Frasers Centrepoint Trust Preferential Offering

FCT is one of my "medium" size holdings in my portfolio It is a counter that I have been holding since the Great Financial Crisis. It has done very well and given me capital gains and regular dividends. Most of my FCT holdings are in CPF as I believe it was one of those that rarely had rights issues (rights issues are a hassle for CPFIS investors- more on this below).

2019 appears to be the first time in my 10+ years of holding the counter that it has embarked on a rights issue/preferential offering, presumably to buy Punggol Point. And unlikely highly dilutive issues like OUECT, the FCT preferential offering was merely 31 units for every 1,000 at the price that was reasonably close to the market price (at least, when compared to something like OUECT).

I was pleasantly surprised when I received all the excess rights that I applied for, which indicated that quite a few investors failed to apply for their rights. For CPF, there were huge problems with the timeframe - CPF investors like myself got the CPFIS letter 1 day before the deadline. I had to call the bank and fortunately they indicated that applications by fax would be accepted. 

Even more fortunately, I have a 5-year old multi-function Samsung printer that still has a fax function (I wouldn't be surprised if newer models have no more fax function).  I wonder if this caused some CPF investors to forgo their rights (if they didn't manage to send in their applications in time).

One thing I learnt about CPFIS. You are charged by the CPFIS bank (in this case OCBC), for every 1,000 excess rights that you apply for even if the application is not successful.

RESULTS
CDP: Entitled to only 124, applied 876 excess and got all 1,000.
CPF: Entitled to 713, applied 1287 excess and got all 2,000

Astrea V 3.85% Structured bonds

Astrea V structured financed securities were offered to the public. My family member and I applied for some. Unlike Astrea IV, there would be balloting if you applied for amounts above $50k (and in return you stood to get a higher allocation if successful rather than the tiny amount Astrea IV allocated). 

I got 18,000 while my family member got none. I would therefore say that my strategy of two applications to maximise chance of allocation was successful (if you do the maths of expected returns based on the Astrea V allocation table, two applications are better than one because the quantity allocated/quantity applied ratio is a decreasing one).

I wrote about Astrea IV here. This is a structured finance product, rated Asf  by Fitch and A+ by S&P. Astrea IV was oversubscribed by 7.4x despite the negativity by the anonymous internet brigade, and a similar situation occured with Astrea V. 

For Astrea IV, I looked at the yield of BBB+ investment grade SGD bonds of similar tenor and noted that their yields were much lower than the Astrea IV's 4.35%, suggesting that the price of Astrea IV would go up and the yield would go down to where other investment grade products were situation. Turned out to be correct. 

Astrea V at 3.85% is lower than Astrea IV's initial yield, but its still higher than Astrea IV's current yield to maturity, and it's not rocket science that Astrea V's price will go up at least in the short term.

Some keyboard warriors also cast doubt on ratings agencies' ratings of structured finance products. Here is S&P's writeup on their structured finance ratings:

Structured finance: 'sf' identifier

111. The 'sf' identifier shall be assigned to ratings on "structured finance instruments" when required to comply with an applicable law or regulatory requirement or when S&P Global Ratings believes it appropriate. The addition of the 'sf' identifier to a rating does not change that rating's definition or our opinion about the issue's creditworthiness. For detailed information on the instruments assigned the 'sf' identifier, please see the appendix for the types of instruments that carry the 'sf' identifier.

Dividends Collected: May 2019

May is a good month for dividends with UOB and DBS paying dividends this month. OCBC pays in June 2019.