ANBHA, BISHA and BNSPA

[D B Cooper]

Interesting to see that ANZ rolled ANBHA (previously 9.66% issue size of NZD835m) but the BNZ called BISHA (previously 9.89% issue size of NZD450m) . I assume they called BISHA because they wanted to call BNSPA (9.10% issue size of NZD260m) next year and could not be seen to roll one and not the other. BISHA has a margin of 2.20% over the 5y swap while BNSPA has a whopping 4.09% over the 5y swap.

Anyway I am happy that ANZ rolled ANBHA as the new reset rate will be circa 5.60% which is a reasonable rate at this point in time.

Any thoughts on why ANZ rolled and BNZ didnt?



Disc - hold ANBHA

[macduffy]

According to the AFR:

The $NZ835 million ($686 million) retail issue, which paid a 9.66 per cent interest rate, was issued five years ago and had a first call date in April of this year in which ANZ could pay back investors.

But ANZ said it would leave the bonds outstanding, marking a rare occasion whereby an Australian bank has not paid bondholders out at the first opportunity. Traders said initially the price of the bonds fell but recovered quickly as the new rate of 5.5 per cent still represented an attractive level. But there was some suggestion many holders were anticipating a pay-back.

While non-calling of bonds has become common among banks in Europe, it has been rare for an Australian bank to elect to keep bonds outstanding that have systematically met these early payment dates.

ANZ maintained that it never intended to meet the first call date on this specific bond and it should not be regarded as setting a precedent. There was no economic interest for ANZ to buy back the bonds because there was no step-up in the interest rate margin.

The margin only steps at 10 years from issue, from 200 basis points over the bank rate to 300 basis points, at which point the notes become perpetual, which means ANZ can keep the notes outstanding forever.

[sharer]

Thanks Macduffy. I always have difficulty understanding these bonds, & get nervous about my own ignorance ...

[BIRMANBOY]

Sort of sorry to see BISHA go.....had a good couple of years out of that and even though paid over the odds to get them will still turn out to be a good 7.5% p.a. yield at the end. BNSPA would have been uneconomic to rollover at that 4.09 over 5yr swap.

Interesting to see that ANZ rolled ANBHA (previously 9.66% issue size of NZD835m) but the BNZ called BISHA (previously 9.89% issue size of NZD450m) . I assume they called BISHA because they wanted to call BNSPA (9.10% issue size of NZD260m) next year and could not be seen to roll one and not the other. BISHA has a margin of 2.20% over the 5y swap while BNSPA has a whopping 4.09% over the 5y swap.

Anyway I am happy that ANZ rolled ANBHA as the new reset rate will be circa 5.60% which is a reasonable rate at this point in time.

Any thoughts on why ANZ rolled and BNZ didnt?



Disc - hold ANBHA

[modandm]

holding a callable perpetual is a dumb move - limits the upside when interest rates rise -which is the whole reason you buy a perpetual.

[sharer]

holding a callable perpetual is a dumb move - limits the upside when interest rates rise -which is the whole reason you buy a perpetual.

Recently exited ANBHA, to fund another investment, just on instinct really.
Didn't realise i was being rational about it, by chance!
Thanks modandm - next time i shall try to be consciously rational