AIR - Air NZ.

[Beagle]

I know you equities guys won't care too much but I'll be fascinated with how AIR successfully price and sell $600m of debt in the middle of this year. The margin to swap is going to be horrendous.

I reckon Air will close tomorrow evening about $1.14 which is a $0.20 rights price. Then with rights trading it will go down closer to the end of April as people have to front up with coin.

Good point and I have been wondering about the interest rate too. I would think it would need to be at the very minimum 500 basis points above swap to be somewhat attractive but even then, this is a very volatile industry so maybe 600 points ? I guess there is some comfort to be taken in that bond issue from the fact the Govt cannot allow the company to collapse as it provides vital transport infrastructure to the economy so if a second capital raise is required, (and I think that's a very real chance), they will have no choice but to participate and if necessary underwrite it. Maybe 8-9% isn't a bad fixed interest investment ? Certainly the bonds are far more attractive prospect than the shares, there's no question about that !

[Maxtrade]

Astounding how many folk just ignored all logic and supported SP at last months price. It was 100% guaranteed what is taking place today. Plenty of pre warning. Why wait until the news iOS out then take action and sell as we are seeing currently. Market behaviour is foolish and illogical sometimes. Now there will be a race to the bottom. With a couple of pauses and short minor rallies on the fall where hopefuls think a bottom has formed and buy back in, only to see it take another dive. Everyone has their own opinions so best of luck to holders. But newbies might want to consider exiting their positions as this fall is going to be substantial. Still a long way to go from SP 1.26 down to 0.53 Cap Raise price. Thats a huge loss for those heavily invested. Bet the shorts out there this morning and rubbing their hands together. Starting to see sell momentum build currently, touching on 10% drop in an hour soon. Amazing it took this long for people to realise this has been a SELL for so long.

[ordop]

Probably right with 8% and an implicit Govt Guarantee. Depends obviously on subordination so could be a bit less like 7%. This is like a 'ghost plane' - it's going down on fumes but no one knows where or when it's hitting terra firma.

[Beagle]

The sharsies crowd are dancing...What could possibly go wrong, there's no risk here https://www.youtube.com/watch?v=KwxUdT0pMZc

[JohnnyTheHorse]

Sincere apologies to the people I sold a truckload short to on open

[Ggcc]

I am surprised to see one of my friends kept holding onto AIR after I mentioned this would happen. I dare not ask him how he is doing today, as this would rub salt in the wounds. He bought lots around $1.40-1.45.

[Arbroath]

Good point and I have been wondering about the interest rate too. I would think it would need to be at the very minimum 500 basis points above swap to be somewhat attractive but even then, this is a very volatile industry so maybe 600 points ? I guess there is some comfort to be taken in that bond issue from the fact the Govt cannot allow the company to collapse as it provides vital transport infrastructure to the economy so if a second capital raise is required, (and I think that's a very real chance), they will have no choice but to participate and if necessary underwrite it. Maybe 8-9% isn't a bad fixed interest investment ? Certainly the bonds are far more attractive prospect than the shares, there's no question about that !

Theoretically they should be a BBB which is the same as Contact or Meridian etc but somehow I don't think they'll get an issue away anywhere near the spread a power company would...why would any sane person own AIR debt at 4.5% instead of a power company that is also 51% Govt owned with far more stable cashflows.

Need at least 6%+ yield imho given agree the Govt will continue to underwrite the situation

[Beagle]

Theoretically they should be a BBB which is the same as Contact or Meridian etc but somehow I don't think they'll get an issue away anywhere near the spread a power company would...why would any sane person own AIR debt at 4.5% instead of a power company that is also 51% Govt owned with far more stable cashflows.

Need at least 6%+ yield imho given agree the Govt will continue to underwrite the situation

They will have to model it based on the credit spreads other airlines are paying overseas. As you quite rightly suggest there's far more to it than just the official credit rating.

[bull....]

they have to milk the punters to ever pay a good div again with that many shares on issue

[ordop]

In answer to someone's question re a consolidation at some stage. Yes there will be one, almost certainly, but it won't be for a year or so after the share price has settled at a much lower level. Much like SKY TV have done.