Genesis capital bond issue

[Beagle]

Yes, there's a lot of issues in recent years where people would be looking at a significant capital loss if they sold now. OCA issued 7 year bonds at 2.30% a while back, now trading at 4.25% and anyone selling now is tearing up 10% of their capital.

I think the final rate set on these was 4.17% but I agree with you that the prospect of some capital loss even at that rate is very real which is another reason I choose the shares which I see as having the real prospect of capital appreciation along with earning more than twice the yield.

[GTM 3442]

Yes, there's a lot of issues in recent years where people would be looking at a significant capital loss if they sold now. OCA issued 7 year bonds at 2.30% a while back, now trading at 4.25% and anyone selling now is tearing up 10% of their capital.

I think the final rate set on these was 4.17% but I agree with you that the prospect of some capital loss even at that rate is very real which is another reason I choose the shares which I see as having the real prospect of capital appreciation along with earning more than twice the yield.

Yes, I see your point.

But in a rising interest rate environment, don't focus only on the potential downside of selling early, think also about the potential benefit of buying late.

[Beagle]

Yes, I see your point.

But in a rising interest rate environment, don't focus only on the potential downside of selling early, think also about the potential benefit of buying late.

Agreed 100%. My point though is always when considering a bond issue, first ask yourself in the underlying equity is a better bet.

[GTM 3442]

Agreed 100%. My point though is always when considering a bond issue, first ask yourself in the underlying equity is a better bet.

I can see we're coming from somewhat different directions here Beagle.

I'm buying to fit an asset allocation model, and return on capital is only one of the criteria.

There's also the effect on the average credit rating of the bond portfolio, maturity date for laddering, strength of the underlying company, all those sorts of things.

Example OCA - sold out of the shares , looking to buy the bonds - but only at the right price, or Infratil's IFTHA - that annual reset really makes a difference over the long haul on the right entry price.

[winner69]

If you had bought OCA shares instead of their bonds your capital would be down 23% on the Oct 20 bonds and 32% down on the Sep21 bonds ...collected a few divies in the process

Mind you capital value of these bonds are down as well ...the 2.3% bonds down 9% and the 3.3% ones down 5%

Lost heaps on shares .... lost a little on the bonds

But says any recent investment in Oceania has been bad, really bad - can't win either way ...shares or bonds have been duds .... reflects Oceania management

Maybe the depths of despair is the best to time to buy.