10 November 2010

DBS Bank 4.7% Non-Convertible Preference Shares

DBS has announced its new NCPS at 4.7%. Application is open to retail investors from 11 Nov, 0900H, and closes on 18 Nov, 1200H.  The 4.7% perpetual payout would be distributed on 22 May and 22 Nov annually each year, and is callable in 2020.  Minimum application is at a value of $10,000.  At $100 per share, that means 100 shares.  More details at DBS Announcement on 4.7% NCPS.

At 4.7%, that is lower than its current NCPS at 6%.  It makes sense that they will call their existing 6% NCPS which is callable from 15 May 2011.  Even then, 4.7% is still far, far higher than the current rates from equivalent SGS Bonds. 

At $10,000, that works out to $470 per year for at least the next 10 years (till 2020).  Seems like a good deal.  This is probably going to be heavily over-subscribed.  Hopefully it will encourage more such bonds being made available to retail investors. 

And at higher rates?  One can so dream.

See previous post on this subject: Non-Convertible Preference Shares.


la papillion said...


Actually they might not want to call back the 6% pref shares because if it's not called back, the dividend policy changes to 3 mth SOR + 2.28%. Not sure how much the 3 mth SOR will change by May 2011, but currently it's at 0.268%. Unless it rises up to 2.42% by May 2011, it's still less than the 4.7% pref shares issued currently.

Lizardo said...

You may be right. There is some room for interest rates to climb before the so-called 6% DBS NCPS's revised rates reach 4.7% equivalent. I had forgotten that the rate reverts to a floating rate after 'maturity' in 2011 as you've pointed out.

la papillion said...


Quite a lot of room, actually, haha :)