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  1. #61
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    Quote Originally Posted by couta1 View Post
    Rate reset to 7.95% for the year with dividends fully imputed, looking forward may be near 9% next year.
    Finally. It has been a long road waiting for interest rates to return to an upward cycle.

  2. #62
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    Quote Originally Posted by couta1 View Post
    Rate reset to 7.95% for the year with dividends fully imputed, looking forward may be near 9% next year.
    I guess the biggest risk around this is that they will be re-purchased at $1 each or exchanged for shares in Downer (2.5% discount) on some future dividend payment date? At least that is the way I read the prospectus (pages 37 & 50).

    As interest rates rise, they would surely have to think about doing so??

  3. #63
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    Yes, that's how I read it, Lizard. As with all these redeemable/convertible instruments the terms are heavily in favour of the issuer.

    In retrospect, I guess we were always going to be on a hiding to very little by investing in them.


  4. #64
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    To buy them back they have to come up with cash which is probably difficult for most companies since they tend to have their capital working not sitting. Also as rates rise not only do they pay out more but also it would cost them more to borrow so not so clear cut. If they were on to it they would have been buying them back on market when they were selling at a discount...however I don't recall any notification of this happening. However since I was fortunate to get in at 7210 its an excellent return on my capital. I haven't read the prospectus (lazy boy) but conversion to Downer shares would be possibility if I had to hazard a guess. I can see it running a while yet though. All depends on other finance options available globally.
    Quote Originally Posted by Lizard View Post
    I guess the biggest risk around this is that they will be re-purchased at $1 each or exchanged for shares in Downer (2.5% discount) on some future dividend payment date? At least that is the way I read the prospectus (pages 37 & 50).

    As interest rates rise, they would surely have to think about doing so??
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  5. #65
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    New dividend rate from 30 June is 7.21% fully imputed. Pretty competitive in current low interest environment. Bought more during the year so happy with that decision.

  6. #66
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    Hah this has to be one of the least posted investments KT..I see I made a post one year ago so here is my annual post for the year.. Wish I had bought more... What can you say...good return and capital growth. Might drop a bit with interest rates dropping but still double digits for me. See you next year.
    Quote Originally Posted by kiwitrev View Post
    New dividend rate from 30 June is 7.21% fully imputed. Pretty competitive in current low interest environment. Bought more during the year so happy with that decision.
    www.dividendyield.co.nz
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  7. #67
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    The formula for reset annually is: One year swap rate plus step up margin 4.05% so it would appear wherever interest rates are at any time (up or down) this bond (actually a preference share) will always be at a competitve rate to the market norm. Has been trading on the secondary market for some time at around 102 per 100, a small premium to pay.

  8. #68
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    Whoops, time for the annual post on Works...KT I think we are the only holders of this...which means you must have a s***load of these. Still a double digit return annually so still holding. I almost bought some more when it took a bit of a dip but got distracted. Under the radar and still worth looking at with step up margin.
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  9. #69
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    BB, sold these a little while back, to escape the punitive tax deduction. Have a strategy yet to play out-intend to buy IFTHA after NZ$ rate cut. Currently down to 62 per 100 and will probably go lower. Estimate after NZ$ rate cut and IFTHA reset 6.2% real return better net than WKSHA. IFTHA margin 1.5% over 1 yr swap. Only committing new funds to this strategy as best home low interest rates.

  10. #70
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    You mean the posting frequency will go down to one per year (if I remember)? Good luck with your new strategy.. I looked at these IFTHA some time ago but already had 3 other IFT so decided no. Not much of a margin???? Swap rates could go lower yet. If you are putting money on a mortgage that's good use of course.
    Quote Originally Posted by kiwitrev View Post
    BB, sold these a little while back, to escape the punitive tax deduction. Have a strategy yet to play out-intend to buy IFTHA after NZ$ rate cut. Currently down to 62 per 100 and will probably go lower. Estimate after NZ$ rate cut and IFTHA reset 6.2% real return better net than WKSHA. IFTHA margin 1.5% over 1 yr swap. Only committing new funds to this strategy as best home low interest rates.
    www.dividendyield.co.nz
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  11. #71
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    Quote Originally Posted by BIRMANBOY View Post
    You mean the posting frequency will go down to one per year (if I remember)? Good luck with your new strategy.. I looked at these IFTHA some time ago but already had 3 other IFT so decided no. Not much of a margin???? Swap rates could go lower yet. If you are putting money on a mortgage that's good use of course.
    IFTHA are one of the inflation hedge components of my bond portfolio. I haven't bought any over 60c. The yield has been remarkable over the past few years.

    I wouldn't like to have bought them at issue, or in the past two years though. . .

  12. #72
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    Yes another one of those situations where its WHEN you buy that really matters. I try and point that out to my partner ..."remember how handsome I was when I was younger...just keep that as your focus". Unfortunately she doesn't appreciate that holistic outlook, and seems to prefer the "here and now". Such a waste. BB quote in Confucious style. Whether an investment is a dog or a darling is quite often only revealed by the passage of time and unfortunately there is a lot more of time in front of us than behind us. (although in my case that ratio is unfortunately not true). I see IFTHA is now trading at 6005 and has taken a tumble from 7420 in Feb. I wonder if it will go down to 54 odd. I guess KT is waiting for some bottom trawling. Will you buy in again?
    Quote Originally Posted by GTM 3442 View Post
    IFTHA are one of the inflation hedge components of my bond portfolio. I haven't bought any over 60c. The yield has been remarkable over the past few years.

    I wouldn't like to have bought them at issue, or in the past two years though. . .
    www.dividendyield.co.nz
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  13. #73
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    I'll be quite happy to pick up some more if they go much lower. I haven't bought for a while due to price, but been happy to sit on what I have as GTM3442 says, the return has been very good if you bought at the right time. Of course selling when they were in the 70's would have been clever too.
    I've been buying ASBPB lately........not near as cheaply as in the past, but I'm hoping for a repurchase by ASB in the next few years to give a very healthy overall return.

  14. #74
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    I will buy in under 60c, but not many, as I already have almost as many as the plan calls for.

    And as I can't see inflation being an issue for the next five years or so (famous last words?) I'm quite happy to wait for the price to fall (under 60c is good, low 50s better).

    Selling at 75c would have been nice, but what would I have done with the money? What else was available in the way of inflation-hedged fixed interest to match IFTHA at a sub-60c price?

    So selling would have been a 50% profit in the hand at the expense of future profit, and would have left a hole in the asset allocation model.

  15. #75
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    [QUOTESo selling would have been a 50% profit in the hand at the expense of future profit, and would have left a hole in the asset allocation model. ][/QUOTE]

    I know that many experts place a lot of emphasis on maintaining asset allocations fairly rigidly but I take a much more relaxed attitude to the subject. If something should be sold - or bought - I tend to do so - and hope to sort things out at a later date!


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