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Hybrid Securities

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Re: Hybrid Securities GNSPA

The Hastings Diversified Fund (HDF) $250M equity raising has given TAPS (TTXPA) a good boost today. $110M is to be set aside for the redemption of these securities.

Warren, why don't you drop "GNSPA" off the title of this thread? It is a little confusing.
 
Re: Hybrid Securities GNSPA

Calliope, I wanted to drop GNSPA from the title and I suggested it back near the start of the thread.
Trouble is I don't know how!!!!
Warren
 
Re: Hybrid Securities GNSPA

You can't do this. PM a moderator or Joe and ask for this to be done.
 
A few of the hybrids that were mentioned here are having a run recently.
The price and volume of IANG has been very interesting in the last few days.
It is almost like someone knows that it will get redeem in 2010.
 
Pretty big gains in MXUPA and IANG so far today, both set to reset/step up or redeem early 2010.
 
shiftyphil said:
Pretty big gains in MXUPA and IANG so far today, both set to reset/step up or redeem early 2010.
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I have IANG. I bought SEVPC and TTXPA for the same reason some time back. They have done well. There may be more mileage in SEVPC at $92.70. TTXPA has slowed down on $97.
 
Looks the Hybrids are getting a bit of rerating, maybe debt isn't so dirty anymore. PXUPA is up about 80% from the recent lows. Plus big runs on my other two hybrids MXUPA and ELDPA. They are making my portfolio look a lot healthier without even considering the big yields.

Still plenty of upside in some of these.
 
The run up in hybrids has been great and my comments are as follows:

SEVPC - have started to lower my exposure just in case Stokes makes a bid for CMJ which may mean no redemption.

MXUPA has moved up to a much fairer pricing level. There is a chance at redemption and if not the yield is great. I say fairer pricing as it shouldn't have traded at a discount to hybrids like AAZPB - there is even a good argument that potential redmption means their should be a premium.

IANG is an interesting one - I would hate to get stuck with the preference share if they didn't redeem and the price would drop significantly so I am keeping my eyes peeled for clues.

DXRPA have taken part profits at $79 - $80 as potential conversion is a while off.

RHCPA will let position sit - close to cashing out as it approaches $100.

TTXPA waiting for redemption

PXUPA and FCLPA can't bring myself to invest in anything to do with such terrible businesses.

AAZPB and GNSPA might be good yield plays at the right price and be redeemed when there is better and cheaper liquidity in the debt markets.
 
jb ppx may have some significant revenue squeeze for the next twelve months, but you'd be struggling to find a company with lower gearing. Considering you are buying debt that is pretty significant.

ELDPA is a risky play.
 

I agree with your comments jbl. You have obviously done your homework. As it turns out AAZPB is not only a good yield play, but it got a remarkable jump in the market this morning.
 
SD,

accept your comments re PXUPA. I nearly bought it (and should have based on the price movement) but I couldn't get past what a terrible business Paperlinx is. If they get to a point where they can resume payments on the hybrids it has a long way to run.

FCLPA (ELDPA) have completely done their dash with me given their continual revisions and poor management of working capital - it is in my never ever basket.
 
Calliope said:
I agree with your comments jbl. You have obviously done your homework. As it turns out AAZPB is not only a good yield play, but it got a remarkable jump in the market this morning.
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Calliope with regard to AAZPB I was hoping I could sneak some a bit lower than the extent of the jump today. To be frank these are a good buy up to $75.00 i.m.o. (4.8% base yield and much higher chance of redemption at some stage).

I don't know about anyone else but I am now finding it harder to find equities to buy that I consider great value (the last 6 months have been a smorgasboard) and so am lokking at places to park cash.
 
Interestingly Intelligent Investor has just put a buy for yield on AAZPB up to $75.00 (I promise I don't read it before my post!).

The numbers are good:
- quite secure risk profile post capital raise and with a key shareholder related to the Singapore Govt.
- Margin of 4.8%
- Quarterly distributions
- at a $70.00 purchase price the distribution is 11.37%p.a. If rates go up your margin will increase.

