ANZ - ANZ Banking Group

[vincent191]

Thanks awg....i will ring ANZ. Previously I rang Commsec and I was told that I had missed out and that maintaining ANZ's shareholders register was not their responsibility. I didn't take that any further mainly because the $$ involved was not very big.

 

[awg]

Thanks awg....i will ring ANZ. Previously I rang Commsec and I was told that I had missed out and that maintaining ANZ's shareholders register was not their responsibility. I didn't take that any further mainly because the $$ involved was not very big.

Ring the SHARE REGISTRY..(either link or computershare)..google " ANZ share register" to find out details.

commsec just want to get u off the phone

 

[drlog]

Haha, all of our questions are answered:

http://www.anz.com/about-us/shareholders/faqs/

Sorry for starting up this thread again!

 

[geea]

Just wondering what peoples thoughts are on the new ANZ Convertible Preference Shares. I don't know alot about this sort of investment and would like to know what the pros and cons are.

 

[gordon2007]

I'd be interested in hearing what some of the more experienced traders\investors think of this too. My own personal view, not based any thing more than a gut feeling, is that anz is getting ready to be a huge regional powerhouse.

 

[ricee007]

Just wondering what peoples thoughts are on the new ANZ Convertible Preference Shares. I don't know alot about this sort of investment and would like to know what the pros and cons are.

Ok.
So.
ANZ will pay an amount above the 3month BBSW rate (24 hours delayed, http://www.afma.com.au/scripts/nc.dll?AFMAv6:HOMEPAGE , top right corner).

until December 2016... when , either, (barring a catastrophe), you will get $101 worth of ANZ shares or $100 cash.

My guess is it would be 3.1% above the BBSW, but we will know shortly.

RISKS: ANZ not being able to afford the interest (HAHAHA)
RISKS: ANZ going bust (HHAHAHAHA)
RISKS: The securities being traded at below 'face value', meaning, to receive your return on investment, you will need to hold till December 2016.
RISKS: You get $101 worth of ANZ..... but, before the shares actually arrive, ANZ drops to half price... so your '$101' of ANZ shares are worth $50 by the time you sell them.

Benfits: You get a reasonable return, with very, low risk.

BBSW is currently 3.95, so your return would be, approximately 7.05% atm... is this high enough? That's up to you (then, take-away tax).

5-6% is historical average for BBSW. I would imagine an average BBSW of 5% between now and 2016. Perhaps 5.25? So, if ANZ are paying 3.1% above that (my guess).... that would be 8.35% per annum (less tax (5.845% after tax).

PERSONALLY, I'd rather aim for a ROI of over 10%.... but, these definitely do have their place for others.

My own personal view, not based any thing more than a gut feeling

I'm going to assume that you haven't been following ANZ then?

OF COURSE they are expanding, rapidly, into Asia. They want 25% of their profit (profit or income?) to be from Asia by 2012( pretty sure it was 2012).

They just bought RBS' Asian Assets, for example. They plan to spend billions more on Asian assets.

They have an AWFUL lot of capital at the moment.... and, I am disappointed that they chose to do this capital raising. They DON'T NEED IT, and, the price is way too high.

Read any of the major ANZ announcments, they have made it clear, many times, that they are expanding into Asia, rapidly and aggressively.


Having said all that, ANZ is my preferred bank and one that I am happy to hold (they make up 19.x% of my portfolio). I believe they have the biggest growth potential out of the majors, and I like their CEO and direction.

Finally, http://ozbankers.com/index.php?option=com_content&task=view&id=26&Itemid=29 is an article I wrote... this is largely shameless self-promotion, but, it does contain some relevant information, such as

n July, ANZ completed a $4.7Bn equity raising that involved a Share Purchase Plan (SPP) that was three times oversubscribed. Mike Smith, CEO, described it as a “strong endorsement of ANZ’s super regional strategy”. Since then, ANZ has purchased $687M of RBS’s Asian assets and $1.76Bn of the wealth management and life insurance joint venture from ING.

