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  1. #31
    Speedy Az winner69's Avatar
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    Good to see NZF innovating Emunerate but don't you get the heebie greebies when the same things that essentially caused the GFC seem to be coming back into favour big time .... even reports today that Wachovia are back in the market with RMBSs

    The rating agencies got heaps of flack about how they rated these things and things don't seem to have changed much.

    The top tiers of the NZF issue are rated AAA. The profile of the underlying mortgages looks impressive with numbers like weighted average LVR of 73% suggesting pretty safe etc .... but then again 42% of them are low documentation loans .... hardly highly rated securities .... but when you bundle them up hey presto the ratings agency give them a AAA rating

    Yep and just the circus of a few years ago all these things are insured as well ..... and just maybe there are heaps of other derivates driven from the same pool of mortgages and bonds. No doubt many prepared to take the extra few points of returns

    At least NZF as the originator get the money up front so prob OK for them

  2. #32
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    There are major differences between the US RMBS market and the Australia/New Zealand markets.

    - there is a limitation in liability to the security asset, in the US - in NZ, you can be bankrupted
    - "low doc loans" in NZ/Australian parlance means loans to the self employed who "auto certify" their income stream; in the US "low doc loans" means the person has pulse ... maybe
    - this is loan syndication up - to banks and financial institutions; the US case was syndication down to the wider finance sector.

    As you point out, the risk is now with the purchasers, not NZF. However, this is not a "stitching up" exercise. I think this may be the way NZF as a "packager" and "enabler" of prime, first mortgage loans raises the capital to fund those loans. It seems like a sustainable and profitable business, to me.

    All this simply justifies, in my mind, that the NZF010s, at 60%, are too cheap.
    Last edited by Enumerate; 18-06-2010 at 09:50 PM.
    Do not consider my postings as investment advice. I am here to share research and to speculate on what might be. The boundary between fact and conjecture might not always be clear - best to treat all comments as speculation.

  3. #33
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    Quote Originally Posted by winner69 View Post
    Good to see NZF innovating Emunerate but don't you get the heebie greebies when the same things that essentially caused the GFC seem to be coming back into favour big time .... even reports today that Wachovia are back in the market with RMBSs

    The rating agencies got heaps of flack about how they rated these things and things don't seem to have changed much.

    The top tiers of the NZF issue are rated AAA. The profile of the underlying mortgages looks impressive with numbers like weighted average LVR of 73% suggesting pretty safe etc .... but then again 42% of them are low documentation loans .... hardly highly rated securities .... but when you bundle them up hey presto the ratings agency give them a AAA rating

    Yep and just the circus of a few years ago all these things are insured as well ..... and just maybe there are heaps of other derivates driven from the same pool of mortgages and bonds. No doubt many prepared to take the extra few points of returns

    At least NZF as the originator get the money up front so prob OK for them
    Winner 69

    NZF have not done low doc for a very long time however, as you point out, they are insured (insured by GE) so thats why they get an AAA rating. GE are still insuring new home loans for NZF and QBE also (not Tower as I mentioned in an earlier post).

  4. #34
    Legend minimoke's Avatar
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    You pop away for a while and some things change - while others don't. Hopefully Enumerate is still around as I'm a bit lost on where to post yesterdays events. NZF Sp takes a 50% hit down to an all time low of $0.10. Enumerate and I couldn't see eye-to-eye on Peter Huljich in the Huljich Wealth Management Thread but yesterdays news once again touches the Kiwisaver thread as wells as the SCF and the ALF/ANF threads. It also touches the Local Body election thread - whose voting for John Banks, Director of Huljich and significant holder of NZF (or at least they were when I last looked)?

  5. #35
    Legend minimoke's Avatar
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    Nothing like a bit of market manipulation. Just a single $400 trade today to drive the SP back up 100% to $0.20!

  6. #36
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    Quote Originally Posted by minimoke View Post
    Nothing like a bit of market manipulation. Just a single $400 trade today to drive the SP back up 100% to $0.20!
    I wouldn't worry about it - just work out what you think it is worth, and how much you want in your portfolio, and buy or sell accordingly.

    Most serious traders don't take any notice of such movements when there is no depth / liquidity in a given security.

    Alan.

  7. #37
    Legend minimoke's Avatar
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    Quote Originally Posted by Alan3285 View Post
    Most serious traders don't take any notice of such movements when there is no depth / liquidity in a given security.

    Alan.
    I'm inclined to agree - I'm not too sure there are too many people interested in this stock - as evidenced by its depth. However where the SP does become important is where a Kiwisaver fund has a substantial holding of a particular stock. The value of that stock will make a real difference to how that KiwiSaver fund reports its portfolio management. And we know that fund performance is then used in the marketing collateral. A $400 investment to double the value of a fund holding is money well spent - unless you are an investor in a Kiwsaver fund which is based on such manipulations.

  8. #38
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    Quote Originally Posted by minimoke View Post
    I'm inclined to agree - I'm not too sure there are too many people interested in this stock - as evidenced by its depth. However where the SP does become important is where a Kiwisaver fund has a substantial holding of a particular stock. The value of that stock will make a real difference to how that KiwiSaver fund reports its portfolio management. And we know that fund performance is then used in the marketing collateral. A $400 investment to double the value of a fund holding is money well spent - unless you are an investor in a Kiwsaver fund which is based on such manipulations.
    Not something I had considered!

    Alan.

  9. #39
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    To the contrary, there is quite a bit of interest in this stock, a lot of watchers waiting on some of the moves in progress to materialise, such as: AGM 22/09/2010 - "The Mike Pero brand continues to be strong in the market place which has
    insured that they have been able to maintain its market leader position. A
    number of new opportunities are being looked at to increase its presence in
    the property sector in New Zealand." Also, expecting another RMBS issue soon and launch of their insurance products!

  10. #40
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    NZF’s liquidity risk on mend with RMBS issues
    The collapse of some big finance companies recently has been an eye-opener for NZF Group which is now seeking to further reduce its reliance on debenture funding in favour of funding sources like Residential Mortgage Backed Securities.

    Tuesday, 5 October 2010
    by Sophia Rodrigues

    Such a source will not only provide the group with a cheaper source of funding, but moderate the asset-liability mismatches on its books by aligning the maturity profile of the funding with the company's loans.



    NZF recently raised $100 million via RMBS issue, earning the distinction of being the first financial institution making the issue since the global financial crisis. The company is now in the process of making another such issue but wouldn't indicate how soon that would be.

    NZF used proceeds from the RMBS issue to repay the amount drawn against the term loan facility with Westpac and the balance now stands at around $106 million from $194 million back in March. Westpac has retained the total facility at $225 million and extended the term to October next year.

    Meanwhile, NZF has also reduced its reliance on debentures with such funding making up only 15.3% of the group's borrowing from around 22% in March.

    As of March, the mismatch in NZF's asset-liability profile was stark with loans over five year-term as per contractual maturity comprising of 62% of total loans taken on an undiscounted cash flow basis. On the other hand, only about 18% are due within one year.

    On the funding side, nearly 95% of the funding was due within a year, including the entire term loan facility from Westpac, $20 million of secured notes that are due in February and a majority of debentures.

    The RMBS issue would have alleviated this mismatch to some extent and with more such issues planned a further easing in the liquidity risk on the books may be on the cards.

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