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  1. #16
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    Two resets re-priced today and both saw interest rates fall again - IFTHA to 4.22% (from 4.99%) and ASBPB from 4.78% down to 4.0%. However, it's an unpredictable process as benchmark has been up and down over the last year and at one stage looked like they might head higher. Still, term deposits have mostly come off too, unless investing with remaining finance companies and opting to reinvest at the considerably higher risk of "no guarantee".

    Re Rabobank, I'm afraid I'm going entirely from memory here, so maybe wrong, but I thought the PIIGS sovereign debt exposure was about €490m or so last I looked on assets of €6.2bn. Enough to cause some stress to equity levels if it was all written down, but would have to be pretty extreme scenario. Worst exposure though would be to private mortgage debt which was over 40% of assets - although think they would probably have a reasonable pick of "good" mortgages and avoid the worst. Obviously, enough extreme scenarios, every bank ends up nationalised and haircuts all round. But would have to hope the ECB finds a printing press before things get quite that extreme.

    I don't see the harm in having a few re-sets to offset the fixed rates for those of us with below average foresight having to make decisions about where to invest. All scenarios at the moment involve making predictions as to which direction overseas leaders will jump when the train gets close enough. And there are many investors that need more than the 3% of an on-line call account to avoid eroding capital in the need for income while we wait to find out. The scenarios where RBOHA actually take a defined haircut would have to be pretty extreme, although given they don't have a maturity date, there is probably increased odds they will live up to their perpetual name for the next 10 years....the whole point is to give Nan income so she doesn't have to sell the notes for income in the meantime.

  2. #17
    Guru Xerof's Avatar
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    Never say never, but Rabo would be the last bank standing globally IMO - they are a pretty unusual bunch, with impeccable credit standards.

    I know what everyone is saying: all Nan is concerned about is an annuity stream. My point is if she ever needed to bail out for any reason, she is currently down the dunny, in a matter of mere weeks from (virtual) entry

  3. #18
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    Quote Originally Posted by Xerof View Post
    I know what everyone is saying: all Nan is concerned about is an annuity stream. My point is if she ever needed to bail out for any reason, she is currently down the dunny, in a matter of mere weeks from (virtual) entry
    The difficulty is, where isn't that the case with income? It just isn't possible to get a liquid investment that you can be certain of being able to withdraw funds from without opting for a call account of some sort, and the returns just aren't there for most peoples income needs. Always going to be a balancing act between risk, return and liquidity - not to mention hidden costs and returns around inflation vs deflation.

    But yes, I guess you are right in pointing out that the market value on price-traded perpetuals/resets is probably more volatile than for most yield-traded fixed rate bonds over a short period.

  4. #19
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    Well, the market keeps talking - Nans (virtual) investment keeps getting hammered in price, now down another 3.5 cents since last week.

    Far more volatile than your regular fixed term bonds, most of which have barely blinked (yet).

  5. #20
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    Can't buy a trick these Perpetuals......Nan's buried......

    For wonderful spin, take a read of their announcement today, where they were DOWNGRADED from AAA to AA

    Rabobank retains its position as the world’s highest rated
    privately owned bank according to Standard & Poor’s new
    methodology
    Rating agency Standard & Poor’s (S&P) today announced its new ratings for the top 37 global banks according to its new methodology. S&P has awarded Rabobank the highest rating of all these 37 banks: AA with a ‘stable outlook’.
    Rabobank previously held a AAA rating based on the former approach used by S&P. As is the case at Moody’s, Fitch and DBRS, Rabobank remains the highest rated privately owned bank in
    the world according to S&P. Rabobank views S&P’s new rating as a reconfirmation of its stability and strong creditworthiness.
    They must use the same firm as Heartland.......

  6. #21
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    Personally, I'm surprised at the way the price has held up. Percieved premium for quality ?

  7. #22
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    Rabobank has given notice of its intention to redeem the RBOHA capital securities on 9 October 2017, the first business day following the "First Call Date". I assume they are pre-empting an anticipated interest rate rise at the next rate reset, but at the current rate of 2.8825% I'm more than happy to have my small holding repaid.

  8. #23
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    Quote Originally Posted by macduffy View Post
    Rabobank has given notice of its intention to redeem the RBOHA capital securities on 9 October 2017, the first business day following the "First Call Date". I assume they are pre-empting an anticipated interest rate rise at the next rate reset, but at the current rate of 2.8825% I'm more than happy to have my small holding repaid.
    yeh didnt quite make sense to me either macduffy.
    they could buy them on market for less, and yet they chose to pay par.
    For clarity, nothing I say is advice....

  9. #24
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    So do you guys have any insight as to their intention regarding RCSHA perpetual pref. callable 2019. Current interest 8.3425%. Rate resets 5yr swap plus margin 3.75%, last reset 2014.

  10. #25
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    So the RBOH capital securities were duly repaid on 10 October. Now IFT advise that their IFT170 bonds will be repaid as scheduled on 15 November and there won't be any reinvestment offer. Don't need the money, apparently. That 8% coupon will be missed! - and more funds to redeploy!

  11. #26
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    I think you'll find the early redemption had nothing to do with interest rates, and everything to do with the bonds no longer being able to be categorised as 'Tier 1 equity' on the Balance Sheet.

    Like chewing gum on the bedpost, over time they both lose flavour
    This message is not intended to digitally harm anyone's feelings

  12. #27
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    Quote Originally Posted by kiwitrev View Post
    So do you guys have any insight as to their intention regarding RCSHA perpetual pref. callable 2019. Current interest 8.3425%. Rate resets 5yr swap plus margin 3.75%, last reset 2014.
    Chris Lee says they will be repaid June 2019.
    So buying now at $107 will cause a capital loss of 7% in 20 months time, offsetting about half the 8.34%pa interest.

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