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  1. #1
    Senior Member
    Join Date
    May 2007
    Location
    Auckland, , New Zealand.
    Posts
    830

    Default Mercury MCY020 Reset

    The Mercury MCY020 Capital Bond is coming up to its first reset date of 11/7/24.
    Will they reset the interest rate (presently 3.6%), or will they repay?
    These have a maturity date of 2049 but can be repaid at each (5 yearly) reset date.

    Looking through the terms, the reset will be (unless I've read something incorrectly-which is quite possible), the benchmark interest rate at the date of reset, plus a margin of 2.1%, pus a step-up margin of 0.25%
    5.5% + 2.1% + 0.25% = 7.85%

    If that is the rate (or thereabouts), I'll be happy enough to continue holding.
    If they repay, I'll be equally happy, as that will give me something to deploy to equities.
    Either way it'll be nice to move up from the current 3.6%.....

  2. #2
    Senior Member
    Join Date
    May 2007
    Location
    Auckland, , New Zealand.
    Posts
    830

    Default

    Before Mercury were Mercury, they were Mighty River Power (MRP) and in July 2014 they issued capital bonds - which became MCY010 when they changed the company name to Mercury.
    These bonds had a maturity date of 11/7/2044 at a 6.9% rate and had a 5-yearly reset date - or repayment, at Mercury's discretion.
    They decided to repay holders at the first reset date (July 2019) and then immediately issued the MCY020 bond at the 3.6% rate.
    Depending on the type of bond and how they are treated in accounting terms, these bonds are often repaid at the 1st reset date. Whether this will be the case with these I don't know (I suspect it is, going by the repayment of the MCY010 bonds). But if they are to be repaid, we should know before too long.

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