Waratah Bonds

[Tyler Durden]

SMALL investors will be asked to help rebuild NSW by entrusting their savings and superannuation to the O'Farrell government.

The so-called ''mum and dad'' investors - and the growing market of people who manage their own super funds - will be targeted by the government to finance infrastructure such as the proposed north-west rail line.

Nine days before delivering his first budget, the state Treasurer, Mike Baird, today will announce the immediate release of ''Waratah Bonds'' which he will promote as ''perfect protection'' from roller-coaster financial markets.

A throwback to nation-building bond schemes of the past, Waratah Bonds will be particularly aimed at people nearing retirement age whose wealth is more exposed to global jolts. The interest rate is likely to be set fractionally below bank term deposits of similar duration, reflecting the added security of government-backed debt.

http://www.smh.com.au/nsw/barry-bonds-to-rebuild-state-20110827-1jfhc.html

I heard on TEN news that the interest rate will be about 4.5%.

Given Ubank offers 6.51%, why on earth would anyone go into this??

 

[danbradster]

http://www.smh.com.au/nsw/barry-bonds-to-rebuild-state-20110827-1jfhc.html

I heard on TEN news that the interest rate will be about 4.5%.

Given Ubank offers 6.51%, why on earth would anyone go into this??

If they agree that "added security of government-backed debt" versus UBank is worth the 2% difference, then they might choose this.

 

[skc]

If they agree that "added security of government-backed debt" versus UBank is worth the 2% difference, then they might choose this.

4.5% I assume is for the life of the bond. Ubank rates are variable.

However, these bonds are only 3 to 10 year maturity so the shorter dated ones will probably trade under par if they are only offering 4.5% in the current rates environment... if they are even tradable.

 

[Bill M]

http://www.smh.com.au/nsw/barry-bonds-to-rebuild-state-20110827-1jfhc.html

I heard on TEN news that the interest rate will be about 4.5%.

Given Ubank offers 6.51%, why on earth would anyone go into this??

I saw the same program and thought the same as you. I wouldn't touch it with a barge pole, plenty of better opportunities out there, cheers.

 

[tothemax6]

http://www.smh.com.au/nsw/barry-bonds-to-rebuild-state-20110827-1jfhc.html

I heard on TEN news that the interest rate will be about 4.5%.

Given Ubank offers 6.51%, why on earth would anyone go into this??

Its actually a good question. Ubank has the 'government guarantee', so theoretically its as safe as government bonds. Perhaps there could a charitable patriotic element to it, i.e. people want to buy them because they pay for the rebuilding of their state - kind of like why people buy 'war bonds' during wars.

 

[sptrawler]

Well after Bris connect and Rivercity motorway, there is no way any investor is going to put money into a government/private infrastructure project, not in living memory anyway.
I suppose that is why they are going the government guarantee. Serves them right for being such a#####les.