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  1. #21
    Advanced Member BIRMANBOY's Avatar
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    Fine until the second to last paragraph....HNZ has been around a couple of years and lets face it looks ok but has no real track record or history like ANZ....Yes it MAY show capital appreciation and it MAY keep giving dividends but there is no guarantee on that continuing...its a minnow and a new minnow..I certainly wouldn't be borrowing against my house on THAT either. Caveat emptor. on everything anywhere...and forever.
    Quote Originally Posted by Roger View Post
    I can see why this would be a perplexing situation for many and for others it would seem like easy money, which on the face of it, it is.
    Let's ramp it up to illustrate my points better. Suppose you're debt free and have a lovely home in Nelson worth say $700,000 and the bank offered to lend you $500,000 to invest in these Basil 3 capital compliant loss absorbing deeply subordinated unsecured financial instruments. Suppose also you're in a good paying job and / or business and all is well for the average Joe Bloggs. Joe and his Mrs think this is the easiest 2.2% return they'll ever make and will earn $11,000 before tax for nothing right ? WRONG.

    1. You are trading the security of your debt free family home for "a risk" to make that $11,000 per annum before tax, $7,370 per annum after 33% tax.
    2. You are moving from a completely risk free, (assuming you're living in a part of Nelson that doesn't flood) totally secure position in your home which provides long term security for you, your wife and your children to a psotion where you're exposing them to risk.

    So what's the risks ?

    1. Debt servicing Risk. Well ANZ in certain circumstances don't have to pay interest on these and its non cumulating and they wouldn't if there was a serious "event". You however would still be required to pay your interest at $25,000 per annum and while this probably wouldn't greatly affect you it would smash many families budget to bits.

    2. Capital Risk. They're loss absorbing so in the event of a crisis at any time over the entire life of this financial instrument, (read GFC Mk2), if in the Reserve bank of Australia's opinion it was necessary for the bank to give its shareholders "a haircut" you could see a substantial portion of your investment obliterated but of course you'd still be left holding the baby on your full $500,000 mortgage. If you got a 40% haircut, ($200k of your $500K gone, it would make the circa $7.5K per annum after tax return, look a bit silly wouldn't it !!

    Now I know you're a bright and likeable guy and have your head screwed on well and truly and have a range of other quality investments and wouldn't be so silly as to do this to a level of half a mil so the above is purely for illustrative purposes for others to understand the risks, fully.

    There's no free lunches in the investment world even when it appears there are !!

    Now on the other hand if one were to say, yes there's risk here (as in any capital investment), but lets borrow that $200K and invest in more HNZ shares which will give better dividends and in all likelyhood dividend growth each yearand capital appreciation I think there's a far better case to be made for that sort of investment being better on a risk / reward basis, e.g. your investment could easily double (as you know it does with that company), in value in 5 years and you're being pretty well compensated for the risk involved.

    Disc This poster thought he was clever and decided to partake of what appeared to be a free lunch and did what you're proposing to do on a fixed interest product prior to the GFC and got his fingers burned...once bitten twice shy !! My hair is greyer than yours mate so I just thought I'd share some of that hard learned wisdom.
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  2. #22
    ShareTrader Legend Beagle's Avatar
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    HNZ have a 50% better capital ratio than ANZ and no exposure to all those hundreds of small aussie mining companies that must be starting to really struggle to service their debt with those commodities prices where they are now ...just saying.
    Last edited by Beagle; 21-03-2015 at 01:22 PM.

  3. #23
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    Good posts and discussions Roger and BB !

  4. #24
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    My cheque was banked last Monday. So I'm definitely in.

  5. #25
    Advanced Member BIRMANBOY's Avatar
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    So listing tomorrow.
    Upcoming Listings as at 31/03/2015

    Company Proposed Listing Date Ticker Board ISIN Listing and Quotation Notice
    ANZ Bank New Zealand Limited 01/04/2015 ANBHB NZDX NZANBDT013C0 Click Here
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  6. #26
    Advanced Member BIRMANBOY's Avatar
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    Seems to be good demand on these...trading well and close to 2 million in the buy queue. Could stag these and make a nice profit LOL
    Last edited by BIRMANBOY; 01-04-2015 at 02:47 PM. Reason: correction
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  7. #27
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    These bonds have been trading now for a little while and have been a good buy for those who got in on the open. Given 'normal circumstances' the biggest risk for new entrants via NZDX would seem to be that of redemption and loss of capital (ie premium paid to purchase vs face value). Interest rates have gone significantly south since these have been issued which raises the question would ANZ review and redeem at first opportunity? Perhaps none on this forum can know the answer but I would be interested for some healthy discussion on the topic. If they were redeemed early would that put ANZ in a bad light with the market in general given they may need to raise further capital as pointed out by previous posters. Also heard on the news today Aussie banks will need to increase capital even more to comply with regulators new requirements.

