UOB 5.05%NCPS 100

• Current Price = $106.03
• Interest = $5.05 per share
• Yield = 4.76%

Investment till Callable Date

• Tenure = 1.5 years
• Total Interest = $7.58 per share
• Capital Loss = $6.03
• Overall Yield = 0.97%
• Interest Rate after Callable Date = 5.05% (Assuming they don't redeem at callable date)

This is another one which I have researched on. The yield seems very high but if you look at the tenure, total interest and potential capital loss, I realize that the overall yield is only 0.97% which is very low. What I believe the investors are hoping is that UOB does not redeem their preference shares in 2013 so that they can enjoy higher yields. This is something which I doubt because I believe UOB can issue another preference shares at a lower yield and redeem the current one, taking advantage of the low interest rates currently.

On the bright side, if UOB issue a new preference shares in 2013, it is an opportunity for investors who wish to opt for investments with lower risks. I am looking more to the new offering than the current one.

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...