Singapore Corporate Bonds and Preference Shares: Analysis of Olam 6.75%b180129 Retail Bond
Recently they have decided to redeem the bond which resulted in a drop of its shares to $1.033. I guess I am still not quite informed and not tracking the market as closely as I should. I actually bought it on the day they made this announcement so I am making a loss on this. Hope that it is not too much.
Showing posts with label Olam. Show all posts
Showing posts with label Olam. Show all posts
Saturday, February 14, 2015
Wednesday, January 28, 2015
Analysis of Olam 6.75%b180129 Retail Bond
- Current Price on 26th Jan 2015 = US$1.043
- Interest = US$0.0675 per share
- Yield = 6.472%
- Credit Rating = None
Investment till Callable Date
- Tenure = 3 years
- Total Interest = US$0.2025 per share
- Capital Loss = $0.043
- Overall Return = $0.1595
- Overall Annual Yield = 5.097%
I realize that I made an error in my previous analysis and discounted one payment of the coupon which amounts to $0.03375. Apologies for that. Here is the current statistics.
With the current statistics, especially when it corrected to reflect its distribution of interest, its overall annual yield is now at 5.097% which is extremely attractive. Current yield is at 6.472% which is also the highest among the SGX retail bonds. The only issue is that it is US$. But US$ is currently quite stable and is increasing so risk is very minimal.
Olam is currently majority-owned by Temasek Holdings which is Singapore's SWF. As a Singaporean, I do trust the judgement of Singapore's SWF especially when it is listed on SGX. They can't let it go down the drain because ordinary Singaporean is also vested in it. To me, Temasek Holdings gave them security.
This excites me as I am able to find one bond which is much stronger than what OCBC 360 account can offer (which is risk-free). Thus, I am switching my cash reserves over to Olam 6.75%b180129 Retail Bond
With the current statistics, especially when it corrected to reflect its distribution of interest, its overall annual yield is now at 5.097% which is extremely attractive. Current yield is at 6.472% which is also the highest among the SGX retail bonds. The only issue is that it is US$. But US$ is currently quite stable and is increasing so risk is very minimal.
Olam is currently majority-owned by Temasek Holdings which is Singapore's SWF. As a Singaporean, I do trust the judgement of Singapore's SWF especially when it is listed on SGX. They can't let it go down the drain because ordinary Singaporean is also vested in it. To me, Temasek Holdings gave them security.
This excites me as I am able to find one bond which is much stronger than what OCBC 360 account can offer (which is risk-free). Thus, I am switching my cash reserves over to Olam 6.75%b180129 Retail Bond
Tuesday, January 13, 2015
Analysis of Hyflux 6% CPS 10
- Current Price on 8th Jan 2015 = S$106.05
- Interest = S$6.00 per share
- Yield = 5.618%
- Credit Rating = None
Investment till Callable Date
- Tenure = 3.5 years
- Total Interest = $21 per share
- Capital Loss = $6.05
- Overall Return = $14.05
- Overall Annual Yield = 4.028%
Hyflux Preference Shares was one of my holdings when I first have my cash reserves. With an interest of 5.618%, it is one of the best in SGX which is S$ denominated. (Olam is better but it is US$). However, it is priced at 6% premium which is tricky. Therefore, the overall return will be only 4.028% if it is held till maturity.
My strategy would be to use this as a one-year bond. That means to purchase it now, earn 5.6% interest, pay about 0.50% transaction cost (which means a net of 5.1% return) and sell it after 12 months. Of course, there is a risk that its price will drop but with a historical fluctuation of 3%, it is worth a try.
Increasingly, I am setting some of my criteria. One of which is that it needs to have a remaining tenure of at least 3 years to provide some price stability to it.
My strategy would be to use this as a one-year bond. That means to purchase it now, earn 5.6% interest, pay about 0.50% transaction cost (which means a net of 5.1% return) and sell it after 12 months. Of course, there is a risk that its price will drop but with a historical fluctuation of 3%, it is worth a try.
Increasingly, I am setting some of my criteria. One of which is that it needs to have a remaining tenure of at least 3 years to provide some price stability to it.
Monday, December 29, 2014
Olam US Bonds - The highest yield with currency risk.
- Current Price = US$1.08
- Interest = US$0.0675 per share
- Yield = 6.368%
- Credit Rating = None
Investment till Callable Date
- Tenure = 3 years
- Total Interest = US$0.2025 per share
- Capital Loss = $0.08
- Overall Return = $0.1225
- Overall Annual Yield = 3.781%
As I am rebuilding my cash reserve, it would be good to look at some of these bonds again to see whether it is good. One of the choice is Olam 6.75% Bonds.
The interest rate is quite high at 6.25% which is the highest in the market (even higher than Hyflux) If we are looking at investment till maturity, the overall annual yield is 3.781% which unfortunately is not the highest
One interesting point is that it is US denominated which means there is a currency risk. However to think about it, if US raise their interest rates which has always been the talk in the financial world, money will flow into the country. Therefore, US dollar will rise and it will benefit this bond.
With 3.781%, I don't think I will be putting this amount of money in this yet. I can wait until it drops further before I analyze again. I am still leaving my money in my OCBC 360 account which is giving me 3.05%.
The interest rate is quite high at 6.25% which is the highest in the market (even higher than Hyflux) If we are looking at investment till maturity, the overall annual yield is 3.781% which unfortunately is not the highest
One interesting point is that it is US denominated which means there is a currency risk. However to think about it, if US raise their interest rates which has always been the talk in the financial world, money will flow into the country. Therefore, US dollar will rise and it will benefit this bond.
With 3.781%, I don't think I will be putting this amount of money in this yet. I can wait until it drops further before I analyze again. I am still leaving my money in my OCBC 360 account which is giving me 3.05%.
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