Hybrid Securities
- Thread starter Warren Greenspan
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Hmm, there MAY be better value than FXJPB (GNSPA at $65, for example!!!)... but, in the media section, I much prefer FXJPB over SEVPC!
I worked out a circa 19.5% yield on FXJPB... which, for the risk, seemed quite a good deal for me... but, of course, depending on your risk profile, there may be better securities out there. I'd probably prefer a few more, but 10.5% of my portfolio is alright.
I worked out a circa 19.5% yield on FXJPB... which, for the risk, seemed quite a good deal for me... but, of course, depending on your risk profile, there may be better securities out there. I'd probably prefer a few more, but 10.5% of my portfolio is alright.
Appears Moody's has downgraded banking hybrids by 2 notches. CBA put out a release. Moody's didn't rate PERLS V so they are unchanged. S&P has not rerated any yet.
Does anyone expect the higher risk rating to translate in to slightly lower prices? I don't expect the majors to have much price degradation with rising interest rates.
If new issues arrise hopefully it means healthier margins which would otherwise be reduced due to improvements in the markets.
Does anyone expect the higher risk rating to translate in to slightly lower prices? I don't expect the majors to have much price degradation with rising interest rates.
If new issues arrise hopefully it means healthier margins which would otherwise be reduced due to improvements in the markets.
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There might be some selling pressure, as some big funds are mandated to hold
a specified grades of security in various proportions.
I read an article somewhere to this effect, but it also noted effects might be hard to gauge due to other agencies not re-rating.
a specified grades of security in various proportions.
I read an article somewhere to this effect, but it also noted effects might be hard to gauge due to other agencies not re-rating.
Bill M
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Nearly all the listed Hybrids jumped yesterday on the news of the increase in interest rates, nice to see green all over my porfolio for a change. Bought another batch of SEVPC with the intensions of holding and collecting decent dividends for the future and possible capital gains to come. A few more rate rises will be good news for hybrid and note holders.
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Nearly all the listed Hybrids jumped yesterday on the news of the increase in interest rates, nice to see green all over my porfolio for a change. Bought another batch of SEVPC with the intensions of holding and collecting decent dividends for the future and possible capital gains to come. A few more rate rises will be good news for hybrid and note holders.
Yes, the hybrids love interest rate rises and my portfolio jumped accordingly. I didn't hold SEVPC and yesterday bought 300. They look very attractive having dropped about $10 and will now be returning about 11% yield.
If GNS sells some assets for a decent price, Mitre10, wine and construction.... I'll be throwing myself at some GNSPA. Might even make them my second highest holding. Perhaps evenb if GNSPA declares a 2nd half dividend, as intended... that may be my signal.
MXUPA is also looking tempting again... but, I think FXJPB provides better value.
ELDPA is also always tempting, but, not quite enough yet. Probably going to be around this SP for say 10-12 more months.
SEVPC is nice, but I'm not 100% sure on all the details. It looks like they'll step up and become "perpetual" @ 4.75% above from 1st June 2010?
@ $85, $9.25 in interest = 10.88% running yield... +18% redemption value sometime in the next few years. Presume its in 3 years time, 17% per annum yield. Though, AFAIK, no time-frame for redemption has been set?
Equivalent of $2.35 non-franked dividend to be paid on circa 14th July... with an ex-date of circa 30th June. I might need some by then.
MXUPA is also looking tempting again... but, I think FXJPB provides better value.
ELDPA is also always tempting, but, not quite enough yet. Probably going to be around this SP for say 10-12 more months.
SEVPC is nice, but I'm not 100% sure on all the details. It looks like they'll step up and become "perpetual" @ 4.75% above from 1st June 2010?
@ $85, $9.25 in interest = 10.88% running yield... +18% redemption value sometime in the next few years. Presume its in 3 years time, 17% per annum yield. Though, AFAIK, no time-frame for redemption has been set?
Equivalent of $2.35 non-franked dividend to be paid on circa 14th July... with an ex-date of circa 30th June. I might need some by then.
Bill M
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You're a clever man, got it at a good price and a dividend drop coming next Month, well done.
