HGH - Heartland Group Holdings

[winner (n)]

Chris Lee speculating that Heartland will do another discounted rights issue in the near future ....that debt issue probably off agenda at the moment


https://www.chrislee.co.nz/taking-stock

[Basil]

I remain of the view that the most likely fallout from the overseas banking issues is the effect on the net interest margin (NIM) Heartland earns.

As a way for us to say thanks for being a valued Heartland customer, we're offering you a special term deposit offer. To make it even easier for you to make the most of your savings, you can either apply through the Heartland Mobile App or using the links below.
Your exclusive term deposit offer

If you apply for a Term Deposit by 28 April 2023, we're rewarding you with access to special rates on our 7-month and 11-month Term Deposits.

This today from Heartland with an 11 month term deposit offering 6.10% well above the big Aussie 4.
Interesting article https://www.newshub.co.nz/home/money/2023/04/report-reveals-aotearoa-behind-the-curve-on-banking-industry-changes.html
HGH do a lot of lending to SME's and defaults also look set to rise.
https://www.rnz.co.nz/news/business/487253/small-businesses-owners-face-dipping-into-personal-funds-to-stay-afloat
The only way they are maintaining a FY23 forecast that amounts to zero eps growth  is by treating some material things as extraordinary items below the line.
Maybe with the obvious headwinds in the economy, costs of funding impacting NIM and likely rise in delinquent loans they'll also struggle to get any eps growth in FY24 ?  On the other hand, if they can do it, maybe maintaining eps in a very slow economy isn't a bad result? 

Make of this what you will but I have never had so many emails from them in such a short space of time offering increased interest rates on call accounts and term deposits.

[lorraina]

Car sales were strong in March. There were 11,626 new cars registered in the month plus another 9,681 used imports.

But the strength was in the new vehicles. New car sales rose +4% from the same month a year ago to be only -2% below the all-time record high in September 2021.

I would guess Heartland's Marac are getting more than their share of financing these new cars.
So looks as though Heartland's funds will be earning straight away.
Good NIM in motor vehicle lending too.

[LoungeLizard]

Chris Lee speculating that Heartland will do another discounted rights issue in the near future ....that debt issue probably off agenda at the moment


https://www.chrislee.co.nz/taking-stock

Yes, difficult to know what is going on behind the scenes at Heartland, and banks are masters of the dark art of financial misdirection. The SP has responded well in the last few days so obviously some feel this is a good time to buy, and they may well be right. The TA doesn't indicate as such, but market sentiment does seem to to have softened. Still in watch and wait mode.

[winner (n)]

Share price had a nice climb in the lead up to the cap raise last August

Even got a speeding ticket ....but noth to disclose they said ha ha

Just saying

[lorraina]

The share prices of ANZ,HGH and WBC on NZX appear to be moving in unison currently.

[Basil]

Heartland proceeding with its proposed unsecured subordinated bond offer, indicative terms sheet here
https://www.heartland.co.nz/Uploads/Pohutakawa/Heartland%20Bank%20Limited%20-%20Indicative%20Terms%20Sheet%20(Lodgement).pdf
Credit rating of these bonds is BB+, (Below investment grade and sometimes referred too as junk bonds)
Not guaranteed by Heartland Group.  The margin above the swap rate will be set by a bookbuild on or about 21 April.
What does Tier 2 capital mean if things get really gnarly for HGH ?  Are you ostensibly taking an equity risk for a fixed income return and if so what's the point?

[lorraina]

As signalled in their 28th February announcement;
https://www.nzx.com/announcements/407458

[winner (n)]

Heartland proceeding with its proposed unsecured subordinated bond offer, indicative terms sheet here
https://www.heartland.co.nz/Uploads/Pohutakawa/Heartland%20Bank%20Limited%20-%20Indicative%20Terms%20Sheet%20(Lodgement).pdf
Credit rating of these bonds is BB+, (Below investment grade and sometimes referred too as junk bonds)
Not guaranteed by Heartland Group.  The margin above the swap rate will be set by a bookbuild on or about 21 April.
What does Tier 2 capital mean if things get really gnarly for HGH ?  Are you ostensibly taking an equity risk for a fixed income return and if so what's the point?

Not for you Basil

In first part of that document If you do not fully understand how they work or the risks associated with them, you should not invest in them

[Basil]

Not for you Basil

In first part of that document If you do not fully understand how they work or the risks associated with them, you should not invest in them

Agreed.  At least with ARV bonds, from my read of the debt issue documents, they rank equally with bank debt under a master trust agreement so you know exactly where you stand.  Pretty sure I could wrap my brain around them if I wanted too but I don't.

[winner (n)]

Even if they have to pay 7%pa for this new debt it's still cheaper than the cost of equity

[winner (n)]

With Heartland going the junk bonds way makes you wonder if Jeff has got bored after all these years and started gambling .....like playing high risk games (in a foreign country)

Think Jeff's personal rating needs to downgraded

[Teitei]

Why the angst with HGH issuing sub-ordinated bonds?  It is standard practice with banks when they need additional 'capital' to issue them as long as there are investors prepared to take them.

[winner (n)]

Don't need the 'public' to buy them ........all gone through the big boys and brokers ........who'll keep their 'clients' happy by offering them some.

At least another $125m in the coffers

[lorraina]

Jeff's rating needs upgrading.