Bonds with choice of assets
NZAX-listed propertyfinance group has launched a new bond programme which it says will help address a significant need for investors wanting interest-bearing investments.
Friday, November 24th 2006, 12:01PM
What is it called and what sort of savings product is it?Rated Mortgage Bonds are a new listed debt security which has some unique characteristics.
Who is the company behind it?
They are being promoted by Christchurch-based, NZAX listed company Propertyfinance Group Limited.
Who is the target market?
Investors looking for an investment grade, listed interest bearing investment.
What return does it offer?
There are two types of bonds, one with commercial property backing and the other with residential mortgage back. The rates are set quarterly and the opening rates are 8.97% and 9.02% for the residential and commercial bonds respectively,
When was it launched?
November 20.
What other products is it like or is it competing with?
The bonds are up against finance company debentures , and other secured bonds listed on the NZDX.
Is it long term, short term or medium term?
Because of the way the bonds are structured it would suit medium term investors.
What is the unique selling point?
The first offering of these bonds are expected to have a BBB rating from international agency Fitch (an alternative to Moody's and Standard and Poor's). In the future investors will have a choice between different levels of returns, based on AAA, AA, A or BBB rated bonds. Other pluses are that investors can choose whether they want exposure to residential or commercial property loans with the latter offering slightly higher rates.
How strong a stomach do you need for it?
These bonds have an investment grade rating and are tradable which gives investors a good degree of comfort.
What's the hitch?
The biggest issue investors need to get their mind around is a call option which kicks in after five years when the company intends buying back the notes.
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