SIA MCB-R – Why buy at 0.001?

As I continue to follow the trading of $SINGAPORE AIRLINES LTD(C6L.SI)$ MCB Rights in the secondary market, an interesting observation came to me.

Earlier when afternoon trading reopened in for the Singapore market, there were approximately 9.2 million of SIA MCB Rights transacted at 0.001 through married deal.

9.2 million of SIA MCB Rights doesnt cost a lot. At 0.001, it is worth only $9,200.

The next question that came to my mind is what this buyer is planning to do with the MCB Rights.

First, he could be a long-term supporter of SIA and he is buying the Rights to subscribe for the MCB. But to subscribe, it will cost him $9.2 million to take up his rights. That is a lot of money! And this money will be locked up for 9 years! Even if the investors want to exit the investment in the secondary market in future, there is unlikely to have enough liquidity to absorb so many MCBs.

Then, if the investor is already a shareholder of SIA, he could have opted to subscribe for excess MCBs instead of purchasing the Rights to subscribe. Considering the poor demand for MCB during last rights issue in 2020, the investors should be able to get as many MCBs as he wants if he goes for excess rights subscription.

Is it Temasek buying? Probably not as Temasek already committed to subscribe for all the unwanted MCBS already. It does not have to waste another 0.001 to pay for the rights.

Maybe the buyer is not an investor but a trader? That's possible if the trader is thinking that he is buying at the lowest possible price and assuming if SIA share price surge, the value of the MCB will surge and the Rights will also increase in price. Then he could be making multi-fold returns within short period. But then, time is not on his side as the MCB Rights are only tradable for a short period. These traders could be taking a bet and risk $9,200 in hope of a much higher returns that WallStreet Bets will be proud of.

But, once again, time is not on their side and the risk-reward doesn't look that good, at least to me.