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 Originally Posted by peat
VCT080.NZ - VCT 15/06/22 5.70% Vector Limited Bonds
These are capital bonds and so... they don't actually have to pay you back for 'kin ages. maybe never, not sure. Attachment 11136
I was just looking on the NZDX as I have been reading people's views and the idea we are going into a recession that may have a downward effect on equity and house prices which will cause central banks to reduce/suppress interest rates again.
Yields on bonds are currently better than dividend yields and if interest rates are expected to fall then on the secondary market, bond prices might rise as yields fall.
Looking at the list
https://www.nzx.com/markets/NZDX
For example Mercury MCY020 7.3% for a "Capital Bond" described as "structured debt". I assume this means like the Vector ones above they are perpetual but redeemable if it suits the borrower. It must be sh*t if the bond yield is twice the dividend yield. Looking at the depth and volume on the ASB securities site, someone small like me might get out again. No idea of minimum investments or fees for buying and selling on the secondary market.
Best to give ASB Securities a ring I suppose
Where would you go to read the original loan/bond agreement? Mercury must have a copy but does the NZDX have these on file somewhere?
The bond market is not very optimistic on Synlait I see 15% yield. Maybe that is an opportunity maturing next year Dec 2024 described as a "Vanilla Corporate Bond" (again it would be good to see the agreement or at least some experts summary of one).
The sale of all the stainless steel might cover the bondholders even if all the shareholders get wiped out.
Just interested if anyone actively buying/trading the NZDX and any advice for a newbie. Probably should have posted this in the newbies section.
Last edited by Aaron; 12-05-2023 at 09:39 AM.
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Originally Posted by mcdongle
Now you are making me look stupid.
I see only 75 pages of legible writing to get through so will make the effort.
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As for Synlait.... Who knows what is actually going on there.
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MCY020 The Final Terms sheet was a much better summary, I looked at the trust deed initially which is between Mercury and Guardian Trust so did not read.
A 2049 maturity. The idea to buy yield now in expectation of a financial market crash in the next few years and rates back down to zero. Sounds easy but gets scary if you get locked in to the long term maturities especially if credit markets and liquidity freeze up, capital will be tied up. Although if the volume on the NZDX list is daily a small fry like me might not have a problem.
https://www.nzx.com/markets/NZDX
Bought IPL010 yesterday at 7% as there was a small amount on offer and it matures next year.
The idea requires long term maturities but thought I would go through the process and maybe learn some ins and out. e.g. 21,000 on offer for a brief second when the broker said $98 dollars a unit I panicked as I was suddenly not sure if I was buying $20,580 or $2mill (21,000 * $98). Also brokerage of .07% with a minimum $35. I assumed anything less than $50,000 was $35 (35/.0007) but now not sure I had the decimal point in the right place fees likely to be $144 and minimum trade $5,000 not $50,000.
You live and learn.
Admittedly "share trader" site but wondered if anyone taking a punt on longer dated bonds assuming interest rates have peaked.
Last edited by Aaron; 13-05-2023 at 04:47 PM.
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ABB080 Is one i have been looking at. Not bought yet though.
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You can use the Direct Broking bond calculator at https://www.directbroking.co.nz/dire.../bondcalc.aspx to get an idea of pricing.
Fees/Commissions ex Jardens:
New Zealand listed and unlisted debt securities
Greater of NZ$30.00 per trade or 0.50% of trade value up to NZ$50,000
For trades with a trade value exceeding NZ$50,000, 0.50% for the first NZ$50,000;
plus 0.35% for the portion of the trade value exceeding NZ$50,000
Last edited by GTM 3442; 14-05-2023 at 02:24 PM.
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Originally Posted by GTM 3442
You can use the Direct Broking bond calculator at https://www.directbroking.co.nz/dire.../bondcalc.aspx to get an idea of pricing.
Fees/Commissions ex Jardens:
New Zealand listed and unlisted debt securities
Greater of NZ$30.00 per trade or 0.50% of trade value up to NZ$50,000
For trades with a trade value exceeding NZ$50,000, 0.50% for the first NZ$50,000;
plus 0.35% for the portion of the trade value exceeding NZ$50,000
ASB Securities .7%, I was going to say as an online broker who does not give recommendations I would have thought ASB would be cheaper, but you do have to call them to do the trade.
ABB080, I guess the only requirement for bonds is if the company can refinance at maturity and pay you out and that they are not overleveraged and could go bankrupt. Not sure how you check on the viability of a bank. Obviously some issues in the States but maybe not in NZ. So few banks.
IPL010 was an impulse buy but they lease to countdown and proved pandemic proof so assume they will be recession proof as well. Yield was also over my minimum hurdle rate of 7%. That was my hurdle rate for more risky equity securities not so long ago so just proves I am all over the place.
Do you know what are the main ratios or z scores to check for company viability. Interest times covered, Debt to Equity etc. should be a lot less work for bond buyers compared to equity buyers I would have thought.
P.s. couple of additional thoughts do the NZX companies or their bonds get rated by a credit rating agency and if so how do you check this?
Is there an ASXDX list like the NZXDX one.
Finally I should take this to the newbies thread as it has nothing to do with Vector Bonds.
Last edited by Aaron; 15-05-2023 at 09:12 AM.
Reason: extra thoughts
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Last edited by GTM 3442; 15-05-2023 at 01:37 PM.
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