Bill M
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You have worked it out pretty well. As I understand it, it is perpetual and I have accepted this and that is probably why people wanted to get out of it. I look at it a different way. I think Seven Group will be a better company after the restructure. I also think telys4 will be much better than telys3 and the dividend is extremely good. My opinion is that once all of the sellers who have been spooked sell their stocks then the price will improve slightly until the ex dividend date.
Then in the future as interest rates increase this Hybrid may get re-rated upwards. I believe and hope this will get the price up to somewhere in the $90 to $95 mark. As rates rise in the future the interest burden might get a bit too much for the new Seven Group and they may repurchase the hybrids. (You never know and it could happen) They can repurchase for face value of $100 at any dividend payment time as far as I understand. In the mean time I am happy to hold at these prices and these dividends and I am ready to sell on market when or if the price improves and I feel like selling. I suggest to anyone who is interested in investing in these to read all the scheme booklets and the telys4 prospectus and good luck.
4.75% for a low-medium risk large company is, historically, a very high margin. Hell, 3% is, historically, high.
So, I do expect conversion one day. However, considering that they are being "re-offered" (effectively)... it would seem not for a couple of years. Would 3 be your estimate? Longer? Shorter?
Now, I know I might be being optimistic, but, I'd prefer 15% ROI... SEVPC @ 11% just doesn't quite cut the mustard.... For that reason, if I can jump out of FXJPB @ near $95, I very much might. $94 ex-div would be a dream come true, but, probably need to see the market increase substantially, *AND* news that increases the likelihood of a May RBA increase... so, seems unlikely in the immediate term.
With most hybrids stepping up lately (at least, the ones I've been looking at, MXUPA, GNSPA and SEVPC, for example!), I'm now less sure that FXJPB will be converted in April 2011.... so, wouldn't mind getting out, if the price is right.
So, I do expect conversion one day. However, considering that they are being "re-offered" (effectively)... it would seem not for a couple of years. Would 3 be your estimate? Longer? Shorter?
Now, I know I might be being optimistic, but, I'd prefer 15% ROI... SEVPC @ 11% just doesn't quite cut the mustard.... For that reason, if I can jump out of FXJPB @ near $95, I very much might. $94 ex-div would be a dream come true, but, probably need to see the market increase substantially, *AND* news that increases the likelihood of a May RBA increase... so, seems unlikely in the immediate term.
With most hybrids stepping up lately (at least, the ones I've been looking at, MXUPA, GNSPA and SEVPC, for example!), I'm now less sure that FXJPB will be converted in April 2011.... so, wouldn't mind getting out, if the price is right.
Bill M
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Nice jump on SEVPC today, up 3.5% with a divi next Month to come.
So_Cynical
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Hastings HDF is going to pay out TAPS, ive no idea why i took them 5 months to get around to announcing it :dunno: quote the ann below.
Hastings Funds Management Limited, as Responsible Entity for the Hastings Diversified Utilities Fund and the TAPS Trust, today advised that 100 percent of the Trust-issued Adjustable Preferred Securities (TAPS) will be redeemed and repaid in full on 30 June 2010 and TAPS investors will receive a cash redemption amount of $100 per TAPS security plus distribution for the quarter ending on 30 June 2010.
http://data.iguana2.com/hastings/news-item?Number=334941&Code=HDF
Hastings Funds Management Limited, as Responsible Entity for the Hastings Diversified Utilities Fund and the TAPS Trust, today advised that 100 percent of the Trust-issued Adjustable Preferred Securities (TAPS) will be redeemed and repaid in full on 30 June 2010 and TAPS investors will receive a cash redemption amount of $100 per TAPS security plus distribution for the quarter ending on 30 June 2010.
http://data.iguana2.com/hastings/news-item?Number=334941&Code=HDF
I have held (and still hold) GNSPA for several years and enjoyed excellent yield. In search of the Holy Grail of cash redemption which I thought might occur around mid 2011, I have several questions.
