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  1. #46
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    I just call it as I see it BB, never been known for my political correctness and probably never will be. A question you might want to ask yourself after reviewing the SP graph's of the major Australian banks, is why has the ANZ been smacked down a lot harder than the rest of them ? Percy reckons they have the biggest exposure to the Dairy industry and from what I've read elsewhere this seems to be right, (sorry haven't got time to post supportive links but surely you can do some background reading ?) I have seen first hand the carnage these sort of unsecured deeply subordinated instruments have inflicted upon investors first hand during the GFC, that's why I find the terms of them so abhorrent. The other thing is that in a recent article on interest.co.nz the comment was made that about 90% of investors don't understand the implications of the Reserve Bank's open bank resolution and its implications for investors in banks. Sorry but I felt it was worth some more airing on here to help others understand the risks...I am sure not everyone is such a well informed investor as you or I. The risk of loss is small as is the chance of the ANZ invoking any of their "escape clauses" so eloquently written into the fine print of this instrument but in the context of what is starting to look like a pretty serious correction in international banking stocks I thought this was worth some more bandwidth.

    I am sure many will be very happy to receive their 7.2% coupon. The odds are they will continue to receive same and all will be well. As Winner suggested earlier, if the ANZ have to invoke some of their clauses or RBNZ invoke the provisions of the open banking resolution there will be so many other problems going on nobody will even notice $500m being compromised so I shall crawl back into my kennel and wonder why I bothered barking in the first place.
    Last edited by Beagle; 15-02-2016 at 06:26 PM.

  2. #47
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    A question you might want to ask yourself after reviewing the SP graph's of the major Australian banks, is why has the ANZ been smacked down a lot harder than the rest of them ?
    The reason seems to be ANZ's higher exposure to Asian markets - now seemingly downplayed since the retirement of CEO Mike Smith and China's slowdown. New management have specifically revoked the previously ambitious target for Asian earnings. Dairy exposure, while significant to the NZ business is much less so in the ANZ Group lending portfolio.

  3. #48
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    Quote Originally Posted by winner69 View Post
    Interesting article

    Things may have changed?

    Mind you punters still like them - the 7.2% ANZ jobs are yielding 4% odd if you buy them today
    http://www.interest.co.nz/personal-f...ies-issue-same
    Hang on a minute mate. My gut instinct tells me something is not quite right here. Can't be 4%, (I was assuming you were right hence my initial very strong surprise).
    7.2% coupon rate and currently trading at about $1.026 per $1. Ticker code ANBHB on NZDX.
    So one is paying a 2.6% premium for the remaining life of these instruments.
    My understanding is that these have callable features built into them so the bank can call them at the first five year anniversary and any five year anniversary thereafter and that the yield calculation is usually based on the assumption that the bank call them at their first option, (although this is probably unlikely in the current environment IMO).

    These were first listed on 1 April 2015 so there's just over 4 years to run to the first possible redemption date by the ANZ bank. In simple terms without getting into a full bond calculator analysis you're paying a 2.6% premium for the next four years coupon's of 7.2% so the yield to first possible maturity is approx. (7.2 x 4) - 2.6 = 26.2 / 4 = 6.55%.

    This corrected approximate yield makes more sense and gives something of an idea where HBL will need to pitch their Tier 2 capital raise in terms of yield.

    I still don't like them for all the reasons mentioned earlier in the thread but I can understand in an ultra low interest rate environment, lowest in more than 50 years, which is likely headed even lower how these would have some appeal, (as a modest part of a well diversified portfolio of other investments) to bond investors chasing yield.
    Last edited by Beagle; 18-02-2016 at 05:32 PM.

  4. #49
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    Quote Originally Posted by Roger View Post
    Hang on a minute mate. My gut instinct tells me something is not quite right here. Can't be 4%, (I was assuming you were right hence my initial strong surprise).
    7.2% coupon rate and currently trading at about $1.025 per $1.
    So one is paying a 2.5% premium for the remaining life of these instruments.
    My understanding is that these have callable features built into them so the bank can call them at the first five year anniversary and any five year anniversary thereafter and that the yield calculation is usually based on the assumption that the bank call them at their first option, (although this is probably unlikely in the current environment IMO).

    I will get my old bond calculator out and edit this to calculate the true yield assuming the bank exercise their first right of redemption.
    They were 1.062 last week

    https://www.nzx.com/markets/NZDX/hyb...B?icharts=true

    Look at the chart - price fallen down a cliff face. ha ha
    Last edited by winner69; 18-02-2016 at 05:28 PM.
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  5. #50
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    Quote Originally Posted by winner69 View Post
    They were 1.062 last week

    https://www.nzx.com/markets/NZDX/hyb...B?icharts=true

    Look at the chart - price fallen down a cliff face. ha ha
    Record date for quarterly dividend was on Monday.

