Analysis of OCC 5.1% NCPS 100

• Current Price on 6th Mar 2015 = S$105.30
• Interest = S$5.10 per share
• Yield = 4.873%
• Credit Rating = BBB+

Investment till Callable Date

• Tenure = 3.5 years
• Total Interest = $17.85 per share
• Capital Loss = $5.30
• Transaction Cost = $0.52
• Overall Return = $12.02
• Overall Annual Yield = 3.262%

OCC 5.1% NCPS 100 is one of those which is giving a higher return than OCBC 360. Moreover, they just paid a coupon which reduces its purchase price. Here are the statistics.

Current yield is at 4.873% which is quite strong (One of the highest) but if you count in capital loss and transaction cost, overall annual yield is 3.262% which is marginally higher than the base of 3.05%. One good thing about this is that it has a credit rating of BBB+ which shows its stability and it is equivalent to most of the REITs

There are better preference shares out there like Hyflux (although there is no credit rating) and Genting (but it is casino-based which I don't like). I will just keep track but I won't enter into this yet.

Rebuilding my Cash Reserve

Hi everyone,

Corporate Bonds and Preference Shares is a quieter blog as there are not much new movements and the statistics does not change much. Just to share with you some updates on my Cash Reserve.

I have placed $20,000 as cash reserves (saving up Dec salary plus bonuses of mine and my wife) and we have placed it in OCBC 360 Account which gives us 3.05% at this point. Not the best option in terms of yield but the best in terms of liquidity because I don't have to sell bonds or preference shares to get back my cash.

Thus this is the portfolio that I currently have. I intend to continue to build this portfolio so that I have enough cash reserve to tide over any emergency.

Cash Reserve = $20,000
Interest = $610 per year ($50.83 per month)

OCBC 360 Account - 3.05%

http://www.ocbc.com.sg/personal-banking/accounts/360-account.html

I have opened this account and did all they need me to do for the past few months to earn the 3.05%. The results were amazing. There were months where I earn $18 interest just for deposits in that month.

To me, it is really a lot considering that I have been researching on how to have risk-free interest and investments and now we have this account to earn so much interest.

Highly recommended. DBS' 2.08% can't beat it.

OCBC 360 Account - 3.05%

http://www.ocbc.com.sg/personal-banking/accounts/360-account.html

I know that this is not a corporate bond or preference shares. But the fact is that it is giving us 3.05% which is more than some of the bonds or preference shares listed on SGX. To me, it is a great place to park my cash reserve especially when I can use it without incurring any charges. Moreover, it is paying me a monthly interest without the fluctuation of the market, which is fantastic.

I am putting money in and rebuilding my cash reserve.

OCC 5.1% NCPS 100

• Current Price = $107
• Interest = $5.10 per share
• Yield = 4.77%
• Credit Rating = BBB+

Investment till Callable Date

• Tenure = 6.5 years
• Total Interest = $33.15 per share
• Capital Loss = $7
• Overall Yield = 3.76%
• Interest Rate after Callable Date = SWOR + 2.5% (Assuming they don't redeem at callable date)

This is another one which I have researched on and which I am considering seriously. It has a high yield of 4.77% with a long tenure of 6.5 years. The only drawback is the reduction in rates after callable date which is currently at 3%. However, this can be resolved by selling it about one year before their callable date. Looking at the trend, there is still enough time factor to reduce the capital losses to the minimum.

If I start to invest in preference shares, this is one which I will start with.

Preference Shares - OCC 3.93% NCPS 10

After a lull period of 8 months, I am back to look at Preference Shares which I am thinking of placing some cash into it. Here is one which I am considering seriously

• Current Price = $97.80
• Interest = $3.93 per share
• Yield = 4.02%

Investment till Callable Date

• Tenure = 3 years
• Total Interest = $11.79
• Capital Appreciation = $2.20
• Overall Yield = 4.77%

This is one preference shares which I am considering because it is the only one which is trading at a discount to Par Value. However, the catch is that if it is not recalled, the interest will drop to SOR + 1.85% which is quite low at 2.3% currently. Thus, I think they will not recall it and continue to pay interest to this. Nevertheless, it is still slightly better than a bond.

OCBC Bk 4.2%NCPS

Current price at $1.02

• Coupon of 4.2% (regardless of whether there is a redemption)
• Tenure = 2.75 years left.
• Overall yield per annum = min 3.40% (Assuming that OCBC redeem its preference shares after 2.75 years and we book a loss of $0.02 per share)

Looking at preference shares, OCBC looks a good choice if you are able to buy it at $1.02... 3.4% is one of the highest you can find if you compare the different preference shares and bonds. I think further analysis is requried for me to see whether it is worth it to buy bonds/preference shares. This is just one of my analysis.

Just a note... Bonds looks safer than preference shares as they will get the first cut if something bad happens.

UOB 5.05%NCPS 100

UOB 5.05%NCPS 100

• Coupon of 5.05% (regardless of whether there is a redemption)
• Tenure = 8 years left.
• Overall yield per annum = min 2.78% (Assuming that UOB redeem its preference shares after 8 years and we book a loss of $6 per share)

After looking at the different preference shares and bonds, I have come to a conclusion: those preference shares whose yield doesn't drop after so-call "redemption date" are the attractive ones because the price of the preference shares are more likely to be stable.

Therefore, I have narrowed my choice to 4 preference shares, three from OCBC and one from UOB. Someone from Channelnewsasia Discussion board has highlighted to me that the tenure is only 3 years instead of 8 years as discussed earlier... I realized that it is wrong so here is the adjustment... With the overall yield at 2.78% instead of 4.04%, I realize that it is not worth it to buy this preference shares...