I have seen GNSPA drop as low as $46 on 26 Feb 09. At these prices why wouldn't Gunns buy them back on the open market, effectively repurchasing $120m of 'expensive' debt for $60m?
GNSPA liquidity is very low with daily trade totals often in the hundreds. On 26 Mar 10 I was interested to see on off market trade of 175,000 GNSPA @$56 when the market price was $58. This is about 15% of issue in one trade!
Gunns annual reports have never disclosed any GNSPA holdings. Am I looking in the wrong place?
Where can you see who the majority holders of GNSPA are?
The recent decision of Gunns not to pay the interim dividend gives them the right not to pay any GNSPA distribution on 14 Jul 10. Does it also mean they do not have to pay the 14 Oct 10 dist or would this also require no final div for GNS?
I have seen GNSPA drop as low as $46 on 26 Feb 09. At these prices why wouldn't Gunns buy them back on the open market, effectively repurchasing $120m of 'expensive' debt for $60m?
GNSPA liquidity is very low with daily trade totals often in the hundreds. On 26 Mar 10 I was interested to see on off market trade of 175,000 GNSPA @$56 when the market price was $58. This is about 15% of issue in one trade!
Gunns annual reports have never disclosed any GNSPA holdings. Am I looking in the wrong place?
Where can you see who the majority holders of GNSPA are?
The recent decision of Gunns not to pay the interim dividend gives them the right not to pay any GNSPA distribution on 14 Jul 10. Does it also mean they do not have to pay the 14 Oct 10 dist or would this also require no final div for GNS?
I think you'll find we are still quite a while away from no divis on GNSPA...
AFAIK, I didn't think preceding dividends were relevant when considering whether or not GNSPA had to pay a dividend. I thought it went the other way->GNS can only pay if GNSPA paid their last dividend*...
Your thoughts RE: repurchase need to be reconsidered.
IF GNS had the spare cash needed to rebuy GNSPA, would they be trading at $46?
*IF* GNS tried to rebuy GNSPA, do you think that GNSPA would remain at $46?
*With possibly needing 2 GNSPA dividends in a row in the case of a dividend restart?
I want to get out of FXJPB, and, I'm kinda annoyed that I'm sticking with my 90.89 price, when I prob could have got 90.45.
Just not sure. I want to get into STO, but, looking at the chart, could easily fall a little while yet.... when it starts to bounce, I may @market sell FXJPB and jump into STO... but it is notoriously hard to pick the bottom.
My GNSPA exposure is quite low... but, the risk of them stopping the dividend payment in, say, 6 months time, has prevented me from topping up... Circa 15% running yield is a fantastic opportunity, if they keep paying.
I suspect the next couple will be paid, esp. given the small issue, but... if they have another bad year, then, potentially, might find it hard.
The BEST thing that could possibly happen (besides someone offering to buy GNS and offering GNSPA holders $100) would be if GNS released that the PulpMill is no longer going ahead... so, they have tonnes of spare capital and enough cash. Might be devastating for GNS holders, but, I can only see it as a positive for GNSPA.
MXUPA is kinda tempting, esp at around $75....@ circa 11.2% running yield.... but, just not quite sure if these will be converted in the next couple of years.... Could hang around $80, up to $85 for the next 2 years....
AFAIK, I didn't think preceding dividends were relevant when considering whether or not GNSPA had to pay a dividend. I thought it went the other way->GNS can only pay if GNSPA paid their last dividend*...
Your thoughts RE: repurchase need to be reconsidered.
IF GNS had the spare cash needed to rebuy GNSPA, would they be trading at $46?
*IF* GNS tried to rebuy GNSPA, do you think that GNSPA would remain at $46?
*With possibly needing 2 GNSPA dividends in a row in the case of a dividend restart?
I want to get out of FXJPB, and, I'm kinda annoyed that I'm sticking with my 90.89 price, when I prob could have got 90.45.
Just not sure. I want to get into STO, but, looking at the chart, could easily fall a little while yet.... when it starts to bounce, I may @market sell FXJPB and jump into STO... but it is notoriously hard to pick the bottom.
