Bonds

kiwi2007 · Oct 17, 2022, 01:22 PM

Air New Zealand (AIR) has announced that it plans to issue a 5.5-year senior bond.

The interest rate has not yet been fixed, but it has set a minimum interest rate of 6.00%, with interest paid semi-annually.

Air New Zealand has an investment grade credit rating, is 53% owned by the New Zealand Government and has over $2.1b in current liquidity.

AIR will be paying the transactions costs for this offer. Accordingly, clients will not be charged brokerage.

Glenorchy · Oct 17, 2022, 05:34 PM

The Air Bond is expected to be heavily over-subscribed and therefore will be brutally scaled. I guess most think AIR as our only airline would never be allowed to fail and the govt is the majority owner and so given the rate it's pretty attractive for people but would or could an AIR bond ever be allowed to default?

kiwi2007 · Oct 18, 2022, 11:22 AM

The 6% interest rate and there being no brokerage costs are positives but buying unsecured and unsubordinated bonds in an airline when we're probably going into a (possibly severe) recession is for the brave IMO.

Glenorchy · Oct 18, 2022, 02:31 PM

I would say after this mornings inflation numbers, that we'll be in a position to get over 6% from arguably safer sources quite soon.

kiwi2007 · Oct 20, 2022, 05:00 PM

The $100 mln Air NZ retail bond offer has closed and the interest rate has been set at 6.61% per annum. This reflects an issue margin of 1.50% per annum over the base rate of 5.11% per annum. That is far above the indications set when this unsecured, unsubordinated, five year bond was launched on Monday. Then it seemed they would be paying 6.25%. They have been caught in an interest rate updraft since.

mcdongle · Oct 21, 2022, 08:58 AM

Auckland Airport seems to be the next in line to offer a bond

kiwi2007 · Oct 25, 2022, 09:21 PM

Auckland International Airport (AIA) has announced that it plans to issue a 5.5-year senior bond.

The interest rate has not yet been fixed, but based on comparable market interest rates, we are expecting a rate around 5.90%, with interest paid semi-annually.

Auckland Airport is New Zealand's largest commercial airport, with over 2/3 of all domestic sectors. It also owns 1,500 hectares of freehold land and produced an after-tax profit of $191m for the past financial year.

AIA has a strong, stable credit rating of A-.

Please note that AIA will not be paying the transactions costs for this offer and it's 10K min.

I quite like this one. 5.9% for an A- bond for five and a half years looks OK to me.

Gerald · Oct 25, 2022, 11:08 PM

Quote from: kiwi2007 on Oct 25, 2022, 09:21 PMAuckland International Airport (AIA) has announced that it plans to issue a 5.5-year senior bond.

The interest rate has not yet been fixed, but based on comparable market interest rates, we are expecting a rate around 5.90%, with interest paid semi-annually.

Auckland Airport is New Zealand's largest commercial airport, with over 2/3 of all domestic sectors. It also owns 1,500 hectares of freehold land and produced an after-tax profit of $191m for the past financial year.

AIA has a strong, stable credit rating of A-.

Please note that AIA will not be paying the transactions costs for this offer and it's 10K min.

I quite like this one. 5.9% for an A- bond for five and a half years looks OK to me.

Only 1.5% over the risk free. What premium did AIA have to pay in the past?

Also whats the TC out of interest. Sorry lazy :p

BlackPeter · Oct 27, 2022, 02:55 PM

Quote from: kiwi2007 on Oct 25, 2022, 09:21 PMAuckland International Airport (AIA) has announced that it plans to issue a 5.5-year senior bond.

The interest rate has not yet been fixed, but based on comparable market interest rates, we are expecting a rate around 5.90%, with interest paid semi-annually.

Auckland Airport is New Zealand's largest commercial airport, with over 2/3 of all domestic sectors. It also owns 1,500 hectares of freehold land and produced an after-tax profit of $191m for the past financial year.

AIA has a strong, stable credit rating of A-.

Please note that AIA will not be paying the transactions costs for this offer and it's 10K min.

I quite like this one. 5.9% for an A- bond for five and a half years looks OK to me.

I guess buying bonds at the moment is pure speculation on dropping inflation. If inflation drops come next year and stays down, than yes, 5.9% look really good.

If inflation however stays where it is or accelerates, then even 5.9% means we are overall losing money and still paying taxes on our loss (adding insult to injury ...).

Just saying. Still wondering how the people feel who bought some years ago 0% (or even negative interest) bonds with 30 years maturity expecting a really long deflationary period. Just shows that it is impossible to predict future interest rates and inflation.

Discl: I did buy recently some bonds in the 5.5. to 6% bracket (basically my mid term cash allocation), but try at this stage not to move too much money into them.

kiwi2007 · Oct 27, 2022, 04:55 PM

Auckland Airport have set the interest rate at 5.67% and have applied scaling to the bonds.

Glenorchy · Oct 27, 2022, 10:49 PM

SBS Bank are offering 5% for a 12 month term investment now.

kiwi2007 · Oct 29, 2022, 12:40 PM

Quote from: Glenorchy on Oct 27, 2022, 10:49 PMSBS Bank are offering 5% for a 12 month term investment now.

A look at how all the banks are responding - David Chaston seems to suggest that others will follow with 5% offerings.

https://www.interest.co.nz/personal-finance/118185/5-offer-one-year-term-deposit-has-burst-scene-savers-potentially-ending

A 5% offer for a one year term deposit has burst on to the scene for savers, potentially up-ending the current rate cards of other banks. But despite this, TD rates have been rising anyway, and compared to home loan rates, aren't much out of line
[UPDATED]

27th Oct 22, 11:57am by David Chaston

Basil · Oct 29, 2022, 04:31 PM

5% is a big change from a year ago when you struggled to get 2%.

kiwi2007 · Nov 08, 2022, 04:02 PM

ASB Bank (ASB) has announced that it plans to issue a new four-year senior note.

The four-year interest rate has not been announced, but based on comparable market rates, we are expecting an interest rate above 5.50%.

These notes have a strong credit rating of AA-.

ASB will not be paying the transactions costs for this offer. Accordingly, clients will be charged brokerage.

Glenorchy · Nov 09, 2022, 03:59 PM

The ASB four year senior note has been set at 5.928. The rate used to set the interest rate has been on the rise. They accepted 550,000,000 of over-subscriptions so it was popular.

Next up will be BNZ who are meant to be bringing a 6 yr bond offer to market shortly