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  1. #21
    Join Date
    Jun 2004
    , , New Zealand.


    Quote Originally Posted by peat View Post
    Its worked pretty well I would've thought , capital gains, no failures (that I can think of) .
    With interest rates falling the capital value of any existing bond will rise. That is indisputable. It follows that in a climate of falling interest rates that most bondholders experiences will have been positive.

    However, I think it is a false belief to rely on this 'experience' and suggest that in a future climbing interest rate market, that most bond holders experiences will be positive. Many companies that issue bonds know this and have built in a future 'reset to market rates' clause at some time in the medium term future. That will stop the value of those bonds absolutely tanking as interest rates go up.

    Last edited by Snoopy; 12-09-2017 at 05:31 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...


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