Olam International

[greypiggi]

While I am no bond expert, investing into Olam now is as good as punting.
To me, we choose a bond due to its safe nature and if there's a risk, however minimal, we should avoid at all cost.

I agree but if i did not already own OLAM bond i will take the punt. But i will classify this under my speculative portfolio and not my bond portfolio. So instead of buying equities to trade, i will buy use 50K to buy the 2013 Sep bond yielding 2.5% which current YTM should be about 3.5% since bond price is about 99. Borrow the other 200K at 0.8% interest. Do the math, effective yield on my 50K is (6250+2500-1600-500)/50000=13.3% assuming 1 full year and 0.2% commission when buying. Yield on this play is 13.3 which meets my speculative targets.

Risk? default is the main one but Temasek and owner already committ to raise 750M which will pay off all 2013 bond holders. Interest rate almost zero chance to spike up in 2013.

The only reason i am not doing this is that i own some olam bonds and have a rule to not have more then 2.5% of asset in any one instrument.