 

[geea]

ricee007, thats a great response and you've answered my question beautifully. Thanks for taking the time to do that. The only other question i have is what really affects the price of pref shares?

 

[Largesse]

Just a quickie,

I'm very interested in buying a block of these new CPS2's for my old old lady as I expect them to give her a quite good income stream as interest rates continue to rise.
With regard to subscribing, should I expect to get scaled back, and thus would you think it would be sensible for me to over apply to ensure we get allotted the desired amount?
Should we not get scaled back, are we under any obligation to pay for the full amount we applied for or can we just take the desired amount?

 

[ricee007]

I'm very interested in buying a block of these new CPS2's for my old old lady as I expect them to give her a quite good income stream as interest rates continue to rise.

I think CBAPA (perls v) started as $500m or $750m, and ended up accepting $2Bn....

ANZ's is $750M + or - whatever they feel like.....

ANZ haven't said that there is a limit to how much you can apply for. Just a $5000 min.

It's IMPOSSIBLE to know if they will allow over-subscriptions, but, I would imagine that a lot more than $750M will apply.... and wouldn't be surprised if ANZ accepted $1.5M or so......

I think I read ANZ holders (as at a certain date, 30th Oct?) have 'priority' if scaleback occurs....

$750m will only increase T1 ratio by 0.3 percentage points... If they accepted $1.5M, it will increase by 0.6 percentage points, which is substantial...

With regard to subscribing, should I expect to get scaled back, and thus would you think it would be sensible for me to over apply to ensure we get allotted the desired amount?
Should we not get scaled back, are we under any obligation to pay for the full amount we applied for or can we just take the desired amount?

IF YOU DON'T GET SCALED BACK, YOU ARE COMMITTED TO PAYING FOR THEM.

Note, you can then sell on the ASX though (but, will need funds in between those 2 dates ).

Um, will you get scaled back?

Hmm.

It's VERY hard to tell. Perhaps ANZ will receive, um, $2.25Bn applications and accept $1.5Bn?

Perhaps, ANZ preferred applicants (holders of CPS1 or ANZ as of the record date) will get their full amount requested, and the general public will be scaled back a little bit?

That's my UNEDUCATED guess. But, I wouldn't be surprsied if ANZ took in all applicants and accepted $2.25Bn worth. I would be annoyed, just not surprised



Geea, you are very welcome. Thanks for your manners.

 

[doctorj]

Unrelated to your current discussion, but its emerged in the press that ANZ may be a likely bidder for AXA Asia Pacific Holdings depending on how the AXA Group/AMP bid evolves.

 

[oldblue]

Unrelated to your current discussion, but its emerged in the press that ANZ may be a likely bidder for AXA Asia Pacific Holdings depending on how the AXA Group/AMP bid evolves.

It may very well be related.

As noted above, ANZ don't appear to need more capital at this stage unless they have further major acquisition plans. We know that they intend to grow but we don't know we don't know any details.

 

[Bill M]

Just wondering what peoples thoughts are on the new ANZ Convertible Preference Shares. I don't know alot about this sort of investment and would like to know what the pros and cons are.

I am an investor of these type of securities. The cons are that the security may trade under face value. If this happens and you need your money you will have to sell on market at a capital loss. During the GFC nearly all of these securities crashed and if you wanted your money back you would have made a loss.

Having said that the interest spread of between 3.1 to 3.3% (to be announced) is attractive and should hold prices at or above face value. The risk is that credit could become tighter in the future and then companies may issue other securities with higher yields. For example if a company issued a product with 4.5% above the bbsw then which would you buy the ANZ one with 3.1% or the XYZ with 4.5%. If that happens then again the capital value can drop. We are coming out of the greatest credit squeeze I have ever seen so I think there is not much chance of that but who knows there are some gurus out there predicting worse to come.

