Found this negative review of CPS3:
http://www.intelligentinvestor.com.au/articles/ANZ-CPS3-Convertible-Preference-Shares-ANZPC/ANZ-CPS3-A-three-strike-failure.cfm
Article makes sense to me, and I actually found it quite educational (at least for a newbie like me); so I'm definitely avoiding this offer. Already have ordinary shares in ANZ anyway.
Slightly harsh in my opinion.
I mean... the articvle is flawed. Just because it's a good deal for ANZ, doesn't mean it's a bad deal for investors. Using that logic, no-one would ever get a home loan, or even get a job... both parties CAN win in a transaction. We know this because that article recommends you purchase OTHER assets that are for sale.
The other key part of the article is:
"In the event of a financial cyclone, though, these preference shares will behave much more like equity than debt."
And, that is correct. However, in a 'large financial downturn' or 'normal' or 'good' or 'great' or ANYTHING short of a 'financial cyclone'.... the CPS3 should hold up quite well. At the end of the day, their price may go down.... but, if you can hold till 2016, that's perfectly fine. Otherwise, they should still be paying dividends.
"They’re barely worth the paper they’re written on. If ANZ’s tier 1 capital falls below 5.125% (it’s currently about 8.5% and was 5.2% in 2007)"
Well, yes.... but, it was also at around 10% during the GFC as the bank took a conservative approach. Back in 2007, T1 ratios of 5.2 was normal. Now, post-GFC, APRA requirements (and global standards) are higher.... and ANZ won't go back down to 5.125, baring a major catastrophe... in which case, the ordinary shares would get so entirely pummeled that it is not funny.
$100 is probably a fair price... their other 3.1% CPS are trading at circa $101, but have sllllightly more protection.... so, $100 is probably fair. THey were obviously quite oversubscribed though, so there is no reason that they can't (even temporarily) go to $101.
As to whether or not I'll buy? Almost certainly not, as I don't want to spend $5,000. If they fall below $100 once trading, I'll consider picking up a small parcel of $3000 or so.