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Member
Originally Posted by couta1
Rate reset to 7.95% for the year with dividends fully imputed, looking forward may be near 9% next year.
Finally. It has been a long road waiting for interest rates to return to an upward cycle.
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Originally Posted by couta1
Rate reset to 7.95% for the year with dividends fully imputed, looking forward may be near 9% next year.
I guess the biggest risk around this is that they will be re-purchased at $1 each or exchanged for shares in Downer (2.5% discount) on some future dividend payment date? At least that is the way I read the prospectus (pages 37 & 50).
As interest rates rise, they would surely have to think about doing so??
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Yes, that's how I read it, Lizard. As with all these redeemable/convertible instruments the terms are heavily in favour of the issuer.
In retrospect, I guess we were always going to be on a hiding to very little by investing in them.
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To buy them back they have to come up with cash which is probably difficult for most companies since they tend to have their capital working not sitting. Also as rates rise not only do they pay out more but also it would cost them more to borrow so not so clear cut. If they were on to it they would have been buying them back on market when they were selling at a discount...however I don't recall any notification of this happening. However since I was fortunate to get in at 7210 its an excellent return on my capital. I haven't read the prospectus (lazy boy) but conversion to Downer shares would be possibility if I had to hazard a guess. I can see it running a while yet though. All depends on other finance options available globally.
Originally Posted by Lizard
I guess the biggest risk around this is that they will be re-purchased at $1 each or exchanged for shares in Downer (2.5% discount) on some future dividend payment date? At least that is the way I read the prospectus (pages 37 & 50).
As interest rates rise, they would surely have to think about doing so??
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Member
New dividend rate from 30 June is 7.21% fully imputed. Pretty competitive in current low interest environment. Bought more during the year so happy with that decision.
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Hah this has to be one of the least posted investments KT..I see I made a post one year ago so here is my annual post for the year.. Wish I had bought more... What can you say...good return and capital growth. Might drop a bit with interest rates dropping but still double digits for me. See you next year.
Originally Posted by kiwitrev
New dividend rate from 30 June is 7.21% fully imputed. Pretty competitive in current low interest environment. Bought more during the year so happy with that decision.
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Member
The formula for reset annually is: One year swap rate plus step up margin 4.05% so it would appear wherever interest rates are at any time (up or down) this bond (actually a preference share) will always be at a competitve rate to the market norm. Has been trading on the secondary market for some time at around 102 per 100, a small premium to pay.
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Whoops, time for the annual post on Works...KT I think we are the only holders of this...which means you must have a s***load of these. Still a double digit return annually so still holding. I almost bought some more when it took a bit of a dip but got distracted. Under the radar and still worth looking at with step up margin.
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Member
BB, sold these a little while back, to escape the punitive tax deduction. Have a strategy yet to play out-intend to buy IFTHA after NZ$ rate cut. Currently down to 62 per 100 and will probably go lower. Estimate after NZ$ rate cut and IFTHA reset 6.2% real return better net than WKSHA. IFTHA margin 1.5% over 1 yr swap. Only committing new funds to this strategy as best home low interest rates.
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You mean the posting frequency will go down to one per year (if I remember)? Good luck with your new strategy.. I looked at these IFTHA some time ago but already had 3 other IFT so decided no. Not much of a margin???? Swap rates could go lower yet. If you are putting money on a mortgage that's good use of course.
Originally Posted by kiwitrev
BB, sold these a little while back, to escape the punitive tax deduction. Have a strategy yet to play out-intend to buy IFTHA after NZ$ rate cut. Currently down to 62 per 100 and will probably go lower. Estimate after NZ$ rate cut and IFTHA reset 6.2% real return better net than WKSHA. IFTHA margin 1.5% over 1 yr swap. Only committing new funds to this strategy as best home low interest rates.
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