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Originally Posted by Dubdee
And tim was too mean to pay firm brokerage so watch the salesmen head for the hills
according to this, they already have (non binding) take up of 75%.
Maybe they are just being smart. They know it will be fully subscribed so why waste money.
My prediction is it will close oversubscribed
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Member
The issue was unrated but great marketing play was made on the road shows that it was right up there with the top corporate credits IE Investment grade. It was priced accordingly. Now Tim is under some pressure has said its Not investment grade which buggers the pricing. And since the 75% interest is non binding its now a much harder sell at the original yield as its Just JUNK
Success is the ability to go from one failure to another with no loss of enthusiasm
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Have retail investors learnt nothing?
Originally Posted by Greenstone Article on Stuff
...by Tuesday the lead managers had received non-binding offers for $150m worth of bonds.
Originally Posted by Tim Brown of Greenstone
Mr Brown... concluded that Standard & Poor's probably would have given the bonds a BB rating – ...often referred to as junk
Clearly not... unrated Junk, pile in for your 7.5% return...
http://www.stuff.co.nz/business/indu...to-judge-issue
~ * ~ De Peones a Reinas ~ * ~
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Given that it is half owned by the Superfund which is owned by the Govt, does it not have the same 'effective' Govt guarantee that Kiwibank has?
We will see if it is oversubscribed.
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Originally Posted by Dubdee
The issue was unrated but great marketing play was made on the road shows that it was right up there with the top corporate credits IE Investment grade. It was priced accordingly. Now Tim is under some pressure has said its Not investment grade which buggers the pricing. And since the 75% interest is non binding its now a much harder sell at the original yield as its Just JUNK
Still doesn't answer my question on the "too mean to pay brokerage" statement.
I've concluded now that you meant "too mean to pay a fee to the rating agencies"?
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Member
Macduffy,
No what I meant is that brokers are paid by issuers to take stock firm; in effect an underwrite. Greenstone wouldnt pay just expecting the stock to walk out the door. Now brokers are just on best endeavours, not committed. Some will certainly walk unless clients beat the doors down
Success is the ability to go from one failure to another with no loss of enthusiasm
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Selected cut and pastes from the article.
Infratil is defending its decision not to seek a credit rating for a major retail bond issue by petrol retailer Greenstone, arguing that the research of the financial institutions pushing the bonds means more than that of a ratings agency.
http://www.stuff.co.nz/business/indu...to-judge-issue
The bonds will carry no credit rating, although investors will rank equally with Greenstone's banks if the company fails.
"Why did the global financial crisis happen? Because guys bought bonds purely on the basis of ratings."
banks such as Westpac which were recommending the bonds to clients – but not directly involved in the issue – had "actually put their money up" lending $100m for the purchase of the Shell assets.
discussions between First NZ and Infratil ahead of the bond issue concluded that Standard & Poor's probably would have given the bonds a BB rating – which is sub-investment grade and often referred to as junk – because of Greenstone's newness. Such a rating would reflect Standard & Poor's formulas
He denied Infratil had decided not to seek a rating because it didn't want the answer it expected to get. "It's not so much that, as the value we were going to extract for the cost of north of $100,000 a year to get the rating done."
For clarity, nothing I say is advice....
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Originally Posted by Dubdee
Macduffy,
No what I meant is that brokers are paid by issuers to take stock firm; in effect an underwrite. Greenstone wouldnt pay just expecting the stock to walk out the door. Now brokers are just on best endeavours, not committed. Some will certainly walk unless clients beat the doors down
Thanks, Dubdee.
It will be interesting to see what rate of brokerage/commission the issue pays brokers for applications carrying their stamp - once the prospectus comes out.
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Originally Posted by CJ
My prediction is it will close oversubscribed
Guessed correct but only $47m, not the full over subscription of $100m
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Junior Member
Originally Posted by peat
discussions between First NZ and Infratil ahead of the bond issue concluded that Standard & Poor's probably would have given the bonds a BB rating – which is sub-investment grade and often referred to as junk – because of Greenstone's newness. Such a rating would reflect Standard & Poor's formulas
He denied Infratil had decided not to seek a rating because it didn't want the answer it expected to get. "It's not so much that, as the value we were going to extract for the cost of north of $100,000 a year to get the rating done."
That sounds quite bizarre. Would it rate so low purely because of the newness of the holding company despite the fact that the assets have been around for ages? If so, that's a shocking indictment on S&P. Surely their model is more sophisticated than that?
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