Stanchart shares are currently trading at £13.73 (yesterday's quote); the highest level reached during last year was £19.75. The British £ has also taken a pounding, diving from S$2.90 to S$2 yesterday, a stomach churning plunge of 30%. Yahoo! Finance indicates today's range will be £1.9907 - £1.9937.
So what fool (as in "fool me, hah?') would bet that the Stanchart share price would go up 27% in 3 years' time? That's a tantalising return of 9% per annum, assuming the pound-euro correlation doesn't get any worse. Reuters is reporting a sterling drop, as latest UK data adds to the gloomy outlook.
That's the premise of Temasek's of bond offer. The zero coupon bonds which mature in 2014 can be exchanged for Stanchart shares at
A remisier friend said the stock market is founded on the greater fool theory - one fool buys, and hopes for another fool to come along and pay a higher price. After the debacle of the Lehman shabby deals, is this type of business still legal? Bank of America Merrill Lynch is the lead manager and sole book runner for the bond offer.