Infratil IFT140/IFT150 Offer

[GTM 3442]

My daughter just got an interesting offer from IFT.

Was to swap her IFT140 (8.25%, 15/05/2011) for IFT150 (8.5%, 15/06/2016).

Gives her another 5 years at 8.5%.

But Infratil won't have to stump up cash at maturity.

What does the team think it all means ?

[macduffy]

Personally, I wouldn't have a problem with investing with IFT for five years if it suited my fixed interest needs, ie if I didn't need the cash for other purposes and if the 5 year term fitted into a gap in my maturity "ladder".

I havn't done a lot of research into this but 8.5%pa seems a reasonable return for the term and risk, given that there don't appear to be a lot of comparable securities of this term offering at present. An alternative of course would be to take the cash and wait (and hope?) for a better offer but personally I've never had any success in being able to correctly forecast or time interest rate movements!

[GTM 3442]

I was rather thinking that it might indicate a disinclination to stump up with the cash ?

[macduffy]

I was rather thinking that it might indicate a disinclination to stump up with the cash ?

I doubt it, although it would probably be convenient for IFT not to have to repay and to make other arrangements.

It's fairly standard practice for companies to "roll-over" maturing debt. A warning sign would be if the interest rate offered was out of line with that current for the term and risk. I don't think that's the case here.

[CJ]

I was rather thinking that it might indicate a disinclination to stump up with the cash ?

Your your fixed rate mortage on your house finishes, do you repay or do you refinance. That is all they are doing. If 8.5% rocks your boat go for it - seems pretty good to me.

Disc: IFT holder

[GTM 3442]

Thanks team.

[peat]

subordination levels?
terms of the deed, security etc
make sure they're are the same or at least acceptable
probably are , just sayin....