Fixed Interest & Bonds

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Infratil Bond Offer - May 2017

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infratil logoInfratil Limited are offering two series of Unsecured Unsubordinated Infrastructure Bonds to all investors in New Zealand.

  • 2022 Bonds - Maturing 15 December 2022 (~5.5 Years) paying 5.65% per annum

  • 2025 Bonds - Maturingy 15 June 2025 (~8 Years) paying 6.15% per annum.

Issue price is $1.00 per Bond

Interest will be paid quarterly 15 March, 15 June, 15 September and 15 December of each year until and including the Maturity Date.

Interest payable on the first Interest Payment Date will accrue at the Interest Rate from (and including) the date on which your subscription moneys have been banked to (but excluding) the first Interest Payment Date.

The Minimum application is for $5,000 and multiples of $1,000.

NB It is important that you read and understand the terms of the offer before committng to invest, You can download a copy of the Infratil Term Sheet for 2022 and 2025 Infrastructure Bonds by clicking here or reading below.

If you decide you would like to invest you should request a Firm Allocation by ringing us 07 578 3863 before Noon on Monday 12 June 2017.

If we manage to obtain a firm allocation for you, you must provide us with a properly completed Application Form before the Closing Date. If you are having difficulty obtaining the Terms Sheet and Application Form, please contact us and we will endeavour to assist you.

Please note: a Firm Allocation is treated by us as the equivalent of a binding Buy Order (subject to allocation scaling).

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Bank Interest Reset Securities

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Are Bank Reset Securities an Opportunity, or Just Too Hard to Understand?

Interest Rates GraphA reset security is one that will have its coupon (interest rate it pays) reset at a margin over the prevailing interest rate on the reset date. In NZ we have annual, three and five year reset securities. This is in contrast to a fixed rate security that has the same coupon until it matures.

These can be a useful investment option but, if not monitored, they can turn into an unattractive option depending on the timing and the state of the interest rate cycle.

Note that this article was updated 20 September 2016, prices and rates may have changed by the time you read it, the concepts will still be valid..

For example take the ASB Capital Limited Perpetual Preference securities (Stock exchange code - ASBPA). These reset in November every year. They are currently paying a coupon 4.00% and they are trading at about $0.764. This applies until November when the rate will be reset , probably a little lower (If reset today that would be 2.13% + 1.3 = 3.33%). These were issued by the ASB Bank in 2004 at $1.00..

To calculate your return on these securities you divide the coupon by the price. To be conservative we will assume they will reset at 3.33%. If you paid 76.4c your return for the next year would be about 4.36%. But you have to pay transaction costs - brokerage, to buy them. Again we'll be conservative and assume 1.5% brokerage - you should never pay more than that - so your cost is now about 77.6c and your return is 4.29% for the first year until they reset again. That may not sound very attractive but currently you'll only get 3.20% from the ASB on a 12 month term deposit.

Would you rather invest in a one year ASB term deposit at 3.20% (current advertised rate) or a ASBPA at 4.29%? Before you answer you should also consider the following.

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Heartland Bank

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Heartland Bank

Heartland is a new name for an old friend, comprising the former businesses of MARAC, CBS Canterbury, Southern Cross Building Society and PGG Wrightson Finance. The MARAC range of investments is now offered under the Heartland brand.

Heartland Bank still offers deposits at interest rates you may find attractive.

To see the latest Heartland Bank deposit rates click here.

To invest in Heartland Bank deposits you should read the Heartland Bank Investment Statement by clicking here at the back is the Heartland Bank Deposit application form.

You can call us on 07 578 3863 and talk to an adviser to discuss whether this investment is appropriate for you.

Bay Financial Partners Ltd will receive brokerage at the rate of 0.5% p.a. of the sum invested upon funds being placed with Heartland Bank. This sum is not deducted from your investment.