With the capital raise I bench it as being on par with DXRPA (better yield but arguably higher risk).

MXUPA now definitely should trade at a discount to AAZPB - I would buy MXUPA up to $55.00.
 
Very interesting.. I have similar hybrids portfolios as yours.

Not very comfortable with this one because it is a preference share over a unlisted entity. (Unfortunately I got it when Multiplex was listed and I hold it all the way)

jbl1971 said:
IANG is an interesting one - I would hate to get stuck with the preference share if they didn't redeem and the price would drop significantly so I am keeping my eyes peeled for clues.
Click to expand...

I sold this one yesterday. I am very confused about the conditions in the prospectus. If it is allowed to go to the reset date then it is all fine and worth it. My main worry is about the part where it can be converted to IAG Preference Shares at any time. If it is convert to IAG preference shares, then the margin is maintain at 1.20% and the step up date is ten years from the conversion date (did I read it correctly??). With that terms, IAG would be a bit weird not to convert it to Preference Shares given there is no way they can get that margin in current credit environment. Unless they don't need the money (but then why do they do a capital raising a few months back??). But consider the proceed of IANG is currently invested with bills and bonds, that mean they don't really need it? I got it 2 months back thinking that even it gets converted the price won't be that much worse than that level. At current price I am happy to just take profit due to all the confusions..

jbl1971 said:
RHCPA will let position sit - close to cashing out as it approaches $100.
Click to expand...

Same position. Though I don't mind holding if they step up the margin to 4.85%.

jbl1971 said:
PXUPA and FCLPA can't bring myself to invest in anything to do with such terrible businesses.
Click to expand...

Same here, not touching these two.

jbl1971 said:
AAZPB and GNSPA might be good yield plays at the right price and be redeemed when there is better and cheaper liquidity in the debt markets.
Click to expand...

I bought into AAZPB last week after I read that ALZ still declare distributions for the half year, and Singapore investment arms hold 60% of the company and probably won't let it bankrupt. Good timing I guess. I also has ORIPB, thinking of taking profit.

Recently bought into NABHA thinking of holding long term. I sort of thinking about building up an "income stream" from listed investment.. Also when the interest rate starts to move higher, may be the price get a bit closer to 80 marks because higher yield.
 
Glad I have those risky ELDPA's today. I think the chnage is reflective of the risk that has now been taken off the table. Major debt pay down and good spp.

Still some risks, that's why it's still running at 12% yield at 50/100 face value. But ELD is no longer on death watch.
 

Yah.. A lot of the companies have worked hard to strengthen their balance sheet now. The market is also willing to take on a bit more risk. Interesting that gap between MBLHB (rated BBB+) and NABHA (rated AA-) has now shrinking fast.
 
SD, Jackman at Elders has done a great deal for them in terms of survival and hybrid holders can thank him for that - good luck to you. QBE's subscribing for shares reflects their view (and they are capable people) that Elder's distribution network is more valuable than the market gives them credit for.

The recent performance of hybrids across the board reflects the increasing appetite for risk in the market. They are a good place to have your money at the moment - collect a good yield and wait for redemption when rates allow.

IANG worries me because unlike other instruments there is no punitive step up to encourage redemption - they can convert to a 10 year preference share at a 1.2% margin (well below current rates). I have compared them to IAGPA which currently pays 5.63% per annum and trades circa $100. If IANG converts to a preference share then it should trade circa $70 to $75 with upside if rates go up.
 

IAGPA is paying a fixed and fully franked dividend (so gross up to 8%). IAGPA is rated "A" so if converted IANG will probably rated the same. Compare to WCTPA, maturing/stepping up in 7 years, which is rated "A" as well the price is about 85-86 range at the moment. And PCAPA, rated "A+" and trading at 170-172 range. Since it will be a long time before it is converted or step up, I tried to look at NABHA which is rated "AA-", currently trading at 75 level. So it looks like it can go between 70-85 range. I guess the wildcard is for any reason, IAG decides to redeem it. But looks like it will probably be toward high seventy to mid 80 range.
 
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