Thank you for your comments Norwest.
I believe the big four Aussie banks have plenty of their own problems and the recent credit rating downgrade has
started to reflect some of them.
Credit rating is one thing, momentum in where the credit rating is headed is another thing as is the capital ratio and HGH has to the best of my knowledge a better capital ratio than any of the big Aussie 4.
Its one thing to, for example, invest on term deposit with say the BNZ and get 2.9% and I am grateful for small mercies that I still have a term deposit with them at that rate until February 2021 but their current rates here
https://www.bnz.co.nz/personal-banki...rates-and-fees are a completely different story with a maximum rate regardless of term or amount of just 1.15% before tax and inflation. This as you quite rightly observe is before one takes account of the risks imposed by the Reserve Bank's open banking resolution.
It is beyond any doubt whatsoever that the current (negative real after tax rates and inflation) returns compensate in any way for the OBR risk or any other risk of default...so that begs the question of alternatives. I think HGH shares are a fair alternative and although there are clear risks one shouldn't also overlook the possibility of the recovery story being better than expected over the medium term seeing as both N.Z. and Australia (lowest Covid cases in Melbourne today since the new outbreak went rampant) are weathering the Covid risk much better than most other countries.
One shouldn't overlook the optimistic case for earnings of 14.5 cps in FY21 (mid point of HGH's forecast) and a vaccine for Covid sometime in late 2021 seeing HGH rerated to around the mid point of its historic PE range of 11-17, mid point 14, as the economy starts to recover. 14.5 cps at the mid point PE of 14 suggests a possible recovery price of something in the order of $2 perhaps as early as late 2021 or more likely sometime in 2022.
Risks and rewards appear to suggest to me that on balance HGH is quite probably a good recovery stock to take a modest position in so that's what I've done.
Sure there's some downside risk, no-one thinking objectively would not acknowledge that, but there's quite solid upside potential too.
If you want minimum possible risk the Reserve Bank has Kiwibonds, current rates are here and don't forget these rates are before tax and inflation
https://debtmanagement.treasury.govt...e111-13jul.pdf