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BOQ Perpetual Equity Preference Share Offer

Discussion in 'Shares' started by Simon, 20th Nov, 2007.

  1. Simon

    Simon Well-Known Member

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    Newcastle
    I just receive a couple of cards in the mail telling me I am able to buy the above shares at a face value of $100 each.

    I don't know much about them but there is more info here:

    Share Purchase Plan. Bank of Queensland Australia. Share Purchase Plan.

    Am I right in thinking that this is like a share float where the BOQ PEPS will be listed on the exchange at $100 each from Dec 2007, with a starting dividend of about 9% inc franking credits.

    Would this then mean that these should increase in value given that the yield is attractive, until the yield becomes similar to other banking stocks?

    Has anyone seen any research on these or done any? I would really welcome more info as I am considering taking a decent stake with some spare funds I have.

    Thanks

    Simon
     
  2. Simon

    Simon Well-Known Member

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    Any info at all?

    Even just an opinion or two??

    Thanks,
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi Simon,

    This is a debt security not equity/shares.
    While it says Preference Shares, they are raising equity via a loan.

    Bank Bill Swap Rates (BBSW) are available here http://www.nabmarkets.com/bondcreditmarkets/bankbills/bankbills.aspx

    Currently, as at 21st November 2007, the rate is 7.3667% pa, so 2% over this is 9.3667%. Being fully franked is certainly more attractive to not being franked.

    Paying twice a year you will see the price drop similarly after an interest payment and then slowly rise until the next interest payment.

    You can work this out by using the basic formula here RBA: Pricing Formulae for Commonwealth Government Securities to calculate the actual trading value.

    The redemption date will let them buy some of the debt back at a later date.

    Good luck,

    Dan

    PS The above is general information and not advice to invest in any equity or fixed interest securities. Speak to you FPA registered Financial Planner, Stockbroker, Accountant or Tax Adviser before making an investment decision.
     
  4. Simon

    Simon Well-Known Member

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    Dan,

    Would you then consider this as more of a "cash" investment rather than a speculative one?

    Thanks for that
     
  5. AsxBroker

    AsxBroker Well-Known Member

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    Hi Simon,

    Closer more to an interest bearing deposit style investment.

    There is always some element of risk investing with any company, though a bank going bankrupt is smaller than a mining explorer. Though it has happened before.

    While there isn't any recommendations on Aegis for BOQ it is a $2b company in the ASX200 index.

    I would call it a defensive investment as you aren't going to be relying on it for growth (ie, any growth will be small though the market might be keen on such an investment so it may trade above the $100 face value when it starts trading on the ASX).

    Cheers,

    Dan

    PS The above is general information and not advice to invest in any equity or fixed interest securities. Speak to you FPA registered Financial Planner, Stockbroker, Accountant or Tax Adviser before making an investment decision.
     
  6. handyandy

    handyandy Well-Known Member

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    It seems to indicate that the 9.3667 is not the actual interest rate you receive but will be this less the imputation credit.(rather than this interest rate plus the imputation)

    I can't paste the relevant section from the PDS but check under Dividend rate where the calc includes the tax rate.

    So if they are on 30% then subtract 2.81% from the previous figure. This is your 'income' plus there is an imputation credit of 2.81%.

    I have participated in one of these types of offers with St George some years ago which was redeemed with shares. This was quite good as the discount on the shares was substantial. This is not the case here.

    Cheers