Olam Group announces repurchase exercise for its 5.375% perpetuals

Overview of repurchase exercise

Olam Group Limited (Olam) has announced a market repurchase of its 5.375% subordinated perpetuals, shortly before the first call date on 18 July 2026. Olam will repurchase the perpetuals at 101% of principal, plus accrued distributions. The repurchase period is 9 July 2026 to 13 July 2026, and the settlement is expected on 15 July 2026.

Separately, Olam stated its intention to redeem any remaining outstanding perpetual on 18 January 2027 at 100% of principal. It will make the necessary notice of redemption at an appropriate time in accordance with the perpetual’s underlying terms.

(This indicates that these Olam perpetuals will technically miss their first call date on 18 July 2026, likely as the required 30-day notice period was not met.)

What bondholders can potentially receive

Calculation assumptions

1. We assume bondholders hold 1 full lot of bonds ($250k principal).
2. Accrued interest is calculated based on the Act/365 convention as stated in these perpetuals’ original pricing supplement. For example, interest accrues for 181 days between 18 Jan 2026 – 18 Jul 2026 (Option 1), 184 days between 18 Jul 2026 – 18 Jan 2027 (Option 1), and 178 days between 18 Jan 2026 – 15 Jul 2026 (Option 2).
3. The indicative new coupon (after 18 July) is assumed to be around 9.02%. This is based on the reset rate of 5y SOR + 4.807% + 2% step-up. However, 5y SOR is already discontinued, and the practical market conversion would be to change 5y SOR into 5y SORA-OIS + 0.3112%. Using an indicative 5y SORA-OIS of 1.90% (the 1-week average from 2 July to 8 July), our final calculation is 1.90% + 0.3112% + 4.807% + 2% = 9.02%.

Option 1: Bondholders hold onto their bonds, and it is called in Jan 2027

In this case, bondholders would receive total cashflows of around $268,028 (Table 1). This includes:

1. 18 Jul 2026: Distribution at the old 5.375% coupon
2. 18 Jan 2027: Distribution at the indicative new coupon (~9.02%)
3. 18 Jan 2027: Principal repayment (100% of principal)

Table 1: Indicative cashflows if bondholders hold their bonds until Jan 2027 call

Option 2: Bondholders sell their bonds in the market to Olam

In this case, bondholders would receive total cashflows of around $259,053 (Table 2). This includes:

1. 15 Jul 2026: Accrued interest at the old 5.375% coupon
2. 15 Jul 2026: Principal repayment (101% of principal)

Table 2: Indicative cashflows if bondholders sell their bonds to Olam on 13 Jul 2026

Why Option 1 is superior, and you should NOT sell the bonds

Our recommendation is to hold the bonds until the Jan 2027 call - you should NOT sell the bonds to Olam at the price of 101. Investors who choose to hold the bonds need not take any action – they can simply hold onto their bonds and benefit from the higher reset rate.

Holding the bonds (Option 1) gives bondholders significantly higher returns, with a difference of almost $9,000 ($268,028 less $259,053) or effectively 7.1% annualised. This $9,000 represents about a 3.59% return over 6 months on your $250k principal, or 3.46% over 6 months on the P+I figure of $259,053 in Table 2 – these translate to 7+% annualised yields. Similarly, the internal rate of return (IRR) from holding instead of selling can be estimated at around 7.1%.

Put another way, you should only sell the bonds if you can identify another similar SGD bond opportunity which offers over 7.1% annualised returns over 6 months. We think it is extremely unlikely there are such opportunities available with a similar risk profile; with Olam already announcing its intention to call the bonds in Jan 2027, we think non-call risks (barring unexpected events) look very unlikely. Default risks also look unlikely, with Olam already benefiting from the sale of its assets (notably Olam Agri to SALIC) and well-documented plans to deleverage and right-size its capital structure.

For those who wish to sell their bonds to Olam (against our recommendation), they may try to sell their bonds on the secondary market within the repurchase period, from 9 July (Thurs) to 13 July (Mon).

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in OLGPSP 5.375% Perpetual Corp (SGD). The analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.