Z Energy Bonds 15 August 2018

[tobo]

Type of Bond: Secured, senior, fixed rate, listed debt obligations of the Issuer.
Closing Date: 5 August 2011

Interest rate 7.25% p.a.
Interest Payment Dates: 15 February, 15 May, 15 August and 15 November of each year until and including the Maturity Date (commencing on 15 August 2011)

Maturity Date: 15 August 2018

Bonds rank equally with the bonds already issued by Greenstone Energy Finance Limited (in respect of which Z Energy Limited became the substituted issuer)
Ranking: The Bonds will constitute secured senior obligations of the Issuer and rank equally with each other and the existing Series of bonds issued by the Issuer. Bondholders and Z Energy Group’s banks share the same security on an equal ranking basis, with both groups ranking behind Shell’s security over petroleum products supplied by Shell to the extent that it has not received payment of the purchase price for them, and behind statutorily preferred creditors.
NZX ticker code “ZEL” has been reserved for the Issuer.

[tobo]

what do we think of this rate/risk.
I only have very big picture opinion, not much depth of knowledge about bonds.

Infratil bonds (closed May2011) were 8.5%
Z Energy bonds are 7.25%

I don't see much risk in the failure of petrol station business.
I see the biggest risk over Z Energy as a gradual move away from petrol stations when oil runs out (10 or 30 years away?). Maybe petrol stations will become electric car plug-in points, or Hydrogen fuel cell outlets, or just new new "corner dairies", but if cars disappear and everyone uses electric buses or monorails (or bicycles), petrol stations will suffer the same problem that Bookshops are suffering in the face of internet books.

[moimoi]

Tobo,

A risk is inflation..

http://www.nzherald.co.nz/personal-investment/news/article.cfm?c_id=71&objectid=10631651&pnum=0

@ a real rate of return of 3.55% i doubt i am being adequately compensated..

[minimoke]

I see the biggest risk over Z Energy as a gradual move away from petrol stations when oil runs out (10 or 30 years away?).
They don't make much on the sale of petrol. Its the high margin pies, milk and considerable where they make their loot. It might have been Shell, or was it Mobil who had a requirement of staff to up sell "would you like a cadbury Peanut slab with that purchase"

[CJ]

They don't make much on the sale of petrol. Its the high margin pies, milk and considerable where they make their loot. It might have been Shell, or was it Mobil who had a requirement of staff to up sell "would you like a cadbury Peanut slab with that purchase"true but without the petrol to get you in there, there is no chance of the upsell.

Another risk, given your line of thinking is payment at the pump with NFC (near feild communication - ie. swipe cards). Some stations do this at the moment but implement it so badly (intentionally??) that no one uses it. If tap and go payment becomes simple and ubiquous, then that is a significant risk of them loosing the impulse purchase.

[Anonymous]

Another risk, given your line of thinking is payment at the pump with NFC (near feild communication - ie. swipe cards). Some stations do this at the moment but implement it so badly (intentionally??) that no one uses it. If tap and go payment becomes simple and ubiquous, then that is a significant risk of them loosing the impulse purchase.

NFC going forward will be through smartphones. Maybe that is the true reason that petrol stations don't want you using your phone at the pump... ;)

[Penfold]

I am cautious of buying fixed rate bonds at historically low levels, with the possibility of inflation going wild. There's a few perpetuals that reset annually out there, that I would be looking at first.

[Beagle]

I am cautious of buying fixed rate bonds at historically low levels, with the possibility of inflation going wild. There's a few perpetuals that reset annually out there, that I would be looking at first. I agree. Turn the situation around, I'd be happy to borrow at 7.25% locked in for 7 years so why lend to them at that rate ? I also don't like how Z energy are almost always continually leading the market when it comes to their repeitive fuel price rises. Anyone else noticed that ? Infratil "playing us" by taking advantage of playing the Kiwi Owned" card ?

