Beware of DRBHCOM-CC Further Issuance

Written by Editor

CIMB has announced today that it plans to further issue another 50 million DRBHCOM-CC on top of its existing issue of 50 million.  When issuers carry out additional issues, it usually means that the amount outstanding not held by the public has reached a low enough level for the issuer to want to increase supply.  The reason why issuer wants to issue more warrants is to ensure effective market making.  It is argued that when too many outstanding issues are in the hand of the public, the warrant may not track the underlying movement effectively, hence the need for additional issue.  Nevertheless, this argument is only valid if the issuer is market making in a fair way. 

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