IFT: Greenstone Energy bond issue

[peat]

Greenstone Energy Finance Limited is issuing fixed rate senior secured bonds. The bonds offer a coupon of 7.35% and mature on 15 October 2016.


Application has been made to New Zealand Exchange Limited (“NZX”) for permission to list the Greenstone Energy Bonds ... ...and all of the requirements of NZX relating thereto that can be complied with on or before the date of this notice had been duly complied with. However, the Bonds have not yet been approved for trading...

[POSSUM THE CAT]

Peat They are cheapskates considering ANZ is offering 6-75% for a $5000.00 5 year term deposit with interest paid monthly & 12 months govt guarantee

[winner69]

One comment made in the paper the other day said that any time after sometime in 2013 they have the option to buy them back ... the concern was that if interest rates fell and were lower at that time they probably would and refinance at lower rates .... leaving the punter to reinvest in a low interest rate envionment after locking away rtaes for a 5 year period.

The article also pointed out that these were not rated but the promotoers are saying they have done the sums and if they were they would be rated quite high ... but then declined to share their workings so the whole argument about transparency came up.

No dount punters will be swayed with the comfort of names like Shell and NZ Super Fund behind them

[RRR]

In my books, bonds are for the institutions/managed funds. If an individual is investing in bonds, he must be very wealthy and want to diversify risk. It will suit for a large diversified portfolio. We need more and more corporate bonds issuance from stable and profitable institutions and that will lessen the reliance on the big banks and will diversify their debt profile and spread the risk.

[peat]

I've read the investment statement (not the prospectus itself) main points I note are :

they are callable after April 2013 (2.5 years away) for the Principal or the NZDX price (whichever is greater)

Infratil and New Zealand Superannuation Fund will not guarantee the Bonds and are not Guarantors.

NZX ticker code “GEF

Possum The Cat
The Effective Annual rate is still higher for these though clearly ANZ (and Rabo also at 6.85) would be of higher security which is I suppose the point you're making.


Does anyone have any idea about how the secondary market will go with these? Thats an important distinction between these and term deposits , you may be able to sell them.

[peat]

One comment made in the paper the other day said that any time after sometime in 2013 they have the option to buy them back ... the concern was that if interest rates fell and were lower at that time they probably would and refinance at lower rates .... leaving the punter to reinvest in a low interest rate envionment after locking away rtaes for a 5 year period.

yes callable bonds are valued differently
but note the terms - price is based around mkt value

[POSSUM THE CAT]

Peat I want more margin than that for the longer term and that they have the right to duck out early. Also the higher risk. would have to be 8.5% to interest me.

[Beagle]

I've read the investment statement (not the prospectus itself) main points I note are :

they are callable after April 2013 (2.5 years away) for the Principal or the NZDX price (whichever is greater)

Infratil and New Zealand Superannuation Fund will not guarantee the Bonds and are not Guarantors.

NZX ticker code “GEF

Possum The Cat
The Effective Annual rate is still higher for these though clearly ANZ (and Rabo also at 6.85) would be of higher security which is I suppose the point you're making.


Does anyone have any idea about how the secondary market will go with these? Thats an important distinction between these and term deposits , you may be able to sell them.

Peat I think the current yield on Goodman property Trust senior bonds is a reasonable proxy for how these will trade, currently about 6.75%.
IMO there's quite a bit of cash sitting on the sidelines at present so these bonds will have appeal due to ongoing uncertainty due to the GFC.

The other point made regarding Rabobank and other banks term deposits for five years is valid but note, there are signifcant penalties for pulling out of 5 year term deposits with the banks whereas as we all know bonds with a large issuance are readily trade-able.

I think they have been fairly miserly with the rate too, but hey, if I were them I'd do the same in this low interest rate environment.

Investors looking for a better rate and an equity upsaide kicker might want to have a very good look at Kiwi Income Property Convertible Notes KIPGC. Even at $1.07 that's a better rate than this security, has vastly lower gearing on 24% and if KIP shares are trading at or above $1.20 in December 2014 you're in the money.
If they're trading at lower than this, the ordinary shares are issued on conversion at a 2% discount to 20 day VWAP.

[Dubdee]

Tim Brown has just blown both feet off this issue. BB shadow rated but priced as Investment grade and maketed to brokers accordingly. And tim was too mean to pay firm brokerage so watch the salesmen head for the hills

[macduffy]

And tim was too mean to pay firm brokerage so watch the salesmen head for the hills

I don't understand this.

Are you saying that brokers (salesmen) won't receive any commission for acting in this issue?