Beginners

[Perky]

Hi Aaron
I been buying bank preference shares as a replacement for term deposits.
Find them under bonds

TIckers
BNZHA 7.3%
BNZHB 7.28%
ANZBHD 7.6%
or
QHLHA 6.4% Quayside are BOPcouncil investment arm…own POT

Still has some risk but if the banks all get in trouble there probably big trouble elsewhere

DYOR before investing

[Nor]

Can anyone explain the maths of why IFT330 are quoted as price per 100 $104.320 which is a 4.3% increase on issue price but also quoted at yield of 5.98% vs coupon rate of 6.9% which would indicate an increase of
((6.9 / 5.98) - 1) * 100 = 15.3%.
This formula seems reasonable to me because if yield had halved it would give 100% increase which seems right.

[blackcap]

Can anyone explain the maths of why IFT330 are quoted as price per 100 $104.320 which is a 4.3% increase on issue price but also quoted at yield of 5.98% vs coupon rate of 6.9% which would indicate an increase of
((6.9 / 5.98) - 1) * 100 = 15.3%.
This formula seems reasonable to me because if yield had halved it would give 100% increase which seems right.

Maturity 2029. THats 5 years. Yield is quoted till maturity and worked out on a DCF situation.

You pay 1.043 now, get 1.00 in 5 years time and every year get $6.9% per note.

That probably works out to a yield of 5.98% if you pop that in excel.

[Bjauck]

Hi Aaron
I been buying bank preference shares as a replacement for term deposits.
Find them under bonds

TIckers
BNZHA 7.3%
BNZHB 7.28%
ANZBHD 7.6%
or
QHLHA 6.4% Quayside are BOPcouncil investment arm…own POT

Still has some risk but if the banks all get in trouble there probably big trouble elsewhere

DYOR before investing

I have been doing something similar as existing term deposits mature. I don’t want to buy more ordinary shares, and may need some cash at uncertain date in about a year or two and figure selling preference shares and bonds would be (cheaper and) easier than breaking a TD if necessary.

[blackcap]

I have been doing something similar as existing term deposits mature. I don’t want to buy more ordinary shares, and may need some cash at uncertain date in about a year or two and figure selling preference shares and bonds would be (cheaper and) easier than breaking a TD if necessary.

Serious question, are there real penalties for breaking term deposits?

If banks were smart they would allow the breaking of TD's and price it just like a bond would be priced if interest rates change.

[stoploss]

Serious question, are there real penalties for breaking term deposits?

If banks were smart they would allow the breaking of TD's and price it just like a bond would be priced if interest rates change.

You can give notice 31 days I think . Say it us a 2 year TD & you cut out at say 6 months .They will give you a haircut , generally give you what the 6 month rate would have been .