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  1. #21
    Junior Member D B Cooper's Avatar
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    Sad to hear that Tim Brown - Head of Capital Markets at Infratil and a previous contributor to this thread was knocked over and seriously injured by a bus in downtown Wellington - Lets hope that he makes a speedy recovery.

    http://www.stuff.co.nz/national/7312...ns-the-company

  2. #22
    Junior Member D B Cooper's Avatar
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    Nice gain on IFTHA - 60c now as the 1 year swap rate rises so does IFTHA as the reset will be that much higher
    Last edited by D B Cooper; 07-02-2013 at 03:10 AM. Reason: Spelling

  3. #23
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    An interesting discussion. I bought IFTHA in 2007 when it was showing about 9% yield. A year or two back I read Chris Lee's suggestion that IFT should do something to help bondholders and had an email debate with Tim Brown. He of course used the "it will disadvantage shareholders" argument. Anyway yield is now down to 3.97% so on the principle that if you can beat them you join them I bought another batch at the discounted price. These show 6.75% which is about market average at present.

    As has been pointed out above once the swap rate rises IFTHAs will start to look good. This assumes of course that IFT dont cash them up. There is sure to be clause in the deal somewhere that allows this.

    Bonds should be an important part of any NZ portfolio because of their relative security and high yield by world standards but you have to know how they work. I also have another "perp" RCSHA (Rabo) which is yielding 8.32% currently. Their reset date is sometime in 2014 and I will need to follow the price trend and bail out if necessary.

    Re "relative security" I got burnt with Blue Star but that's abnormal. Cheers
    Last edited by bondholder007; 09-03-2013 at 05:12 PM. Reason: missing word

  4. #24
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    IFT can cash mine up at $1.00 any time they want.
    ----
    Never try to teach a pig to sing. It wastes your time and annoys the pig.
    ----

  5. #25
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    Yep. I'm happy either way having bought at low prices. Buy them back at a dollar or wait for the % rate to rise (along with the expected rise in unit price). And in the meantime not a bad % rate return.

  6. #26
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    Re RCSHA I worked out what the final annual yield would be if called in 2019 and assuming buying at todays price and assuming 5 year strike rate of todays rate. Would return annual of 6.2% on your original in price I believe. This is decent yield and one might also consider IFT150, IFT160, IFT170 and IFT 090..all of these look at 6.3 to 6.5 % based on current priceing. I will be looking at taking my BISHA returns this month and trying one of these
    Quote Originally Posted by bondholder007 View Post
    An interesting discussion. I bought IFTHA in 2007 when it was showing about 9% yield. A year or two back I read Chris Lee's suggestion that IFT should do something to help bondholders and had an email debate with Tim Brown. He of course used the "it will disadvantage shareholders" argument. Anyway yield is now down to 3.97% so on the principle that if you can beat them you join them I bought another batch at the discounted price. These show 6.75% which is about market average at present.

    As has been pointed out above once the swap rate rises IFTHAs will start to look good. This assumes of course that IFT dont cash them up. There is sure to be clause in the deal somewhere that allows this.

    Bonds should be an important part of any NZ portfolio because of their relative security and high yield by world standards but you have to know how they work. I also have another "perp" RCSHA (Rabo) which is yielding 8.32% currently. Their reset date is sometime in 2014 and I will need to follow the price trend and bail out if necessary.

    Re "relative security" I got burnt with Blue Star but that's abnormal. Cheers

  7. #27
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    A lot of great posts on this thread but nothing for the past 2.5 years. Looking for a home for a sizeable sum in bonds and have done a lot of homework inc. ANBHB IAGHA and now looking at IFTHA. The one big advantage IFTHA have over others is they are unlikely to be redeemed in the short term at current market value whereas fully priced bonds are always at risk from redemption. No doubt coupon will be lower in next reset but still will give a favourable return compared to the market in general. So as interest rates sink how low will the market value the bond now? It seems to me if one is prepared (and can do so) to hold for as long as it takes these will come good when??? interest rates eventually rise-in fact be very good.

  8. #28
    Guru Xerof's Avatar
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    2.5 years - yes these aren't exactly instruments to watch and comment on, on a regular basis. For the fixed interest part of a portfolio, these are quite good if you have the patience of Job and the time horizon to hold.

    I didn't accumulate any more beyond those I held at 55 and 58 (see my last post) and they got ditched about a year ago, when it became apparent rates weren't going any higher.

