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  1. #46
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    And however far the OCR and bank rates fall, I'm guessing the rate on these will look attractive enough in comparison. It would be nice if the 1.5% was a bit higher, but it is what it is and I'm always happy when payment date rolls around.

  2. #47
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    I hold a few of these, bought and sold at varying prices. While the margin over and above the 1 year swap rate is only 1.5%, as interest rates go down the margin increases in percentage. At the moment currently at 3.63% (swap rate 2.13) the margin is at 70%. if the swap rate goes up to 5% then the margin is 30%. I would imagine then that the value of these should increase in a low interest rate environment and decrease somewhat in a higher rate environment. Maybe this is what happened years ago as I see previous posters buying a .55. Has gone as high as .78 in recent year or so.

    Another thing I dont understand is when we get close to the interest payment date at CI. The price seems to go down. I would have thought it would go up. After all you are buying bonds at thr quoted price and then get the interest shortly. The contract note specifies the interest taken away from the quoted price and leaves a lower figure for purchase of the capital stock. When it goes ex the price remains the same sowewhat and after a month or so, they increase in price. It seems to me at least that that is the trend. Why.

    IFT must be careful when buying back because they dont want the value to rise too much. What a good buy for the company. $1-00 bonds at 63 cents.

    I believe unlike other bonds issued by IFT, they can never be tranferred to shares, which if the company shareprice is suffering they will change debt to equity. For this reason I dont think I would like the other bonds issued by the company. Anybody still holding these. I like the yearly reset so it keeps up with the inflationary chages more quickly that five year bonds.

  3. #48
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    Quote Originally Posted by bottomfeeder View Post
    I hold a few of these, bought and sold at varying prices. While the margin over and above the 1 year swap rate is only 1.5%, as interest rates go down the margin increases in percentage. At the moment currently at 3.63% (swap rate 2.13) the margin is at 70%. if the swap rate goes up to 5% then the margin is 30%. I would imagine then that the value of these should increase in a low interest rate environment and decrease somewhat in a higher rate environment. Maybe this is what happened years ago as I see previous posters buying a .55. Has gone as high as .78 in recent year or so.

    Another thing I dont understand is when we get close to the interest payment date at CI. The price seems to go down. I would have thought it would go up. After all you are buying bonds at thr quoted price and then get the interest shortly. The contract note specifies the interest taken away from the quoted price and leaves a lower figure for purchase of the capital stock. When it goes ex the price remains the same sowewhat and after a month or so, they increase in price. It seems to me at least that that is the trend. Why.

    IFT must be careful when buying back because they dont want the value to rise too much. What a good buy for the company. $1-00 bonds at 63 cents.

    I believe unlike other bonds issued by IFT, they can never be tranferred to shares, which if the company shareprice is suffering they will change debt to equity. For this reason I dont think I would like the other bonds issued by the company. Anybody still holding these. I like the yearly reset so it keeps up with the inflationary chages more quickly that five year bonds.
    Hi BF
    Don't expect changing debt to equity a likely scenario. Worth revisiting Infratil long explanation of the history of IFTHA and possible outcomes.
    http://infratil.com/assets/Uploads/PiiB-July-2016.pdf

  4. #49
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    Quote Originally Posted by kiwitrev View Post
    Hi BF
    Don't expect changing debt to equity a likely scenario. Worth revisiting Infratil long explanation of the history of IFTHA and possible outcomes.
    http://infratil.com/assets/Uploads/PiiB-July-2016.pdf
    I feel sorry for the poor b*ggers who bought these at time of issue, and I suspect that a good proportion of those folk didn't understand what they were buying.

    I hold some of these in the bond portfolio. They're in there because sometimes they are cheap, and because the floating rate works as a hedge against inflation.

    But that's only the case if you buy 'em well below face value.

  5. #50
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    What's with the sudden increase in price and volume? Surely Tim Brown's not thinking of doing the unthinkable....

  6. #51
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    The answer is simple-Never. However like you i'm surprised by current move in price given the next reset in the interest rate later this year will likely be less than currently being paid which is 3.63%. Mechanism for reset is 1.5% plus 1yr swap currently at about 2%, maybe marginally higher. Delicate balance between low interest rate environment and maybe some inflation?? to come given USA signalling rate increases December and beyond.

  7. #52
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    Quote Originally Posted by Xerof View Post
    What's with the sudden increase in price and volume? Surely Tim Brown's not thinking of doing the unthinkable....
    Did you spot the gartley ?
    For clarity, nothing I say is advice....

  8. #53
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    Quote Originally Posted by Xerof View Post
    What's with the sudden increase in price and volume? Surely Tim Brown's not thinking of doing the unthinkable....
    Likely the money from the upcoming RBOHA repayment looking for a new home.
    ASBPA and ASBPB are up as well

  9. #54
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    Quote Originally Posted by freddagg View Post
    Likely the money from the upcoming RBOHA repayment looking for a new home.
    ASBPA and ASBPB are up as well
    As are all the other fixed income entities on my watchlist, so a sector move.

  10. #55
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    Quote Originally Posted by kiwitrev View Post
    As are all the other fixed income entities on my watchlist, so a sector move.
    Reserve Bank signalling benign inflation and no imminent rate increases so would appear to be contradictory to recent expectation in bond market and increased cost to buy on NZDX. IFTHA now on new 1yr cycle coupon 3.5% but 1yr swap today 1.99% indicates a downward trend.

  11. #56
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    Anyone know what happens if the 1yr swap rate goes negative at reset time in November?

    Will the coupon stay fixed at 1.5% or could a negative swap rate exist of say -0.5% plus 1.5% thus giving a coupon of 1%?

  12. #57
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    I've just had a look at the IFTHA Information Flyer. Nothing mentioned apart from the 1.5% margin. So I'm guessing if interest rates went to negative then the margin would be on top of that as in your example.
    Some later issues have stated that an interest rate will not go below a certain % value. But certainly can't find anything like that for the IFTHA bonds.

  13. #58
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    Thanks Grimy, guess we will know in November. 1yr swap rates hit 0.18% last week.

  14. #59
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    I suspect that few people here bought these at issue, or at anything much over 60c in the dollar, so even on it's own, that 1.5% margin isn't looking too shabby.

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