according to this, they already have (non binding) take up of 75%.
Maybe they are just being smart. They know it will be fully subscribed so why waste money.
My prediction is it will close oversubscribed
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The issue was unrated but great marketing play was made on the road shows that it was right up there with the top corporate credits IE Investment grade. It was priced accordingly. Now Tim is under some pressure has said its Not investment grade which buggers the pricing. And since the 75% interest is non binding its now a much harder sell at the original yield as its Just JUNK
Have retail investors learnt nothing?
Quote:
Originally Posted by Greenstone Article on Stuff
Clearly not... unrated Junk, pile in for your 7.5% return...Quote:
Originally Posted by Tim Brown of Greenstone
http://www.stuff.co.nz/business/indu...to-judge-issue
Given that it is half owned by the Superfund which is owned by the Govt, does it not have the same 'effective' Govt guarantee that Kiwibank has?
We will see if it is oversubscribed.
Macduffy,
No what I meant is that brokers are paid by issuers to take stock firm; in effect an underwrite. Greenstone wouldnt pay just expecting the stock to walk out the door. Now brokers are just on best endeavours, not committed. Some will certainly walk unless clients beat the doors down
Selected cut and pastes from the article.
Infratil is defending its decision not to seek a credit rating for a major retail bond issue by petrol retailer Greenstone, arguing that the research of the financial institutions pushing the bonds means more than that of a ratings agency.
http://www.stuff.co.nz/business/indu...to-judge-issue
The bonds will carry no credit rating, although investors will rank equally with Greenstone's banks if the company fails.
"Why did the global financial crisis happen? Because guys bought bonds purely on the basis of ratings."
banks such as Westpac which were recommending the bonds to clients – but not directly involved in the issue – had "actually put their money up" lending $100m for the purchase of the Shell assets.
discussions between First NZ and Infratil ahead of the bond issue concluded that Standard & Poor's probably would have given the bonds a BB rating – which is sub-investment grade and often referred to as junk – because of Greenstone's newness. Such a rating would reflect Standard & Poor's formulas
He denied Infratil had decided not to seek a rating because it didn't want the answer it expected to get. "It's not so much that, as the value we were going to extract for the cost of north of $100,000 a year to get the rating done."