This bug has been copied from bug #802565 and has been proposed to be backported to 5.8 z-stream (EUS).
Technical note added. If any revisions are required, please edit the "Technical Notes" field accordingly. All revisions will be proofread by the Engineering Content Services team. New Contents: Previously, ksh did not expand the tilde (~) character properly. For example, characters in the tilde prefix were not treated as a login name but as a part of the path and the "No such file or directory" message was displayed. The underlying source code has been modified and tilde expansion now works as expected in such a scenario.
Since the problem described in this bug report should be resolved in a recent advisory, it has been closed with a resolution of ERRATA. For information on the advisory, and where to find the updated files, follow the link below. If the solution does not work for you, open a new bug report. http://rhn.redhat.com/errata/RHBA-2012-0432.html