    Trev, not sure the cycle has bottomed quite yet, but it's close IMO. The market is already moving to price in a 2.5%OCR, and given the coupon will be reset lower, todays price may not yet be a good entry. I'm hoping to get some in to yield around 7% so assuming next coupon is ~4.3% so price needs to be under 62 for me to want to re-enter. Others may be happy with a lower yield, given the coupon is reset annually, so I may not get them.

    you're obviously aware these behave differently to regular bonds, due to the combination of rate reset and perpetuity, so if rates rise, price should also rise, and vicky verka.

    Timbo Brown is clearly unmoved by the protestations from various interests about the 'unfairness' of it all, so holders need to be prepared to hold and/or trade on long horizons.

  9. #29
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    Thanks for your thoughts Xerof. As you have been in this one for some time what would you expect the bond to be trimmed by when next goes ex div?

  10. #30
    Guru Xerof's Avatar
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    Quote Originally Posted by kiwitrev View Post
    Thanks for your thoughts Xerof. As you have been in this one for some time what would you expect the bond to be trimmed by when next goes ex div?
    1.315 cents, i.e. the gross quarterly interest per $. The NZX will adjust the closing price to X-1.315, but who knows what the market will do the next day as far as pricing is concerned - these instruments are very illiquid

  11. #31
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    Interesting time coming shortly for this bond. Next annual reset due 15 November. Mechanism for reset is margin of 1.5% over 1 yr swap. By my calculation the current efective interest rate is 7.7% on paid interest rate 5.26%. For this bond to return 7.7% after next reset a dramatic adjustment would be required to the buy/sell price on NZDX. If I have got my calculations right these are the scenarios.
    If OCR stays at 2.75% and current 1 yr swap 2.7% then interest rate will be 4.2%. The market price on the bond would have to be 55 per 100.
    If the OCR goes to 2.5% - assuming 1 yr swap is 2.45% interest rate becomes 3.95% and market price would be 52 per 100.
    These calulations done purely for estimating maintaining the current effective interest rate when next reset comes into play. Anybody see it any differently.

  12. #32
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    I think most of the coming reset will already be priced in.
    Assuming the reset is at 4.2% and using the current bond price of $68.25 the yield will be about 6.1%. Most IFT bonds are yielding 4.5 to 5% so 6.1% looks pretty good to me.
    Guess it depends on what you think swap rates will do in the future, 3 and 4 year swaps are only a little higher than 1 year.
    I hold a few and will be pretty happy with 6.1%. If they drop to $52 I will be buying a lot.

  13. #33
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    I don't think so. Look at the interactive chart on NZX. Two yrs ago 68 rising to 78 Dec. 2014 and today 68. I'll be flabbergasted if not a big correction
    Last edited by kiwitrev; 09-10-2015 at 03:08 PM. Reason: pasting error

  14. #34
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    Found another chart ASB Sec. fixed interest. During period 2012 to 2013 1 yr swap around 2.45 to 2.5% and IFTHA trading at 52 would suggest to me my calcs approx. correct

  15. #35
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    Company bought some back

    Perpetual Infratil Infrastructure Bonds Buyback

    8:44am, 13 Oct 2015 | BUYBACK

    Infratil Limited advises that it has acquired its own securities. The following information is provided in accordance with Listing Rule 7.12.1:
    Class of security: Perpetual Infratil Infrastructure Bonds
    ISIN: NZIFTD0020S9
    Number of Perpetual Bonds acquired: 1,451,600
    Acquisition Price (average): $0.69
    Payment: In cash
    Amount paid up: Perpetual Infratil Infrastructure Bonds
    Percentage of the total class of securities issued (after the acquisition): 0.62%
    Reason for the acquisition: Considered by the Directors to be in the best interests of the Company and shareholders.

  16. #36
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    Quote Originally Posted by BlackCross View Post
    Company bought some back
    Sneaky - pay 69c and eliminate a $1 liability. Indicates it is unlikely they will ever repurchase at face value.

  17. #37
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    Quote Originally Posted by Harvey Specter View Post
    Sneaky - pay 69c and eliminate a $1 liability. Indicates it is unlikely they will ever repurchase at face value.
    If I remember correctly, they've been doing this for a few years now, off and on. No wonder the price has gone up so much since I bought them. . .

  18. #38
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    Looking ahead a bit to November reset. If OCR goes t0 2% by then new coupon likely to be about 3.5%-currently 4.26%. Buyers and sellers of this bond should pay attention to this fact.

  19. #39
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    I am paying attention to the one year swap rate, that"s what it will be reset on in Mid November.

  20. #40
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    Quote Originally Posted by freddagg View Post
    I am paying attention to the one year swap rate, that"s what it will be reset on in Mid November.
    Of course it is but you will find the OCR and 1yr swap are almost joined at the hip

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