So… SIA is back for more cash. After raising $7.7 billion in 2020, they’re now trying to raise another $6.2 billion.

SIA’s 2021 Rights Issue

The 2021 SIA rights issue is 209 MCBs for every 100 shares in SIA. At the current price of $4.96, this means that for every $496 held in SIA shares, shareholders are being asked to cough up $209. That’s a 42% capital call, which is really big.

How does SIA’s Mandatory Convertible Bonds (MCBs) work?

The MCBs are pretty complex stuff, so let’s recap how they work.

Zero Coupon

You do not get paid any interest (or coupon) each year.

MCBs can be redeemed by SIA any time

These MCBs can be redeemed by SIA any time within 10 years. Let’s say you buy $1000 of MCBs. On redemption date, SIA will pay you $1000 (being the principal) + an extra amount equivalent to the interest on the bonds for the duration held:...