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Junior Member
Kiwibank Perpetual Preference Shares
Any views on how this looks compared to other banks?
Anything different to those issued by ANZ or other banks for example?
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I don't see it as any different to the other banks PPS.
Details can be found on Chris Lee's website https://www.chrislee.co.nz/current-investments
If I needed any more of this type of investment I'd be in, but all my spare cash is being saved to exercise the BRM warrants.....
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275M taken and rate set at 7.38%
I bought a few…surprised I could get this rate when earlier preference issues this year have all been 7.3 ANZ and dropping 7.1 westpac
Might have had to give us punters a bigger margin above swap rate as this business has “kiwi” in it…higher risk than Ozzie banks lol.
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Originally Posted by Perky
275M taken and rate set at 7.38%
I bought a few…surprised I could get this rate when earlier preference issues this year have all been 7.3 ANZ and dropping 7.1 westpac
Might have had to give us punters a bigger margin above swap rate as this business has “kiwi” in it…higher risk than Ozzie banks lol.
US Long dated wholesale rates backed up a bit from when those others were done ....
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The best 5yr TD deposit rate is 4.5% and dropping like a stone.
I’ve been emptying my bank of old 1yr TD rates at around 6.5% as they expire and spreading around some of these bank preference shares.
Not without risk but if you buy at issue time no brokerage to buy so just 1 sell cost to absorb.
So my strategy is to use these instead of TD and just sell them when I see an equity opportunity I would prefer
I hold small amount across all the bank issues plus some QHLA and IFTHC
Rates I have are 7.78, 7.38 ,7.30, 7.28, 7.1 so not a bad average for 5yrs if you hold that long.
QHLA a bit lower interest rate 6.64 but I bought at 0.88 so well under par.
I reckon pretty low risk next couple of years as interest rates drop.
Might get bitten on the bum if hold too long and not sure of the liquidity….i guess I might find out soon.
Last edited by Perky; 17-10-2024 at 01:25 PM.
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Originally Posted by Perky
The best 5yr TD deposit rate is 4.5% and dropping like a stone.
I’ve been emptying my bank of old 1yr TD rates at around 6.5% as they expire and spreading around some of these bank preference shares.
Not without risk but if you buy at issue time no brokerage to buy so just 1 sell cost to absorb.
So my strategy is to use these instead of TD and just sell them when I see an equity opportunity I would prefer
I hold small amount across all the bank issues plus some QHLA and IFTHC
Rates I have are 7.78, 7.38 ,7.30, 7.28, 7.1 so not a bad average for 5yrs if you hold that long.
QHLA a bit lower interest rate 6.64 but I bought at 0.88 so well under par.
I reckon pretty low risk next couple of years as interest rates drop.
Might get bitten on the bum if hold too long and not sure of the liquidity….i guess I might find out soon.
I think you've got a great strategy, these instruments are very good value in terms of interest rate. Buying the new issues works really well because they tend to trade at a premium once listed, so you effectively get a double whammy tailwind which juices up your return assuming you sell before maturity.
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Yeah , all the new issues are up 1.5. -2% capital gain in a few months.
You seem pretty knowledgeable in this space Lego man….you got any other good ideas to park cash in a declining rate environment rather than a bank?
The other place I considered was just throwing it all in my Milford diversified fund and withdrawing some cash as needed.
That fund was a bit flat but come to life in last year and returning 13% on 1 yr which is quite a bit above long run performance around 9% so will probably normalise soon.
Last edited by Perky; 17-10-2024 at 02:04 PM.
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I have a similar strategy to Perky. This past 6 months or so I have been migrating my maturing term deposits into new bond and preference issues. Also I have been increasing my on-call balances to have funds available for new fixed interest or equity opportunities. This strategy is not without increased risk compared with keeping the funds in big Aussie Bank term deposits.
Also I have doubled the contributions to my Milford KiwiSaver (although it will be 10 years until I will be able to access those funds.)
Last edited by Bjauck; 17-10-2024 at 04:49 PM.
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Good info above, thankyou. I bought some of these, I figured IR on the down for the next year or so & therefore hopefully get small capital again + nice yield vs TDs. Surely there wont be to many more 7+% offers...
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Trading 1.5-2% up, always a bonus
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