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It seems some people on the sidelines without knowledge of credit markets or even pricing of debt instruments should not be making these kinds of comments. The person interviewing Phil Green obviously has absolutely no idea, only that the yield is now about 30%....

First, lets actually understand the instrument issued, they are unsecured subordinated cumulative resettable notes. It has always surprised me how unsophisticated the Australian market has been with these kinds of issues in the past. BNB are giving you 2.20% above BBSW (Australian Bank Bill Swap Rate) and you are taking on: debt, that in the event of default, ranks BEHIND that of all creditors other than those creditors who have specifically requested to be ranked further down the chain or the ordinary shareholders. I don't know about you, but even before this crash in debt markets, 220 bps really isn't enough to essentially be taking an equity tranche in a debt issue. AFG's Mobius trust used to love investing in these kinds of instruments and even they were smart enough to request above 500 bps, even without the conditions we have today.

So first factor is that in my view, the instrument should have traded well below par from the beginning. Next point, consider the conditions we are now faced with. Spreads between AAA - BBB have widened to ridiculous levels depending on the firm. Now consider the Bear Sterns incident - does it really surprise anyone that they are trading at low levels in light of the security provided. Because, to me, it seems fairly logical thats where they are. As for whether Phil would want to buy them back, do you really think he is going to be dumb enough to issue another say 80 Mil BNB shares that are going to further depress the BNB share price? Although, considering the discount they are trading at, it could definitely be beneficial to convert them to scrip because they would actually have a gain on disposal of debt securities (hilarious)...

Enough of my rant, personally I wouldn't pay much attention to the interview because obviously the interviewee has absolutely no idea... As for whether I would rushing out to buy BNB scrip, as I have said previously, I would be looking for a break of $15 and start to see some support for the stock. Because regardless of the fundamentals which I think long term are strong, people don't like this stock at the moment. Bare in mind it's 3 return since listing is still over 70%!!!!!! It's been a rocky ride so far..

Cheers

<blockquote data-quote="reece55" data-source="post: 273939" data-attributes="member: 4401">It seems some people on the sidelines without knowledge of credit markets or even pricing of debt instruments should not be making these kinds of comments. The person interviewing Phil Green obviously has absolutely no idea, only that the yield is now about 30%....First, lets actually understand the instrument issued, they are unsecured subordinated cumulative resettable notes. It has always surprised me how unsophisticated the Australian market has been with these kinds of issues in the past. BNB are giving you 2.20% above BBSW (Australian Bank Bill Swap Rate) and you are taking on: debt, that in the event of default, ranks BEHIND that of all creditors other than those creditors who have specifically requested to be ranked further down the chain or the ordinary shareholders. I don&#039;t know about you, but even before this crash in debt markets, 220 bps really isn&#039;t enough to essentially be taking an equity tranche in a debt issue. AFG&#039;s Mobius trust used to love investing in these kinds of instruments and even they were smart enough to request above 500 bps, even without the conditions we have today.So first factor is that in my view, the instrument should have traded well below par from the beginning. Next point, consider the conditions we are now faced with. Spreads between AAA - BBB have widened to ridiculous levels depending on the firm. Now consider the Bear Sterns incident - does it really surprise anyone that they are trading at low levels in light of the security provided. Because, to me, it seems fairly logical thats where they are. As for whether Phil would want to buy them back, do you really think he is going to be dumb enough to issue another say 80 Mil BNB shares that are going to further depress the BNB share price? Although, considering the discount they are trading at, it could definitely be beneficial to convert them to scrip because they would actually have a gain on disposal of debt securities (hilarious)...Enough of my rant, personally I wouldn&#039;t pay much attention to the interview because obviously the interviewee has absolutely no idea... As for whether I would rushing out to buy BNB scrip, as I have said previously, I would be looking for a break of $15 and start to see some support for the stock. Because regardless of the fundamentals which I think long term are strong, people don&#039;t like this stock at the moment. Bare in mind it&#039;s 3 return since listing is still over 70%!!!!!! It&#039;s been a rocky ride so far..Cheers</blockquote>

[QUOTE="reece55, post: 273939, member: 4401"] It seems some people on the sidelines without knowledge of credit markets or even pricing of debt instruments should not be making these kinds of comments. The person interviewing Phil Green obviously has absolutely no idea, only that the yield is now about 30%.... First, lets actually understand the instrument issued, they are unsecured subordinated cumulative resettable notes. It has always surprised me how unsophisticated the Australian market has been with these kinds of issues in the past. BNB are giving you 2.20% above BBSW (Australian Bank Bill Swap Rate) and you are taking on: debt, that in the event of default, ranks BEHIND that of all creditors other than those creditors who have specifically requested to be ranked further down the chain or the ordinary shareholders. I don't know about you, but even before this crash in debt markets, 220 bps really isn't enough to essentially be taking an equity tranche in a debt issue. AFG's Mobius trust used to love investing in these kinds of instruments and even they were smart enough to request above 500 bps, even without the conditions we have today. So first factor is that in my view, the instrument should have traded well below par from the beginning. Next point, consider the conditions we are now faced with. Spreads between AAA - BBB have widened to ridiculous levels depending on the firm. Now consider the Bear Sterns incident - does it really surprise anyone that they are trading at low levels in light of the security provided. Because, to me, it seems fairly logical thats where they are. As for whether Phil would want to buy them back, do you really think he is going to be dumb enough to issue another say 80 Mil BNB shares that are going to further depress the BNB share price? Although, considering the discount they are trading at, it could definitely be beneficial to convert them to scrip because they would actually have a gain on disposal of debt securities (hilarious)... Enough of my rant, personally I wouldn't pay much attention to the interview because obviously the interviewee has absolutely no idea... As for whether I would rushing out to buy BNB scrip, as I have said previously, I would be looking for a break of $15 and start to see some support for the stock. Because regardless of the fundamentals which I think long term are strong, people don't like this stock at the moment. Bare in mind it's 3 return since listing is still over 70%!!!!!! It's been a rocky ride so far.. Cheers [/QUOTE]

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