The offer is expected to open on 17 April 2023 and close on 21 April 2023. The Notes are expected to
be issued on 28 April 2023 and quoted on the NZX Debt Market on 1 May 2023.
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Unfortunately - they are rated BB+ ... this is junk bond status.
Will be interesting to see whether paying just the rate of inflation for these bonds attracts enough risk happy investors. Little gain, but all the pain ...
Note: Heartland itself is rated BBB - which is still investment grade, but these bonds are basically designed to act as "buffer" for Heartland if things turn pear-shaped.
Interesting times. I think I will abstain.
yep junk bonds
they say in the event of default you will likely get nothing and add in they also say if bank bill go negative you will likely receive no int payment lol you can hold the junk bond for years and get zero payment :scared:
Junk bonds??? Rough. BB rated bonds have a 1 in 10 chance of failing. Not sure how much the '+' adds.
see table in link here https://www.rbnz.govt.nz/regulation-...credit-ratings
From this issue and its ratings and market outlook about them even at 7% coupon ...it is conveying whats the actual position of the business at the moment ...it is still not the start of real bad times as yet ...but agreed its almost reaching there for banks at least ...with business evaporating fast and credit even faster ...Most difficult phase for HGH is round the corner ...hopefully they will manage it better ...Jeff needs to impress W69 again ...He was his best supporter but now his confidence is down...but this is the time to show and win his respect back ....fingers crossed ....Inside knowledge ...Banks in NZ have started the exercise of laying off people and drastic cost cuttings are being planned ahead ...
yep my fire power waiting at covid lows , see the imf downgraded world growth again today ... including nz
all banks will be fighting hard soon over shrinking pool
Here is the definition from the CFI website (and as I understand agreed with the rating agencies):
Attachment 14535
https://corporatefinanceinstitute.co...me/junk-bonds/
I understand that shareholders tend to fall in love with their stock and don't want to see it associated with a negative word like junk. However - they need to understand as well that this classification is for the bonds only, not for the shares.
However - these subordinated bonds are per definition clearly junk bonds. Best category of junk, but still junk. Does not mean that they must default, but it means that they are a high risk investment ... and this is in times of banking trouble not always the most prudent way to park ones money.
The other question is - if you really want to put your principal at a high risk ... is the reward of getting the inflation (minus taxes) paid by the bank enough to do that?
There will be compressing demand for some types of loans and or perhaps more appropriately reduced appetite for Heartland to provide lending for others (started pulling back on SME lending last year, personal lending for sometime, etc), but still good growth in others. Largest division, reverse mortgages, is very likely an immediate beneficiary of inflationary and cost of living crisis, evidenced by the near 25% annualised growth in the book from June22toDec22 (an acceleration). Going well off a very low base in targeting the mortgage refi market which should benefit a bit as CCCFA regs have been reworked. HGH growing well in motor receivables although pricing getting competitive (& am guessing it will slow eventually). Bits and bobs, yings and yangs, ups and downs, but ultimately see a growing book, underpinned by RMs. In last 6 months, HBL (NZ) grew its gross receivable book 2.4x that of the aggregate market. But must acknowledge there are headwinds in various segments and its prudent to reduce originations in those. My meandering thoughts only.
Global dairy prices up in overnight auction ….whole milk powder up a solid 5.0%
Bodes well for a higher HGH share price in a month or two