All in all it is a reasonably safe investment (as long as ANZ doesn't go belly up) which will gross you about 7% today but rates are going up and as they do so will your interest rate on this investment which will give you higher returns, good luck.

 

[Bill M]

Just a quickie,

I'm very interested in buying a block of these new CPS2's for my old old lady as I expect them to give her a quite good income stream as interest rates continue to rise.
With regard to subscribing, should I expect to get scaled back, and thus would you think it would be sensible for me to over apply to ensure we get allotted the desired amount?
Should we not get scaled back, are we under any obligation to pay for the full amount we applied for or can we just take the desired amount?

ricee007 is pretty much right with what he has said. Just as a side note I thought that the CBA PERLS V offer was going to be scaled back too but to my surprise it wasn't. Both my wife and I got full allocations, no scale back so I would be reluctant in subscribing for more than neccessary, cheers.

 

[oldblue]

It may very well be related.

As noted above, ANZ don't appear to need more capital at this stage unless they have further major acquisition plans. We know that they intend to grow but we don't know we don't know any details.

Here's Stephen Bartholomeusz' take on how the Australasian part of the AXA business may become contested.
The Asian business is spoken for - the French parent has a firm hold via its majority holding - but others may bid against AMP for the rest.
Personally, I don't see ANZ being interested in this. Their main interest is in expansion in Asia, which isn't possible here, and Mike Smith is unlikely to enter a bidding war for the local business. Still, you never know!

http://www.businessspectator.com.au...Pacific-pd20091109-XM3UC?OpenDocument&src=kgb

 

[doctorj]

Here's Stephen Bartholomeusz' take on how the Australasian part of the AXA business may become contested.
The Asian business is spoken for - the French parent has a firm hold via its majority holding - but others may bid against AMP for the rest.
Personally, I don't see ANZ being interested in this. Their main interest is in expansion in Asia, which isn't possible here, and Mike Smith is unlikely to enter a bidding war for the local business. Still, you never know!

http://www.businessspectator.com.au...Pacific-pd20091109-XM3UC?OpenDocument&src=kgb

Thanks for the link. Very interesting article. To be honest, I don't see AMP taking the whole lot either. What I do think is interesting is AXA is going after AXA APH when AIG and ING are in play.

 

[ricee007]

I am an investor of these type of securities. The cons are that the security may trade under face value. If this happens and you need your money you will have to sell on market at a capital loss. During the GFC nearly all of these securities crashed and if you wanted your money back you would have made a loss.

All in all it is a reasonably safe investment (as long as ANZ doesn't go belly up) which will gross you about 7% today but rates are going up and as they do so will your interest rate on this investment which will give you higher returns, good luck.

Hehe, I bought MXUPA, FXJPB and GNSPA (and have held BEPPA). In profit on all of them, except GNSPA ($14 loss).

 

[Largesse]

I have a couple of follow up questions, and thank you for your previous answers. I am new to preference shares.

1) The issue price is fixed at $100 no matter now many bids they receive?
2) The way the dividend is calculated is a margin of 3.10-3.30% + BBSW. BBSW is based on RBA interest rates yes? Theoretically, what should I expect to happen to the market price of the CSP2's in the event of changes in the official interest rate/BBSW?

I would've thought increase in IR would lead to increase in price of CSP2 as people arb out the yield differentials between fixed rate preference shares/bonds and the floating rate pref's/bonds? Or do I have it completely wrong?

Thanks in advance

 

[ricee007]

I have a couple of follow up questions, and thank you for your previous answers. I am new to preference shares.

No worries. It's either talk preference shares, or study for tomorrows Property Law exam.... Shares win. NCIS: LA in 5 minutes though.

1) The issue price is fixed at $100 no matter now many bids they receive?

Yep, 100% fixed. Will be issued at $100, come heaven or hell. That's kind of irrelevant though. I mean, if the price (face value) was $200, and you bought $5,000 worth and got 10% interest a year... you would get 25 CPS2, each giving interest of $20 a year.... = $500.

