interesting bit in Chris lee commentary yesterday 8th october
https://www.chrislee.co.nz/taking-stock
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interesting bit in Chris lee commentary yesterday 8th october
https://www.chrislee.co.nz/taking-stock
Thanks for posting Gonzo. Interesting especially about Hubbard. Lets hope keep NBR going.
https://finance.yahoo.com/news/japan...013223619.html
https://techcrunch.com/2019/09/20/wa...on-checks-too/
Using the Feds money. Heads they win, tails you loose.
For what is essentially at-call money, that 1.5%pa compares quite well with term deposit rates of well under 1%.
Especially at 55c in the dollar
Even slightly better at today's reset of 1.71% and at 53.5 cents.
The AustralianSuper proposed scheme of arrangement for IFT poses some interesting questions for the IFTHA bonds. What protections are there for bond holders should there be a change in ownership of the IFT shares? What scope does the Trustee have to intervene on behalf of bond holders?
I see the IFT bonds are repayable should compulsory acquisition of IFT shares held by minorities occur - see page 11 of the prospectus:
https://www.interest.co.nz/files/bonds/iftha.pdf
Presumably a shareholder approved Scheme of Arrangement doesn’t result in compulsory acquisition occurring (rather it’s something that occurs under a takeover once 90% ownership is achieved) and therefore I assume the IFTHA’s would survive AustralianSuper acquiring IFT via a Scheme of Arrangement.
It would be worthwhile to review the trust deed in detail. If there is any prospect of repayment, the current market price of 53.8 cents in the dollar may move. Or if bond holders are locked in, 53.8 cents is expensive.
VWRAP of 69c for the day and a turnover of $340k suggests many think they will have to be bought out at a face value of $1.
Perpetual shareholders have every reason to vote in favour of the scheme of arrangement and the votes may prove crucial. Infratil and Morrison & Co may be about to pay a price for taking advantage of perpetual shareholders for so long. They could have been buying them back on market at almost half price.
yeh I had a guick look at the main IFT bond details and they are redeemable so could well be called in if SIA proceeds
I dont know if the perps are under the same conditions tho !!
Interesting ?
"Specifically, holders of Infrastructure Bonds may have the right to request that their bond is
redeemed at its face value, and holders of the Perpetual Infratil Infrastructure Bonds (PiiBs) may also
have rights to convert their PiiBs into Infratil ordinary shares."
I wonder what the circumstances for conversion are?
https://stocknessmonster.com/announc...ft.nzx-364894/
compulsory acquisition
If any person, or group of Associated Persons, becomes entitled or bound to compulsorily acquire Shares held by any minority Shareholders, Bondholders will be given the option to redeem their Infrastructure Bonds for cash at their $1.00 Face Value plus accrued interest (less any withholding taxes and other deductions) or convert their Infrastructure Bonds by the issuance of the number
of Shares obtained by dividing the $1.00 Face Value by the product of the relevant Conversion Percentage
and the Market Price. Unless the Bondholder pays any withholding tax or other deduction to Infratil before conversion, the number of Shares issued will be adjusted in accordance with the formula in the Trust Deed.
If any person, or group of Associated Persons, acquires beneficial ownership of 90% or more of all Infrastructure Bonds such person will become bound to offer to acquire the balance of the outstanding Infrastructure Bonds at prices that an Independent Expert has determined to be fair.
The wording doesn’t appear to cover a change on control via a Scheme of Arrangement. If someone succeeds getting 75% of shareholders to agree to a SoA, then I assume you could get a 100% change in ownership of IFT without the compulsory acquisition threshold (90%) coming into play. If so, IFTHA bondholders may be forced to go along for the ride.
Up to 77.85 at present. 78 the high for the past year. With interest rates on the rise these may climb further. I've been a holder for years and the current price is well above my average cost. Certainly the interest return has been average for a while (but still better than a call account). Tempted to sell and buy IFT shares, but just know that as soon as I do IFT will announce they are buying these back at $1.00.....
Closed up at .785 today
3.14% reset for the next 12 months just announced. At my average buy price takes it over 5% yield, so guess I'll be staying put for now.
I've have always wondered why Infratil don't buy more of these back and cancel these when they have excess capital. Instant and safe 25% capital gain for them at these prices. They would have made closer to 100% a while ago. I get that they helped diversify funding in the early days, but now they are a minor source of their debt.
Yes, I don't know what rules there are for buying back on-market, but if they can it's what I would have done in their position.
They seem to have made it clear they don't want to buy back at face value for various reasons and are happy to let them run as perpetuals.
I guess paying nothing for them is cheaper than paying 79 cents.
A welcome reset of the interest rate from 3.14% to 6.45%
I don't imagine that (m)any on the forum bought these at a buck a pop, so it's a pretty good rate.
Yes, I'm happy with my new 11.5% rate.......
Hi, i'm new to bonds and more so perps and hoping for answers to a few questions and some specific to IFTHA. Sorry in advance i'm still learning about this:
1. Does the current yield based calculation factor that bond will be called at face value?
2. Generally in a rising interest rate environment current price should increase and vice versa in a falling rate environment? If so why would the price dropped today?
3. Total return is a factor of the average coupon for the holding period and the purchase and selling price?
4. At todays price of 0.74 would these still be considered good buying?
TIA
After you finish reading from page 1 of this thread, you can answer your questions except for Q2. Generally speaking, when the interest rate increases, the bond value goes down.
Thanks Newman. I have read the whole thread and i believe I have answers to most of the questions yet they are inferred and hence I was asking for explicit answers.
Your answer to Q2 leaves me wondering though. I see how that works for fixed coupon bonds: as interest rates go up bond investors sell their current bonds for higher yielding bonds and thus prices for the lower yielding bonds decreases. However, in the case of IFTHA the interest rate may increase making them more desirable thus increasing the price?