  6. #51
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    Quote Originally Posted by Sideshow Bob View Post
    Record date for quarterly dividend was on Monday.
    Thanks Bob
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  7. #52
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    Quote Originally Posted by Roger View Post
    A question you might want to ask yourself after reviewing the SP graph's of the major Australian banks, is why has the ANZ been smacked down a lot harder than the rest of them ? Percy reckons they have the biggest exposure to the Dairy industry and from what I've read elsewhere this seems to be right, (sorry haven't got time to post supportive links but surely you can do some background reading ?)
    Quote Originally Posted by macduffy View Post
    The reason seems to be ANZ's higher exposure to Asian markets - now seemingly downplayed since the retirement of CEO Mike Smith and China's slowdown. New management have specifically revoked the previously ambitious target for Asian earnings. Dairy exposure, while significant to the NZ business is much less so in the ANZ Group lending portfolio.
    Having skin in the game (being an ANZ shareholder) gives a strong incentive to check out the facts. So I have done just that.

    Loan Category ANZ Loan Book FY2015 (gross) ANZ Loan Book FY2015 (%ge) ANZ 'Overseas' Loan Book FY2015 (gross) ANZ 'Overseas' Loan Book FY2015 (%ge)
    Agriculture, Forestry, Fishing and Mining $39,610m 4.7% $5,965m 3.2%
    Business and Property Services $51,000m 6.1% $6,969m 3.8%
    Construction $7,609m 0.9% $767m 0.4%
    Entertainment, Leisure and Tourism $11,797m 1.4% $1,438m 0.8%
    Finance and insurance $230,710m 27.5% $98,337m 53.2%
    Government and Local Authority $52,524 6.2% $8.854m 4.8%
    Manufacturing $34,432m 4.1% $20,332m 11.0%
    Personal lending $330,925m 39.5% $13,246m 7.2%
    Electricity, Gas and Water Supplies $9,795m 1.2% $3,774m 2.0%
    Retail & Wholesale trade $38,528m 4.6% $15,460m 8.4%
    Transport and storage $14,783m 1.8% $4,984m 2.7%
    Other $16,455m 2.0% $4,476m 2.4%
    Total $838,248m 100% $184,602m 100%

    The ANZ loan exposure to Asian markets is therefore:

    $184,602m/$838,248m = 22.0%

    By way of comparison the equivalent figure for Westpac, who do not have a specific push into Asia is just 3%. So the facts back up your suggestion Macduffy.

    Now moving onto Rogers point, ANZ as an Australian entity does not disclose a separate exposure for Agriculture. Agriculture loans are lumped in with Forestry Fishing and Mining. The above figure in the table is 4.7%. As a reference the equivalent figure for Westpac (who claim to be underweight mining) is only 2.9%. So ANZ has nearly twice the exposure to Agriculture, Forestry Fishing and Mining as Westpac does. This means that Roger is probably correct as well.

    In this instance, with both Macduffy and Roger likely being correct in their views, any mark down in the value of ANZ is probably a result of pressure from both angles.

    SNOOPY
    Last edited by Snoopy; 24-02-2016 at 01:22 PM.
    To be free or not to be free. That is the cash-flow question....

  8. #53
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    Thinking of switching from these to the ordinary shares - anyone else done this or considering?

  9. #54
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    Great opportunity to load up on this bond if you believe no big sell off in global markets. Current sellers showing a bit of desperation below 102 for a bond yielding 7.2% in an ever decreasing interest rate environment.
    Last edited by kiwitrev; 30-06-2016 at 09:51 AM.

  10. #55
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    You should ask Roger KT..maybe he will ditch his AIR and load up on these..LOL
    Quote Originally Posted by kiwitrev View Post
    Great opportunity to load up on this bond if you believe no big sell off in global markets. Current sellers showing a bit of desperation below 102 for a bond yielding 7.2% in an ever decreasing interest rate environment.
    www.dividendyield.co.nz
    Conservative Investing and dividend producers...get rich slowly!
    https://www.facebook.com/dividendyieldnz

  11. #56
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    Quote Originally Posted by kiwitrev View Post
    Great opportunity to load up on this bond if you believe no big sell off in global markets. Current sellers showing a bit of desperation below 102 for a bond yielding 7.2% in an ever decreasing interest rate environment.
    Odd behaviour with this bond. November record date trades at par, February $105.00 per $100 and post record date (today) $103.85. What occurred during November to cause sharp drop and why is the current differential so narrow compared with long term history?

  12. #57
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    No posts this bond for a year-but-thought should note ANZ calling ANBHA $835m 18 April 2018. So ANBHB Optional Exchange Date is May 2020 which allows for the bond to be repaid or converted to ordinary shares. What do posters think? Will ANZ follow the example of the ANBHA bond. Of course the behaviour of interest rates can affect the outcome.

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