MET - Metlifecare - one for the fundies?

[Balance]

Not sure where you got that info from?

https://www.rbnz.govt.nz/news/2020/0...-nz-govt-bonds

The $30b is a RBNZ LSAP programme of New Zealand government bonds.

That’s how QE works.

[Arbroath]

Yes, but the RBNZ LSAP is NZ Govt Bonds only, varying maturities over the next 12 months - different from the QE that you are referring to where central banks buy other financial assets from commercial banks and other financial institutions.

I think youre both on the slightly wrong track here. the RBNZ LSAP is about ensuring that the Government can issue large amounts of bonds which they know is coming without significantly increasing the cost of borrowing. The objective is to keep NZ Govt bond yields low which in time flows through to investment grade corporate bonds also. They are not targeting the private banks here. It is all about the Government being able to borrow large to fund spending which is trying to replace the destruction in the economy.

[Balance]

You are right it secondary market purchases, but as you say, the point is largely to enable the government to borrow and spend. My point was that this is not QE as Balance was referring to.

https://www.reuters.com/article/us-n...-idUSKBN21914G

https://www.bloomberg.com/news/artic...upport-economy

Guess the experts out there do not understand QE either.

[Arbroath]

https://www.reuters.com/article/us-n...-idUSKBN21914G

https://www.bloomberg.com/news/artic...upport-economy

Guess the experts out there do not understand QE either.

“The RBNZ is, in effect, stepping up to fund the government,” said Nick Smyth, interest rate strategist at Bank of New Zealand in Wellington. “The QE program will, at the very least, help offset the upward pressure in yields that would have occurred due to the forthcoming increase in issuance.”

Guess the expert is backing up exactly what I said?

[Balance]

“The RBNZ is, in effect, stepping up to fund the government,” said Nick Smyth, interest rate strategist at Bank of New Zealand in Wellington. “The QE program will, at the very least, help offset the upward pressure in yields that would have occurred due to the forthcoming increase in issuance.”

Guess the expert is backing up exactly what I said?

The LSAP is the QE, and the QE is via the LSAP.

[Bjauck]

Much has been made of the Rym: Sum ratio of 2:1. Is there such a thing as a Met:Oca ratio though. I suspect their mix of care/ORAs and income sources may be more dissimilar though.

One year ago MET SP was at $4.79; OCA's was at $1.04 - a ratio of 4.606

Today MET $3.87; OCA $0.86 - a ratio of 4.500

MET at $3.96 would mean the ratio would be the same as 12 months ago. However in the meantime has MET's prospects improved relative to OCA, to justify a greater ratio difference and less of a difference in discount to NTA?

[Beagle]

Much has been made of the Rym: Sum ratio of 2:1. Is there such a thing as a Met:Oca ratio though. I suspect their mix of care/ORAs and income sources may be more dissimilar though.

Totally different business models. You think one of the three parties that expressed interest in taking over MET might still be interested at something a bit less than $7

[bottomfeeder]

Totally different business models. You think one of the three parties that expressed interest in taking over MET might still be interested at something a bit less than $7

Each dollar they can save per share, saves a buyer nearly $200,000,000. 20% less than $7 saves about $280 mill. I will pick that figure, so I see a takeover proceeding at $5.60. Based on that market value will go to $5 very quickly.

[Bjauck]

Totally different business models. You think one of the three parties that expressed interest in taking over MET might still be interested at something a bit less than $7

I guess it depends on how many other alternative opportunities have now opened up around the World.

As the NZ government hunts out taxation revenue sources, how confident should we be that they will not revisit the taxation rulings of retirement village companies? Wealth and capital gains taxes also may no longer be off the table.

Many more uncertainties exist by virtue of the Covid epidemic & the economic consequences. The World has changed since three parties were sniffing around. Will a 20% price drop compared with a year ago be enough to tempt suitors in these vastly changed circumstances?

[Balance]

That’s how QE works.

We know that Balance. But I take you back to your first comment on this when it was suggested that the NZ government is effectively borrowing with RBNZ QE assistance:

"That's principally to free up banks' balance sheets so they can lend more "

Economics 101 - How QE works.

https://www.economicsonline.co.uk/Gl...ve_easing.html

To help unlock liquidity (when a liquidity trap exists) and encourage banks to lend, rounds of QE were embarked upon in the US (QE1 was started in December 2008, and QE2 in June 2011) and UK (QE1 was started in March 2009, and QE2 in October 2011).