  8. #28
    Advanced Member BIRMANBOY's Avatar
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    And yet people are still buying..makes me think..why didn't they buy at outset? However, who can say why or why not as to others timing and or motivation. With interest rates still dropping it should keep upward pressure on new entrants. Personally I don't believe ANZ would redeem early as would certainly be a "bad look". Obviously new entrants are not thinking about some sort of early redemption or the buying would have stalled. I cant remember details about their options re early redemption. However difficult for me to understand all the intricacies of global debt markets so cannot pretend to be anything other than an interested observer with some hope that they will continue for some time to come.
    Quote Originally Posted by kiwitrev View Post
    These bonds have been trading now for a little while and have been a good buy for those who got in on the open. Given 'normal circumstances' the biggest risk for new entrants via NZDX would seem to be that of redemption and loss of capital (ie premium paid to purchase vs face value). Interest rates have gone significantly south since these have been issued which raises the question would ANZ review and redeem at first opportunity? Perhaps none on this forum can know the answer but I would be interested for some healthy discussion on the topic. If they were redeemed early would that put ANZ in a bad light with the market in general given they may need to raise further capital as pointed out by previous posters. Also heard on the news today Aussie banks will need to increase capital even more to comply with regulators new requirements.
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  9. #29
    ShareTrader Legend Beagle's Avatar
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    Fact is that wholesale interest rates have dropped significantly in the circa four months since this deeply subordinated unsecured Basil 3 capital compliant issue and that is reflected in the current premium they're trading at.
    Don't for a moment pretend these don't have a serious financial risk attached to them if on a global basis we have a SHTF MK2 GFC.
    The premium is further magnified by a dearth of new issues lately. All the Aussie banks are under the regulator thumb to improve their Basil 3 capital adequacy ratio's so the likelihood of ANZ redeeming these after the initial five year ? callable option is very, very low in my opinion.

  10. #30
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    ANZ has declared themselves pretty comfortable with the new APRA capital requirements.

    http://www.asx.com.au/asxpdf/2015072...9xdw09wq6b.pdf

    But of course their idea of "manageable" may or may not involve redemption of these or any other securities.

  11. #31
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    And on that note ANZ today ann. raising 3B in a placement

  12. #32
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    Quote Originally Posted by kiwitrev View Post
    And on that note ANZ today ann. raising 3B in a placement
    But we only get to line up for a share of 500m

  13. #33
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    Quote Originally Posted by GTM 3442 View Post
    But we only get to line up for a share of 500m
    When you say we are you talking about bond holders as well as SH? I might have missed something in the ann. but the only reference I noticed was "eligible" SH. In any event limited to $15k and not sure if NZ holders in the mix.

  14. #34
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    Australian and NZ shareholders qualify. Not bond holders. But as the current SP is below the SPP price is doesn't look as if the SPP will be rushed. Unless things change, of course.

  15. #35
    CEO Butch Analytics Ltd winner69's Avatar
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    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
    Last edited by winner69; 12-02-2016 at 08:12 PM.
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  16. #36
    ShareTrader Legend Beagle's Avatar
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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
    This is absolutely crazy. Do people not realise that as a Tier 2 capital note these in tandem with shares are first cab off the rank when it comes to the Reserve Bank's open bank resolution ?
    Are people unaware that the ANZ bank has had the sharpest fall in its ordinary SP of any of the major Aussie banks and that they have MASSIVE exposure to the mining and dairy sectors with many of their customers unable to pay their bills ?

