Westpac PPS Offer

[Grimy]

Westpac are considering issuing more PPS. Details next week, but interest rate could be around 7%.

[GTM 3442]

Irrespective of the coupon, I’m ambivalent about perpetuals at time of issue – I think the potential for capital loss due to interest rate movements over time is too great.

I think they’re best bought on the secondary market at a discount to face value - IFTHA at an entry price of $0.56 has served me well over the years, but I sure wouldn't have liked to have bought at time of issue.

[Perky]

That’s an interesting perspective. I bought a few perpetual last few months before interest rates were actually cut in anticipation of interest rates dropping. I’m using them as a replacement for some expiring term deposit. Ie I’m rolling out of 6.4. - 6.5 TD’s and get 7.2 -7.6 on perpetuals
My plan is to hold them whilst interest rates drop and sell them well before interest rates rises devalue them. Happy to leave something on the table for next punter.
Thats my plan …I guess we will see how it plays out. Not sure if liquidity might be an issue when I come to sell if everyone has the same plan..lol

I like the simplicity of the mechanics of perpetuals vs bonds but surely both bonds and perpetuals are going to have their value determined by interest rate movements.

What am I missing ? Keen to learn from more experienced punters in this fixed interest space.
cheers