Following up from last week’s blog post on Will Temasek Bail Out SIA Bondholders In Event of Default?, here is the analysis on SIA’s 5-year 3.03% bond based on Benjamin Graham’s criteria as described in The Lost Art of Bond Investment. Surprisingly, the bond is not as strong as I initially thought based on a simple Debt-to-Equity ratio check. Below are the computation of the earnings coverage and stock value ratio based on SIA’s latest financial statements for Financial Year 18/19 ending in Mar 2019. Earnings Coverage Profit before tax = $868.6M Adjusted for:
– Deduct: Share of profits from joint ventures = $23.2M – Add: Share of losses from associates = $97.4M – Add: Rental on leased aircraft = $679.7M – Add: Finance cost = $116.1M Total earnings available for covering fixed charges = $1,738.6M

Current finance cost = $116.1M Adjusted for:
– Add: Rental