Can I please warn anyone thinking of buying BOQPC (Bank of Queensland PEPS) to think very carefully about what price you pay and to be aware of the implications.
BOQPC have been a good income paying hybrid security. The company announced on Wednesday that they are raising capital via a new issue of Convertible Preference Shares. As part of this new issue they are offering existing BOQPC holders to roll inot the new security on a 1 for 1 basis ie. at the face value of $100. The new issue will have a margin of 5.10% to 5.30% above the 180 day BBSW, to be determined via a bookbuild. This new issue is along the same lines as the recent raisings of Bendigo Bank, Suncorp and CBA, albeit with different margins to suit the security of the issuer.
The problem arises that the record date for BOQPC holders to qualify for the 1 for 1 conversion is today. Hence you would have had to have bought them by Tuesday gone to be on the register by today (assuming it settled on time).
Unfortunately on Wednesay there were over 15k shares that were bought, 1.8k yesterday and today again there are people buying BOQPC's in the high $80's.
These buers will not be able to roll into the new security and therefore will be left holding a perpetual security paying just 2% above the 180 day BBSW. If you work out a fair value on this security asa perpetual security with that margin your likely looking at a share price of sub $70.
So BEWARE. Know what you are buying.
Best wishes and sound investing.