WBL Corp2.5%CB140610

WBL Corp convertible bond is an unique opportunity for investors to participate in the future growth of the company via an equity option to convert to WBL Corp shares at $2.29 for each convertible.

Since I have already collected 5 coupon payouts since its listing, I guess it is time to convert to WBL Corp shares. The convertible bond had been paying 2.5%pa, but as time goes by, more and more investors had converted those bonds to shares and the secondary market for the convertible bond is not liquid anymore.

Furthermore, the ordinary shares had been paying 10cts per share for the past two years. Yield on convertible price for the shares is $0.10/$2.29=4.37%pa, which is higher than the yield of 2.5%pa if I choose to hold onto the bond.

I don't anticipate WBL Corp shares falling below $2.29 unless a crisis happen in the world markets.

Granted, I will lose some time value as I am converting the bond before expiry, but illiquid market for the convertibles doesn't help in getting a fair market value.

By converting the bond during this period, I am still entitled to the final dividend of 5cts per ordinary WBL Corp share that had been declared and will go ex-dividend on 17 Jan 2012.