Can anyone confirm whether interest on the debentures ceases today, or continues until they are repaid.
Looks like there will be a lot of money out there looking for a new home.
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Can anyone confirm whether interest on the debentures ceases today, or continues until they are repaid.
Looks like there will be a lot of money out there looking for a new home.
See Treasury Website. Interest at whatever rate you've been earning ceases today but interest at the OCR rate continues, currently 3% per annum, seems fair to me.
Interestingly the real winners from today's news are SCF010 bond holders, the long bonds, Dec 2012. These traded in recent times at yields up to 40%, around 60 cents in the dollar. Good news for them today.
I find that ridiculous. I haven't looked into the fine details of it, but why in world are the govt paying out these guys when they were never part of the original deposit scheme?! I don't mind paying out original depositors under the scheme, but throwing $125m away to people that have been rewarded greater for the risk they knew they were taking on seems stupid. Is there something I'm missing? Jaa seems to think SCF010 were always part of the scheme? Clearly in my mind the 60 cents in dollar bit shows they weren't!
Thanks for giving an over-view of the effects of dialysis. I'm not trying to be a smart a#se but perhaps if the effects are that profound he sould have stepped down years ago and if in fact he was mentally compromised isn't this a material fact that should have been discolsed in the investment statement and prospectus.
I for one had no idea the effects of this illness were so serious.
I think there were a lot of sceptics, myself included, who wondered if these bonds would be paid out but apparently a default event triggers early repayment, and as at that occurred within the scheme's tenure they will be paid out in full.
I also find it morally reprehensible that these speculators have reaped a reward as high as 67%, (100/60) on the back of taxpayers expense. I hope the I.R.D. does an audit of those taxpayers who bought large volumes of these securities in recent months to ensure they are declaring their profits, in fact I think as an accountant I have a duty of care to the taxpayer to bring this to the Commissioner's attention.....
Lost my $3,000 on the prefs but more than made that up on the bonds ..... and yes Roger I will declare the capital gains on these .... in normal course of events such gains are classed as income anyway .... you dont get the chance to call yourself a trader or not .... thats how i see it
All depends what your intention was winner. I'm not sure these gains would be classed as income if you 'intended' to hold them through to maturity :P
Hmmm I never knew that little loophole existed. Seemed a pretty good bet then, as it looked like it was just a vicious cycle and was certain to come down before the end of 2011.
All gains on financial arrangements are subject to tax. The gain is what you got in less what you paid out. So anyone who got a capital gain on the bonds if NZ resident is subject to tax. losses are also deductible but subject to a test relating to the reason for the loss. if it was due to faliure of the issuer, reduction in their capacity to pay etc the loss is non deductible.
Thats why its best to hold all fixed income in a trading company. Then any losses for whatever reason are deductible.
Sandy says 'Spend it wisely' – I say give it back
http://www.nbr.co.nz/article/scf-bon...-wisely-129209
Thanks for that Dubdee - clarified some points for me. Must attend to further tidying up my estate very soon!
Too late now of course, but maybe still of interest: What if my trading company had held SCFHAs - now valueless - would that loss have been deductible?
Or would the rule re failure of the issuer have made the loss non-deductible?
Apparently SCF have been doing no lending this year. But didn't the Prospectus give an indication that investors money would go into certain types of loans (home loans, boats etc). So the money has been used to pay interest to existing depositors. Thats probably given those depositors comfort that the loans there money was sent to were performing. Clearly not. So if all money raised this year didn't go into new loans - there must have been a huge lack of income from existing loans and massive impairments would no doubt have been reported in the YE accounts.
My thinking is that if you bought the SCFHA's with the intention of making a profit and I would have thought that's most of the punters in recent times, and would have declared the profit if you made it, I can't see a valid reason why you can't claim the loss. If anyone has any case law on this I'd be interested in seeing a link to it.