[BIRMANBOY]

Most of the perpetuals will be resetting with lower interest rates so doubt whether that would be worthwhile. If they reset annually then it will be certainly lower than last reset. Its Z energy (7.25%) still better than term deposits whatever you do.
I am cautious of buying fixed rate bonds at historically low levels, with the possibility of inflation going wild. There's a few perpetuals that reset annually out there, that I would be looking at first.

[Anonymous]

I also don't like how Z energy are almost always continually leading the market when it comes to their repeitive fuel price rises. Anyone else noticed that ?

I note that Z Energy hasn't increased today unlike the others. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10738156

[Penfold]

Suppose it depends on your time frame. If you are looking at holding the Z bonds until maturity you may be better looking at perpetuals. Especially those that are likely to be bought back. But if you are only in it for the year or two then maybe the Z bonds will serve you well. Any sudden rise in OCR could lead to you taking a capital loss on them.

[Waiuta]

Practically, they are fixed rate senior bonds and should be easily tradeable. Greenstone (their earlier issue) opened in October last year at 7.35% and now trade at a yield around 6.6%

[Arbitrage]

The market seems to be huge for these. ASB Securities limited them to 5000 per client. Hopefully the high demand will make them easily tradeable.

[Joshuatree]

Some new Z bonds out with less int.Fixed rate of 6.5% maturity 2019. How does that compare with anything else out there?thoughts appreciated. cheers JT

[POSSUM THE CAT]

Joshuatree As RABO BANK will give you 5.55% for 5 years & far better security. My thoughts is it not enough value to tie money up for 7 years 3 months after reading the prospectous

[Joshuatree]

Thanks POSSUM. Z bonds will be tradable on the NZDX.

[POSSUM THE CAT]

Joshuatree yes they can be traded but unless you have large amounts it is not practical 7 I do not think they will ever trade at a Premium. Possibly okay if you are going to buy a 100 grands worth but then you have to find a large buyer

[777]

Still open so guess it hasn't been filled yet.

[777]

Closed oversubscribed. Shows how little I know.

ZEL010.NZX

ZEL
13/08/2012 15:45
LISTING

REL: 1545 HRS Z Energy Limited

LISTING: ZEL: Z Energy bond offer closes oversubscribed at $135 million

Z Energy Limited ('Z Energy') closed its retail bond offer on 10 August 2012,
having successfully raised $135 million (which includes $35 million in
oversubscriptions).
End CA:00225883 For:ZEL Type:LISTING Time:2012-08-13 15:45:14

[sharer]

ZEL030 new bonds (6.5%) trading now, @ 6.15%

[iceman]

Interesting to look back at this thread. I put a decent amount into ZEL030 in 2012 and am getting it paid back in a couple of weeks. Been a brilliant and safe investment. The comments on here at the time show how difficult it is to guess the market.
Beagle I hope you didn't lock in a mortgage at 7.25% for 7 years back then ! How wrong we all were. No one had an inkling we’d be where we are today

[Beagle]

Interesting to look back at this thread. I put a decent amount into ZEL030 in 2012 and am getting it paid back in a couple of weeks. Been a brilliant and safe investment. The comments on here at the time show how difficult it is to guess the market.
Beagle I hope you didn't lock in a mortgage at 7.25% for 7 years back then ! How wrong we all were. No one had an inkling we’d be where we are today

LOL mate. Old dog's don't like mortgages. Yeah a lot has changed in 7 years and well done to you mate for getting such a great safe return in that bond. Just curious, what rate did they offer you to reinvest ?

[iceman]

Strangely enough Beagle they did not contact me for reinvestment. Would have been a waste of time anyway as not interested in today´s interest rate environment. What we had in ZEL 030 was actually my 2 daughters´ money providing them with a steady income through their Uni years. I´m not a Bond guy myself but this suited their purpose perfectly. Now going into first homes !!!!

[Grimy]

Z didn't offer a replacement bond for people to roll over to with this one.