Bank preference shares

[lzydata]

I decided to create a new thread for news updates and other information and queries on the 3 local banks' preference shares, because older threads were about more specific topics or particular share issues.

 

[lzydata]

Proposed Issuance of Singapore Dollar-Denominated Non-Cumulative Non-Convertible Perpetual Capital Securities
http://infopub.sgx.com/FileOpen/UOB-A2013-87.ashx?App=Announcement&FileID=247764

Proposed Issuance of S$850 Million 4.90 Per Cent. Non-Cumulative Non-Convertible Perpetual Capital Securities
http://infopub.sgx.com/FileOpen/UOB-A2013-88.ashx?App=Announcement&FileID=247891

UOB has issued a new NCPS of size $850m:
- perpetual, yield 4.9% payable semi-annually
- to be issued 23 Jul 2013, first callable date 23 Jul 2018, thereafter rate will be prevailing 5-year SOR plus margin of 3.195%
- to be rated BBB by Fitch and Baa1 by Moody's
- issued in denomination of $250k, to be listed on SGX

According to the first announcement, the proceeds will be used to redeem the Class E 5.05% NCPS in Sep 2013. Consider that issue's redemption confirmed. Unfortunately, like with recent bank NCPS, it looks like the new issue will not be accessible to most retail investors.

 

[Shiny Things]

Hey Izy, can you help me out with your pref payment schedule knowledge?

The 5.05s are trading at 101.90. They're going to redeem on Sep 15th at 100.00. In that time, they're going to pay a $2.525 coupon payment (on Sep 3rd or thereabouts) and a stub coupon when they redeem of about $0.19.

Am I missing something (like the coupon dates or whatever), or are these things yielding about 4.8% to call? If they are, I'm gonna hoover some.

 

[lzydata]

Hey Izy, can you help me out with your pref payment schedule knowledge?

The 5.05s are trading at 101.90. They're going to redeem on Sep 15th at 100.00. In that time, they're going to pay a $2.525 coupon payment (on Sep 3rd or thereabouts) and a stub coupon when they redeem of about $0.19.

Am I missing something (like the coupon dates or whatever), or are these things yielding about 4.8% to call? If they are, I'm gonna hoover some.

I don't think there will be a stub coupon. The next and last interest payment will be for 15 Mar 2013 to 15 Sep 2013, $2.525 as you say, and after that it should be the redemption on 15 Sep. Assuming a brokerage commission of 0.25%++ to buy, the annualized rate of return I got was 1.87%. For DBS Vickers cash upfront at 0.18%++, 2.34%. Not as high as 4.8%, but still pretty good for a 2-month "fixed deposit".

Legal disclaimer: I'm sure Shiny Things knows this, but to everyone else: it's not really a fixed deposit. I make no guarantees. Caveat emptor

 

[arctician]

I don't think there will be a stub coupon. The next and last interest payment will be for 15 Mar 2013 to 15 Sep 2013, $2.525 as you say, and after that it should be the redemption on 15 Sep. Assuming a brokerage commission of 0.25%++ to buy, the annualized rate of return I got was 1.87%. For DBS Vickers cash upfront at 0.18%++, 2.34%. Not as high as 4.8%, but still pretty good for a 2-month "fixed deposit".

Legal disclaimer: I'm sure Shiny Things knows this, but to everyone else: it's not really a fixed deposit. I make no guarantees. Caveat emptor

(2.525% coupon - 1.90% capital loss when redeem at PAR) / 101.9 initial purchase price = 0.61% for a quarter, and i havent factor in commission costs

Too low.

 

[lzydata]

(2.525% coupon - 1.90% capital loss when redeem at PAR) / 101.9 initial purchase price = 0.61% for a quarter, and i havent factor in commission costs

Too low.

To be precise, it's $0.625 per share over 2 months, not a quarter. We must compare 0.61% x 6 with the prevailing interest rates on FDs or other deposit promotions around, then it is more impressive. But yes, because it is a very short term "offer", in terms of absolute numbers it's not a big deal.

 

[Shiny Things]

Yeah, you're right, there's no stub coupon. Still not bad, though - and if you park a bid at 101.60 and get filled there, they look even better. (Some muppet sold them down to 101.33 at the open on Friday, which, man, I wish I'd been there.)

Side note: I was mightily disappointed to find out these aren't available at IBKR. My loss is your gain, people: 2.5% p.a. for two months. Get on it.

 

[lzydata]

UOB has confirmed it.

NOTICE OF REDEMPTION &
PAYMENT OF FINAL PREFERENTIAL DIVIDEND
to the holders of
S$1,320,000,000 5.05% Class E Non-Cumulative Non-Convertible Preference Shares
(ISIN Code of SG1X34941168) (the “Preference Shares”)

http://infopub.sgx.com/FileOpen/UOB-A2013-90.ashx?App=Announcement&FileID=250361

Shareholders will receive $102.56 on 16 Sep.

 

[chopra]

I wonder y. interesting