Home Investment Investing Knowledge SIA Launches First Retail Issue of Bonds

SIA Launches First Retail Issue of Bonds

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Singapore Airlines is for the first time selling bonds directly to the general investing public, and it is a great way to invest.

Companies generally do not sell bonds directly to retail investors, but instead sell them to financial institutions who charge a placement fee and then resell them to well-heeled investors. SIA has now broken new ground by bypassing the middlemen.

Yield & Tenure

The Singapore Airlines five-year bonds yield a fixed interest rate of 2.15% annually. Holders of the SIA bonds may choose to hold them to maturity or sell them on the open market via the Singapore Exchange

Quantum

Minimum investment is S$10,000, with higher amounts at multiples of $1,000.

Application Procedure

Applications can be made via any DBS, POSB, OCBC or UOB ATM until 12 noon 28 September 2010

Risk

The credit risk of the bond issue is with Singapore Airlines.

Conclusion

The "direct to retail" way has certainly meant savings on interests for SIA and higher yields for the investing public. For example, NOL recently priced its 10-year bonds at 4.65 p.a. interest, or more than twice the rate on SIA's bonds (before underwriting fees)

From an investor's point of view, although preferred shares of banks such as OCBC offer higher returns, SIA's bonds certainly look less risky than some of the structured deposits on the market offering similar yields

Although returns on the bonds are not compelling, it would not be surprising if the retail tranche of SIA's bonds is fully subscribed.

Last Updated ( Tuesday, 28 September 2010 14:41 )  
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