My GNSPA exposure is quite low... but, the risk of them stopping the dividend payment in, say, 6 months time, has prevented me from topping up... Circa 15% running yield is a fantastic opportunity, if they keep paying.
I suspect the next couple will be paid, esp. given the small issue, but... if they have another bad year, then, potentially, might find it hard.
The BEST thing that could possibly happen (besides someone offering to buy GNS and offering GNSPA holders $100) would be if GNS released that the PulpMill is no longer going ahead... so, they have tonnes of spare capital and enough cash
. Might be devastating for GNS holders, but, I can only see it as a positive for GNSPA.MXUPA is kinda tempting, esp at around $75....@ circa 11.2% running yield.... but, just not quite sure if these will be converted in the next couple of years.... Could hang around $80, up to $85 for the next 2 years....
So_Cynical
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The BEST thing that could possibly happen (besides someone offering to buy GNS and offering GNSPA holders $100) would be if GNS released that the PulpMill is no longer going ahead... so, they have tonnes of spare capital and enough cash
Its probably fair to say that what's good for GNS holders is also good for GNSPA holders, and abandoning the mill would be share price positive for both i would think..even thou the economics of selling chips @ around 200 a tonne -V- Pulp @ 900 a tonne seem pretty clearly in favour of a mill.
Hmmm, not necessarily.
In this case, I think a big partner coming in and funding 50% of the mill would be be best for GNS....
But, no mill best for GNSPA.
Anyway, enough about that, whats everyones favourite Hybrid atm?
I don't know if FXJPB will step up in 12 months time or not.... (it is april 2011, right?)... 17% return is fantastic if they are converted, but, it's not quite so good if they step up...
Bill M
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Mine is PERLS V.
Up 3.6% since listing (that's after going ex dividend)
Mandatory Conversion in 5 years
Good dividend paying a 3.4% margin above the BBSW (That is 7.8% total now)
Rock solid parent company CBA
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My favourite is MXUPA
Medium Risk
Running yield 10.3%
Cheap at around $80.5
My best earner is AAZPB which I have held for a long time, also medium risk but about $10 dearer.
Medium Risk
Running yield 10.3%
Cheap at around $80.5
My best earner is AAZPB which I have held for a long time, also medium risk but about $10 dearer.
PERLSV don't have a high enough yield for me.
MXUPA @ $80 seems fairly priced... if I could grab @ $70, I'd instabuy.... if I could buy some @ $75 I'd probably buy.
There just doesn't seem to be any outstanding Hybrids left ->Not really since the days of MXUPA being $69.
Hmmm, perhaps GNSPA is the exception.... but, it's too risky to chuck 20% of my portfolio in ATM.... If the market likes the recent announcment on Tuesday, *AND* they announce a GNSPA dividend again..... and GNSPA is heading up (say, circa $69), I may just couple another 10% of my holdings (IE: my current FXJPB holdings into there)->Adding about 140% to my current holdings.
But, it'll depend on when I sell FXJPB, if STO looks like it is bouncing, etc
MXUPA @ $80 seems fairly priced... if I could grab @ $70, I'd instabuy.... if I could buy some @ $75 I'd probably buy.
There just doesn't seem to be any outstanding Hybrids left ->Not really since the days of MXUPA being $69.
Hmmm, perhaps GNSPA is the exception.... but, it's too risky to chuck 20% of my portfolio in ATM.... If the market likes the recent announcment on Tuesday, *AND* they announce a GNSPA dividend again..... and GNSPA is heading up (say, circa $69), I may just couple another 10% of my holdings (IE: my current FXJPB holdings into there)->Adding about 140% to my current holdings.
But, it'll depend on when I sell FXJPB, if STO looks like it is bouncing, etc
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Might get a chance at that price today.
Naturally I stocked up last month, right at the peak.
(Looks like a mostly positive announcement just came out while I was writing this, maybe it won't get dragged any lower.)
Found this while googling, has a good listing of hybrids with yields, updated most days:
http://www.macquarie.com.au/macsecmc/codi/CodiServlet?nav=start&documenttosend=income_security_doc