If face value was $100, and you bought $5000 worth, and got 10% interst a year.. you would get 50 CPS2, each receiving $10 of interest = $500.

2) The way the dividend is calculated is a margin of 3.10-3.30% + BBSW.

Correct. Well, 'approximately 3.1-3.3%', we will know soon. I would guess 3.1%, but.

BBSW is based on RBA interest rates yes?

Yes, no, maybe.
Firstly, http://www.afma.com.au/scripts/nc.dll?AFMAv6:HOMEPAGE Top right is 24 hours delayed 90day BBSW (the relevant BBSW)... 3.97% or so ATM.

Secondly, as the RBA increases 'the target cash rate' (the headline figure everyone talks about, currently 3.5%)... the 90dayBBSW should increase. However, the 90dayBBSW sort of anticipates the 'target cash rate'... I could explain it technically, but, if you need to know, Google it.

Theoretically, what should I expect to happen to the market price of the CSP2's in the event of changes in the official interest rate/BBSW?

Well, if RBA raised interests rate tomorrow, the 90dayBBSW would rise (assuming it hadn't factored in a rate increase).... Lets say the 90dayBBSW rate was, say, 100% (ridiculous, but, work with me). That means every year, ANZ will give every CPS2 owner 3.1%+100% in interest... or, $103.10 per year. If ANZ was giving everyone $103.10, every year, for 7 years... if you give them $100 now.... they will obviously be worth much, much higher than $100. Ergo, price increases.

But, also, note, the 'yield' of similar securities (CBAPA, etc) also increases.... people put more money into savings accounts... what will the affect of 100% interest rates? WIll ANZ risk collapsing and defaulting? Does 100% interest rates mean that the economy is screwed? Etc.

But, yes, all things being equal, as the RBA increases interest rates, these become more valuable. Yes.

 

[boofhead]

For further reading check out how hybrids work like CBA's PERLS products.

The $100 is the listing price, treat it like any other IPO. Once listed the price is set my the market. BBSW is an influence on the market price.

The BBSW is not RBA rate although it follow similar patterns. It is the market rate - it can go up and down independent of the RBA.

The dividend (interest) is calculated using the face value of $100 and not the trading price.

It is interesting how the margin is expected to be %3.10 to %3.30 while PERLS V is something similar recently issued with a margin of %3.40. BBSW increases the main driver to reduce the margin? A greater market desire for the product of this type means it doesn't need as much of a sweetener?

 

[Bill M]

1) The issue price is fixed at $100 no matter now many bids they receive?

Yes

2) The way the dividend is calculated is a margin of 3.10-3.30% + BBSW. BBSW is based on RBA interest rates yes?

Not exactly usually it is about .25% higher than the offical RBA rate. For example when the GFC was in full swing the RBA rate was 3% but the 90 day bbsw was around 3.25%.

Theoretically, what should I expect to happen to the market price of the CSP2's in the event of changes in the official interest rate/BBSW?

I would've thought increase in IR would lead to increase in price of CSP2 as people arb out the yield differentials between fixed rate preference shares/bonds and the floating rate pref's/bonds? Or do I have it completely wrong?

You are right mostly, I would expect them to rise in price also. What you might not be taking into consideration is the credit cycle. At the depth of the GFC no one could get any money from anyone without paying more for it. Therefore new issues were being offered at rate of 4.5% above the bbsw rate. When that happens existing lower interest rate securities lose face value because new buyers don't want something paying a piddly .75% above the bbsw and they will go for the highest offerings. A good example of that was AMP's AQNHA check that one out. Since listing last year with a spread of around 4.5% it's capital value has increased by 10%, everyone chasing the yield like you said. So unless we go back to a terrible credit squeeze like that again then I would expect CPS2 to go up. Credit is becoming easier now and any rate rises should improve the capital value of your CPS2. Incidentally I will be buying a parcel of these as I believe rates will keep going up.

After I typed all of this I noticed others have already answered your queries, sorry if I have repeated anything, cheers.