    I thought these things were stupid at the issue price...at 4% that is a completely ludicrous situation IMO most especially in light of what is a pretty serious correction in banking shares globally. Have grannies and orphans really had the risk explained to them properly ????? or is this the next Credit Sails situation where people sue the bank for misrepresenting the risks involved ?
    Last edited by Beagle; 14-02-2016 at 07:08 PM.
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  17. #37
    Advanced Member BIRMANBOY's Avatar
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    It would appear that you have fallen into the trap of assuming that the SP somehow is a valid indicator of a company's worth and viability and then further compounded this by making a grandiose statement "that they have MASSIVE exposure to the mining and dairy sectors with many of their customers unable to pay their bills ?".. what's the question mark for? Not quite sure of the facts so covering your nether regions? "MASSIVE" implies a dangerously large amount...where are you getting that information from? Or is it a hypothetical adjective based on your assumption that (A) mining sector has been suffering generally so therefore a majority of this sector are at the bankruptcy level...and /or (B) that the ANZ is more affected by this than Westpac or ASB etc. AND that if this is the case that they have somehow managed to hide this from everybody...except you of course. LOL A lot of stocks and shares have had their SP drop...this happens all the time and is normal. Why is it normal? Because people of similar ilk jump on and off based on emotion and the latest market sentiment. Seen it all before and no doubt will see it all again. If holders of these bonds knew anything they would be selling...appears not...so falls upon you to warn us all. Thanks. If you could back up your statement with some cold hard evidence would certainly be interested but hyperbole and panic doesn't convince me.
    Quote Originally Posted by Roger View Post
    This is absolutely crazy. Do people not realise that as a Tier 2 capital note these in tandem with shares are first cab off the rank when it comes to the Reserve Bank's open bank resolution ?
    Are people unaware that the ANZ bank has had the sharpest fall in its ordinary SP of any of the major Aussie banks and that they have MASSIVE exposure to the mining and dairy sectors with many of their customers unable to pay their bills ?

    I thought these things were stupid at the issue price...at 4% that is a completely ludicrous situation IMO most especially in light of what is a pretty serious correction in banking shares globally. Have grannies and orphans really had the risk explained to them properly ????? or is this the next Credit Sails situation where people sue the bank for misrepresenting the risks involved ?
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  18. #38
    CEO Butch Analytics Ltd winner69's Avatar
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    Quote Originally Posted by BIRMANBOY View Post
    It would appear that you have fallen into the trap of assuming that the SP somehow is a valid indicator of a company's worth and viability and then further compounded this by making a grandiose statement "that they have MASSIVE exposure to the mining and dairy sectors with many of their customers unable to pay their bills ?".. what's the question mark for? Not quite sure of the facts so covering your nether regions? "MASSIVE" implies a dangerously large amount...where are you getting that information from? Or is it a hypothetical adjective based on your assumption that (A) mining sector has been suffering generally so therefore a majority of this sector are at the bankruptcy level...and /or (B) that the ANZ is more affected by this than Westpac or ASB etc. AND that if this is the case that they have somehow managed to hide this from everybody...except you of course. LOL A lot of stocks and shares have had their SP drop...this happens all the time and is normal. Why is it normal? Because people of similar ilk jump on and off based on emotion and the latest market sentiment. Seen it all before and no doubt will see it all again. If holders of these bonds knew anything they would be selling...appears not...so falls upon you to warn us all. Thanks. If you could back up your statement with some cold hard evidence would certainly be interested but hyperbole and panic doesn't convince me.
    Hi Birman - woken up from your nap - good for cats to snooze through a warm lazy summer?

    Suppose if ANZ have suspended your interest payments and you have become the proud owner of tens of thousands of cheap ANZ shares we ALL will have many other things on our mind.

    But why worry as Mark Knopfler said there should be sunshine after rain / these things have always been the same / so why worry now
    Last edited by winner69; 15-02-2016 at 08:21 AM.
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  19. #39
    Advanced Member BIRMANBOY's Avatar
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    Hah....I'm sure Roger would say that "Dire Straits" is a most appropriate choice. I'll go for Cream, (I like full fat dairy after all) and "the sunshine of your love"..snooze away.
    Quote Originally Posted by winner69 View Post
    Hi Birman - woken up from your nap - good for cats to snooze through a warm lazy summer?

    Suppose if ANZ have suspended your interest payments and you have become the proud owner of tens of thousands of cheap ANZ shares we ALL will have many other things on our mind.

    But why worry as Mark Knopfler said there should be sunshine after rain / these things have always been the same / so why worry now
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  20. #40
    ShareTrader Legend Beagle's Avatar
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    I haven't got the time like Snoopy does but it seems quite obvious from ANZ's significantly more serious decline in SP relative to the other Australasian banks the market is concerned by questions about their asset quality. If people are silly enough to continue to hold these capital instruments when they could book a capital gain and get out then good luck to them.
    I was actually thinking Dire Straits...Money for Nothing and..well you know the rest of the title, probably too sexist in these politically correct days.
    Last edited by Beagle; 15-02-2016 at 11:02 AM.
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