Capitamall Trust 7 year retail bonds, 3.08%pa

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Capitamall Trust 7 year retail bonds, 3.08%pa

Postby Jennifer » Thu Feb 13, 2014 10:10 am

is this a good return risk free investment?

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby jetsetter » Thu Feb 13, 2014 10:42 am


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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby Jennifer » Thu Feb 13, 2014 2:06 pm

jetsetter wrote:Jen: read this analyst report.

http://www.ocbcresearch.com/pdf_reports ... 23-OIR.pdf


:thankyou:

Regardless of CMT shares performance, the retail bonds payout would remain at 3.08%? No change, right?

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby starlight1968sg » Thu Feb 13, 2014 2:08 pm

Jennifer wrote: Regardless of CMT shares performance, the retail bonds payout would remain at 3.08%? No change, right?

Think so.
These bonds whose payment of 3.08% is made twice a year.

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby Jennifer » Thu Feb 13, 2014 2:10 pm

starlight1968sg wrote:
Jennifer wrote: Regardless of CMT shares performance, the retail bonds payout would remain at 3.08%? No change, right?

Think so.
These bonds whose payment of 3.08% is made twice a year.


what exactly is 3.08% pa mean if paid out twice a year? meaning each time is 1/2 of 3.08%?

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby starlight1968sg » Thu Feb 13, 2014 2:16 pm

Yes, Jennifer and this is usually the case for bonds.
Eg if a bond's coupon rate is 5%pa, then the payout is usually done twice a year ie 6mths part and each payout is 2.5%, so to speak.

For this particular bond, the payout is on Feb and Aug, if I remembered correctly.

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby Jennifer » Thu Feb 13, 2014 2:22 pm

starlight1968sg wrote:Yes, Jennifer and this is usually the case for bonds.
Eg if a bond's coupon rate is 5%pa, then the payout is usually done twice a year ie 6mths part and each payout is 2.5%, so to speak.

For this particular bond, the payout is on Feb and Aug, if I remembered correctly.


:thankyou:

I just confirmed the interest rate on CPF monies.

Ordinary account 2.5%pa
Special/Medisave/Retirement account 4.0%pa

So, such bond with 3.08% pa is considered good returns?

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby starlight1968sg » Thu Feb 13, 2014 2:28 pm

Jennifer wrote: I just confirmed the interest rate on CPF monies.

Ordinary account 2.5%pa
Special/Medisave/Retirement account 4.0%pa

So, such bond with 3.08% pa is considered good returns?

I am not working in any financial related industries.

There is no straightforward answer to you question. It really depends on individual's tolerance risk.

And you are not making an apple to apple comparison. The CPF is risk free and backed by government unless she kaput.

The earlier mentioned bonds are issued by a company which means...

Having said that, if you compare 3.08% vs our current interest rate in savings a/c, then it looks attractive. But you know your money will be "locked" for 7 years. Of course, you still can sell the bonds in the open market, provided you can find buyers and the selling price is unknown until you decide to sell.

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby Jennifer » Thu Feb 13, 2014 2:42 pm

starlight1968sg wrote:
Jennifer wrote: I just confirmed the interest rate on CPF monies.

Ordinary account 2.5%pa
Special/Medisave/Retirement account 4.0%pa

So, such bond with 3.08% pa is considered good returns?

I am not working in any financial related industries.

There is no straightforward answer to you question. It really depends on individual's tolerance risk.

And you are not making an apple to apple comparison. The CPF is risk free and backed by government unless she kaput.

The earlier mentioned bonds are issued by a company which means...

Having said that, if you compare 3.08% vs our current interest rate in savings a/c, then it looks attractive. But you know your money will be "locked" for 7 years. Of course, you still can sell the bonds in the open market, provided you can find buyers and the selling price is unknown until you decide to sell.


:thankyou:

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Re: Capitamall Trust 7 year retail bonds, 3.08%pa

Postby WeiHan » Thu Feb 13, 2014 3:06 pm

It is a bond that trade on the exchange and the price can go up or down. So if the price of the bond drops by 5% in 1 year, then your return is about negative 2% (minus 5% drops in bond price and a +3% interest).

It will be considered a bad investment if you think that within the next 7 years, bank interest rate is going to rise which I think so. Why is this so? If bank 1 year fix deposit rate rise to 3%. Then it beats this bond flat because bank only lock you in 1 year while this bond lock you in for 7 years and obviously bank has a lower risk than this.

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