sharetrader
Results 1 to 5 of 5
  1. #1
    Member
    Join Date
    May 2007
    Location
    Auckland, , New Zealand.
    Posts
    468

    Default CNU010 Being Repaid this Week

    Thursday (6/5/21) sees $400 million being repaid.
    With bonds/fixed interest returns being so low, I guess a lot of this money will find its way into the share market.
    Are we going to see some price rises due to this, or have people been buying already, waiting for the Chorus repayment to then top up their emergency/floating cash reserves?

  2. #2
    Member
    Join Date
    May 2007
    Location
    Auckland, , New Zealand.
    Posts
    468

    Default

    And Wellington Airport repay some of their bonds on the 15th of this month too.

  3. #3
    On the doghouse
    Join Date
    Jun 2004
    Location
    , , New Zealand.
    Posts
    7,617

    Default

    Quote Originally Posted by Grimy View Post
    Thursday (6/5/21) sees $400 million being repaid.
    With bonds/fixed interest returns being so low, I guess a lot of this money will find its way into the share market.
    Are we going to see some price rises due to this, or have people been buying already, waiting for the Chorus repayment to then top up their emergency/floating cash reserves?
    In December 2020 Chorus issued two new bonds:

    1/ CNU030 7 year bonds: $200m with a coupon rate of 1.98%
    2/ CNU040 10 year bonds: $200m with a coupon rate of 2.51%

    At the time it was made known that these two bonds would replace the $400m of CNU010 4.12% bonds, due to mature on Thursday 6th May. So I think it is a fair bet that institutional investors would have known well in advance of the situation and reinvested accordingly.

    It is interesting to see that CNU030 last traded at an interest rate of 2.1% and CNU040 last traded at an interest rate 2.6%. This means foundation bondholders will be suffering a modest capital loss.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  4. #4
    Advanced Member
    Join Date
    Apr 2008
    Location
    Kerikeri
    Posts
    1,756

    Default

    Quote Originally Posted by Snoopy View Post
    In December 2020 Chorus issued two new bonds:

    1/ CNU030 7 year bonds: $200m with a coupon rate of 1.98%
    2/ CNU040 10 year bonds: $200m with a coupon rate of 2.51%

    At the time it was made known that these two bonds would replace the $400m of CNU010 4.12% bonds, due to mature on Thursday 6th May. So I think it is a fair bet that institutional investors would have known well in advance of the situation and reinvested accordingly.

    It is interesting to see that CNU030 last traded at an interest rate of 2.1% and CNU040 last traded at an interest rate 2.6%. This means foundation bondholders will be suffering a modest capital loss.

    SNOOPY
    "This means foundation bondholders will be suffering a modest capital loss".....if they chose to sell...right ?
    I hold a few bonds including the above mentioned Chorus one; the interest rates have been great so I have held until they have been paid back. Very sad about that !

  5. #5
    On the doghouse
    Join Date
    Jun 2004
    Location
    , , New Zealand.
    Posts
    7,617

    Default

    Quote Originally Posted by RTM View Post
    "This means foundation bondholders will be suffering a modest capital loss".....if they chose to sell...right ?
    I hold a few bonds including the above mentioned Chorus one; the interest rates have been great so I have held until they have been paid back. Very sad about that !
    It depends how you look at things. If as a foundation bond holder, you hold your CNU030 and CNU040 bonds until they mature, then -yes- you will get all your capital back. However your 'penalty' for doing this is that you will be earning less interest than you otherwise would, buying an equivalent term and rated bond on the market today. So you have a Hobson's choice with your CNU030 and CNU040 bonds..

    1/ Sell at a loss and reinvest your money in equivalent bonds at market interest rates.
    2/ Do not sell and suffer a below market interest rate return for the life of the bonds.

    Generally the market prices things so that whether you choose 1/ or 2/, you will still end up with the same cash in hand by the time these bonds, or equivalent bonds mature.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •