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Junior Member
RBOHA - Rabobank Prefernce Shares
Hi Guys
I am looking to build a low risk portfolio of bonds and hybrid type securities as a nest egg for an elderly relative. Among others I have been looking at RBOHA over the last week and cant quite see why they have increased 5 or 6 percent.
Is this normal with these types of securities and if so will it be too risky for Nan?
Cheers
Traderdude
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IMO, perpetuals are entirely inappropriate for Nans. Stick to term deposits at the banks, or look at fixed term unsubordinated bonds issued by reputable companies. This is not advice, just my personal view. Seek professional advice from a reputable advisor - yes, there are some out there
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Rabo issued a stack of debt here not so long ago. I heavily suspect the increase is a buy back funded by the proceeds. They have let them fall back to $82.00 and seem to have started buying again recently. I wouldn't be buying them for Nan. TD's are where Nan's live. And maybe some high quality bank bonds. But you will likely get better interest from the TD's.
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For Rabo to be able to buy back, there is a board resolution required, stating the time period during which the buy back will occur, and the maximum amount they may buy. I have not seen this announced, so I don't believe it is them (at least directly)
I know a few people, closer to the action than me, think that they will elect to repay these in 2017, as the purpose for which they were issued becomes redundant under new rules take effect in 2013, i.e. they will no longer qualify as equity on their balance sheet. So IMO, these are being treated as 6 year bonds, not perpetuals. On that basis, its providing a good yield for a AAA rating - this might explain the shift in momentum and increased volume of late.
And for traderdude, I stick with my comments re Nan - they are still perpetuals until proven otherwise
Last edited by Xerof; 02-09-2011 at 12:39 PM.
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Member
The earlier repayment option is as a requirement of the Basel III global regulatory standard http://www.answers.com/topic/basel-iii
Rabodirect offers fair rates for Nan.
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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Junior Member
Awesome cheers everyone the info has been great
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I must admit I haven't seen the IM. I just made the assumption that the NZ Branch is the one doing the buying. They were issued by Rabo Netherlands I think. And I don't know what the rules are about associated companies buying them back. I just don't know who out there would have pockets deep enough to speculate on whether these will be called in this environment. I would be surprised if Rabo didn't call them... but its not unheard of for a small foreign issuer to not call sub debt.
Originally Posted by Xerof
For Rabo to be able to buy back, there is a board resolution required, stating the time period during which the buy back will occur, and the maximum amount they may buy. I have not seen this announced, so I don't believe it is them (at least directly)
I know a few people, closer to the action than me, think that they will elect to repay these in 2017, as the purpose for which they were issued becomes redundant under new rules take effect in 2013, i.e. they will no longer qualify as equity on their balance sheet. So IMO, these are being treated as 6 year bonds, not perpetuals. On that basis, its providing a good yield for a AAA rating - this might explain the shift in momentum and increased volume of late.
And for traderdude, I stick with my comments re Nan - they are still perpetuals until proven otherwise
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Member
i think perpetuals are perfect for nan - why not. they arent risky and actually perform much like a rolling term deposit (usually better)
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But is nan willing to hang around for years waiting for the capital value to be recouped (RBOHA's were issued at 100, now only 85)
I accept that entry at 85 is better than 100, and that 85 then becomes the benchmark for exiting, but my point is that a term deposit suffers no variance to capital price, unlike a perpetual (or any other bond for that matter)
Perpetual prefs are 'risky' - they are one step above equity
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Member
I think Rabo has indicated that they will be called at the time they turn into floaters as they no longer qualify as tier 1 Capital for banks. Their head financial guy was here recently on a non deal roadshow. Call will of course be at par
Success is the ability to go from one failure to another with no loss of enthusiasm
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