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  1. #1
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    Default Mighty River Power Limited - Capital Bond - 6.8-7.0%

    Issuer: Mighty River Power Limited (“Mighty River Power”)
    Security: Unsecured, subordinated, redeemable, cumulative, interest bearing bonds (“Capital Bonds”)
    Issue size: Up to $250 million (plus up to $50 million oversubscriptions)
    Maturity: 11 July 2044
    Reset Dates: 11 July 2019 and every fifth anniversary of that date
    Interest rate: The indicative rate range for the Bookbuild process has been set at 6.8-7.0% per annum. Refer to attached Offer documents for full details of the Interest rate.
    Credit Rating: The Capital Bonds are expected to be rated BB+. Mighty River Power is rated BBB+ (stable) by Standard & Poor’s
    Applications: Minimum $5,000 with multiples of $1,000 thereafter.


    Any thoughts on this issue? How do folk think it compares with similar NZ bonds?

    The yield seems reasonable and compatible with what's on offer on similar rated stuff in the UK and Europe from what I can see.

  2. #2
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    I was looking at these as well, but I currently have some Rabo Capital PIE Shares which I bought in 2009 (http://www.rabobank.co.nz/Investing/...are-offer.aspx), which have been paying 8% p/a with tax capped at 33%. The rate has recently been reset to 8.34% for the next 5 years (http://www.anzsecurities.co.nz/direc...spx?id=3634843).

    So what's the difference between these two types of bonds, given that the Rabo one looks better in terms of returns? Is it the risk level of each company?

  3. #3
    Junior Member devito's Avatar
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    The rabo ones are better. They have a higher rating. They also sell for more than $1 a bond on the bond market.

    You can only roll over what you already had in them though. You cannot buy any extra and get the 8.34% so the MRP offer is as good as you can get at present.

    disc:I have RCSHA Rabo bonds. I also have bought some of the MRP bonds.
    In a hundred years who'll give a s h i t

  4. #4
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    Quote Originally Posted by devito View Post
    You can only roll over what you already had in them though. You cannot buy any extra and get the 8.34% so the MRP offer is as good as you can get at present.
    What does this mean exactly? Say I currently have $20k worth. If I bought an extra $20k what interest rate would I get on that extra portion?

  5. #5
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    At 6.8% taxed at 33c/$ equates to equivalent of 6.3277% if taxed at PIE rate of 28c/$.

    As these are 5 year bonds then they can be comparable to the 5 yr Term deposit rate of 5.75% (at ANZ) , which can be done as a PIE investment.

    Interest rates are going up so there is not much difference in 6.3277% and 5.75% and as the the rates increase over the 5 years then the bond may be worth less than face value unless you hold it for the full term.

    6.8% is not enough for me.

  6. #6
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    I am buying some to spread our money around different co's and sectors.

  7. #7
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    Quote Originally Posted by mcdongle View Post
    I am buying some to spread our money around different co's and sectors.
    Same here.

  8. #8
    Junior Member devito's Avatar
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    You can only roll over what you already have in the rabo bonds. (well it happens automatically you don't get a choice) If you want another $20k you will have to buy them on the bond market. They are not $1 each but are priced according to yield so you will pay much more or get less than 20,000 bonds for your money.
    In a hundred years who'll give a s h i t

  9. #9
    Junior Member devito's Avatar
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    Quote Originally Posted by 777 View Post
    At 6.8% taxed at 33c/$ equates to equivalent of 6.3277% if taxed at PIE rate of 28c/$.

    As these are 5 year bonds then they can be comparable to the 5 yr Term deposit rate of 5.75% (at ANZ) , which can be done as a PIE investment.

    Interest rates are going up so there is not much difference in 6.3277% and 5.75% and as the the rates increase over the 5 years then the bond may be worth less than face value unless you hold it for the full term.

    6.8% is not enough for me.
    My old man has had his money on call getting pittance and saying the same thing for the last five years while I have been investing for five year terms each time.
    How long do we wait for these promised higher rates?.......
    In a hundred years who'll give a s h i t

  10. #10
    Junior Member devito's Avatar
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    Quote Originally Posted by Cricketfan View Post
    What does this mean exactly? Say I currently have $20k worth. If I bought an extra $20k what interest rate would I get on that extra portion?
    You can only roll over what you already have in the rabo bonds. (well it happens automatically you don't get a choice) If you want another $20k you will have to buy them on the bond market. They are not $1 each but are priced according to yield so you will pay much more or get less than 20,000 bonds for your money.
    In a hundred years who'll give a s h i t

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