I bought 200 IANG shares (IAG (NZ) Reset Exchangeable Securities) for $80.20 each - costing $16,269.95 incl. brokerage.
Overall, these trades will have increased my margin loan debt by $900, but will actually reduce the chance of getting a margin call. The IPE shares only have a margin value of 5%, whereas the IANG shares have a margin value of 80%, so the margin valuation of my portfolio will have increased by roughly $12,000 by making these trades. The IANG shares should also be a somewhat less risky investment than the IPE shares they're replacing - being an investment in a portfolio of high quality, short dated, fixed interest securities (Portfolio) managed by IAG Asset Management Limited (IAGAM). This Portfolio has an Australian Bond Fund Rating of ‘AAAf’ from S&P. It pays a fully franked dividend of 1.2% above the 90 day Bank Bill Rate, which should provide income roughly equivalent to the current margin loan interest cost (tax-deductible) of 10.50%. The IANG shares used to trade around the issue price ($100) plus accumulated dividend, as shown below. However, over the past year they have been deeply discounted by the market to currently trade around 20% below "face value". Since the IANG shares first "reset date" is in a couple of years time (15 March 2010), and the portfolio of bonds currently still has a valuation of $100.70 per share, this discount seems likely to be a temporary "panic" reaction and the shares should recover to around $100 by the reset date (barring any significant defaults in the bonds held within the portfolio). Combined with the fully franked dividend rate IANG seems a safer bet than holding on to the IPE shares they replace.
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