Kiwibank Perpetual Preference Shares

[Jenny Ruth]

Hi all. New Zealand's Treasury is advising the government on options for providing the government-owned bank to allow it to compete more effectively against the big four Australian-owned banks dubbed by the competition watchdog as an "oligopoly." It's worrying that Treasury can't get its dates straight.
https://justthebusinessjennyruth.substack.com/

[Nor]

I seem to have noticed suggestions here and there that those who have put their money into bonds in anticipation of rates falling have made a mistake, but can't put my finger on any. Something to do with Trump maybe winning.

[stoploss]

I seem to have noticed suggestions here and there that those who have put their money into bonds in anticipation of rates falling have made a mistake, but can't put my finger on any. Something to do with Trump maybe winning.

The market has already priced this with US debt up .5% since the last FOMC cut ......

[Nor]

How will this affect us? Does US rates rising in response to more debt lead to lower NZ dollar leading to increasing NZ rates to compensate ie a new reason for rate rise here. A quite possible scenario I suppose but not likely I've hit upon it.

[Lego_Man]

I seem to have noticed suggestions here and there that those who have put their money into bonds in anticipation of rates falling have made a mistake, but can't put my finger on any. Something to do with Trump maybe winning.

With these higher yield bonds you are somewhat insulated from adverse interest rate moves. In technical jargon, the higher interest rate gives the bond "lower duration" because you are getting paid more cash on the way through that you can reinvest at the new prevailing interest rate.

The credit margin of 370bps on the Kiwibank issue will shrink significantly on secondary trading, supporting the price. It would take a big spike in yields for these to trade much below par IMO, and a lot of the Trump dynamic has already been priced in by markets.

[Grimy]

Agreed. I don't think holders of any of the recent PPS issues have anything to lose sleep over.