Update on Singapore Savings Bonds March 2016

Singapore Savings Bonds March 2016

I have been monitoring the Singapore Savings Bonds for the past few months, hoping for interest rates rise. I was hoping for safe heaven to park my excess cash. However, the results have been disappointing. The effective return per year for Singapore Savings Bonds seems to be trending down and even fell to a low of 2.19% for the month of April 2016. The lowest yielding stock in my current portfolio gives an estimated return of 2.40% per year. The interest rates  of the OCBC 360 account can easily beat the Singapore Savings Bonds.

I am glad I have subscribed to October 2015 Singapore Savings Bonds which gives an effective return of 2.63% per year. I am expecting my first payout from Singapore Savings Bonds next month.

OUE Hospitality Trust Issues Rights to Fund Acquisition of Crowne Plaza Changi Airport Extension

OUE Hospitality Trust Logo

On 7th March 2016, OUE Hospitalty Trust announce an underwritten and renounceable rights issue to raise proceeds of S$238.6 million.  The proceeds from the rights issue will be used to fund the acquisition of the Crowne Plaza Changi Airport Extension (CPEX).

In the press release, Mr Chong, CEO of the REIT manager mention that following the rights issue, OUE H-Trust’s gearing will be reduced from 42.0% to approximately 37.8%.

33 Rights Stapled Securities will be offered for every 100 existing stapled securities in OUE H-Trust.

The Rights Stapled Securities will be issued at S$0.54. This is a discount of approximately 29.4%, based on the closing price of S$0.765 on 7 March 2016.

Things to Note

I have never subscribe to rights before. Some personal thoughts or questions for me to find out.

  1. As issuance of rights usually dilute the share price, what will be the fair price after rights issue? This is similar to the recent ARA rights issue whereby the share price fell from estimate $1.17 to $1.05 after rights issue.
  2. How do I subscribe for the rights?
  3. How do I or should I subscribe for excess rights?