIS Capital Levy which are two entirely different things
The debentures are traded in the secondary market ALL the time.  I personally know people who have purchased secondary debentures of CDNIS, CIS and ISF.  And why should they be at the offer price and not a "market" price?

HKTHK

回復 HKTHK 的帖子

And BTW, all secondary trading are NOT done at par value or price offered by the school

Shrimpiggy

Yes, there is only two kinds of debentures for GSIS (375k/250k) both are one off and not related to any placement priority.
Once HKIS, CIS, and CDNIS could be traded in the secondary market before but it is not possible anymore as everyone has to buy it from the schools directly. It is kinda self-regulation....

shadeslayer

原帖由 Shrimpiggy 於 13-03-06 發表
Yes, there is only two kinds of debentures for GSIS (375k/250k) both are one off and not related to  ...

I think GSIS has only one debenture, $375k.

Shrimpiggy

Hi Shadeslayer, The 265k is the option B which is non redeemable. The 375k is refundable.

HKTHK

回復 Shrimpiggy 的帖子

Unless this is a policy that they have recently implemented and that is contrary to what they state on their website, this is what I can find on their website:
[p=20, null, left]CAPITAL DEBENTURE

[p=20, null, left]Parents may purchase a Capital Debenture. No further annual capital levies are assessed for the duration of time that their child is enrolled at the school. Upon leaving the school, parents may sell their debenture. Historically, parents have sold Capital Debentures for more than the original purchase price. See Capital Debenture Conditions for more information.

http://www.cdnis.edu.hk/admissions/admission-procedures-policy/68.html

They also have a 50% gain sharing as stated in the details underneath.

Shrimpiggy, where are you getting your information?