Most of the perpetuals will be resetting with lower interest rates so doubt whether that would be worthwhile. If they reset annually then it will be certainly lower than last reset. Its Z energy (7.25%) still better than term deposits whatever you do.
Originally Posted by Penfold
I am cautious of buying fixed rate bonds at historically low levels, with the possibility of inflation going wild. There's a few perpetuals that reset annually out there, that I would be looking at first.
Suppose it depends on your time frame. If you are looking at holding the Z bonds until maturity you may be better looking at perpetuals. Especially those that are likely to be bought back. But if you are only in it for the year or two then maybe the Z bonds will serve you well. Any sudden rise in OCR could lead to you taking a capital loss on them.
Practically, they are fixed rate senior bonds and should be easily tradeable. Greenstone (their earlier issue) opened in October last year at 7.35% and now trade at a yield around 6.6%
Last edited by Waiuta; 14-07-2011 at 09:17 AM.
A quote attributed to Margaret Thatcher goes along the lines of "The problem with socialism is that eventually you run out of other people's money."
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