Agree. However, although this is generally the case, it is less so in Olam's case. In my view, the rights issue of bonds was designed mainly to squeeze short sellers. Therefore, for it to be effective, the return must be relatively more attractive to induce shareholders to take up their rights. Shareholders will lose out if they do not take up their rights. If the objective of the rights issue was solely to raise fund to ensure survival, Olam could have done it in the equity market.

tiancai007      ( Date: 18-Dec-2012 16:47) Posted: The higher the yields the risker of defaulting. Hope u know the risk before exercising to buy the bonds. Looking at Greek bonds u will know. Corporate bond sld be the same is'nt it? Richardus      ( Date: 18-Dec-2012 16:28) Posted: Thanks, counter! Appreciate your comment! How do you invest in those bonds you mentioned? (sorry i'm inexperienced with bonds). Cheers!

I invest in bonds through Standard Chartered. Whenever there is a new issue which gives me the return that I expect, my personal banker will give me a call. IPO bonds can be purchased at around 100.025 per lot and the prices usually, but not always, rise over time. IPO bonds in Aussie dollars typically cost A$100 000 per lot. Do let me know if you are interested. I can give you the contact.

Richardus      ( Date: 18-Dec-2012 16:28) Posted: Thanks, counter! Appreciate your comment! How do you invest in those bonds you mentioned? (sorry i'm inexperienced with bonds). Cheers!  counter      ( Date: 18-Dec-2012 16:21) Posted: I find the rights issue very attractive indeed. Currently, I hold a few lots of bonds, some from JPMorgan (4.65%), some from Morgan Stanley (7.375%) and some from RBS (13.125%), all in Aussie dollars which give far  higher interest rates compared to bonds in Singapore dollars. Among them, the RBS bonds (13.125%) give me the higher return. However, they are currently trading at around 121 which give an effective return of around 7%. If Michael Dee is right about his calculation, 13% returns on the rights issue of bonds from Olam will be  far more attractive. I will take up my rights.

I find the rights issue very attractive indeed. Currently, I hold a few lots of bonds, some from JPMorgan (4.65%), some from Morgan Stanley (7.375%) and some from RBS (13.125%), all in Aussie dollars which give far  higher interest rates compared to bonds in Singapore dollars. Among them, the RBS bonds (13.125%) give me the higher return. However, they are currently trading at around 121 which give an effective return of around 7%.

If Michael Dee is right about his calculation, 13% returns on the rights issue of bonds from Olam will be  far more attractive. I will take up my rights.

As of end-June 2012, Olam’s total number of issued shares is 2,442,409,869. The free float owned by public shareholders accounts for approximately 55.0% of the total issued share capital, which is approximately 1,343,325,428 shares. The indicative lending pool at CDP actually dropped to zero today. If  the shortists choose to fight on, they may need to fight by throwing their machine guns at the longists very soon.

Future      ( Date: 18-Dec-2012 14:45) Posted: I am guessing the short-covering has not commence yet. Maybe the volume is due to new funds building fresh positions since there's zero shares for lending from CDP. News: Olam is up 5.4% at $1.47 in strong volume amid a series of large trades, suggesting institutional interest. Olam’s management is currently on an investor roadshow in the U.S., according to the company. An analyst says this may be driving interest in the shares, especially ahead of the rights issue. The last day of Olam’s cum rights trading is Dec. 27. The stock’s Dec. 4 peak at $1.71 likely offers a near-term cap. http://www.theedgesingapore.com/the-daily-edge/business/42017-olam-54-management-holding-investor-roadshow.html