KEY POINTS:
What is it called and what sort of savings product is it?
TrustPower unsecured bonds.
Who is the company behind it?
TrustPower is an NZX-listed power company, based in the Bay of Plenty, which is seeking to raise up to $100 million through a bond offer. The company sells electricity across the country and also has generation capacity. The offer is being jointly promoted by sharebrokers ABN Amro Craigs and First New Zealand Capital.
Who is the target market?
The other is targeted at the retail market, rather than institutions, and provides an option for people holding the company's 2008 bonds to rollover into a new offer.
What return does it offer?
The bonds have a coupon rate of 8.40 per cent with quarterly interest payments.
When was it launched?
November 1.
What other products is it like or is it competing with?
Other corporate bond offers have been made recently, such as one from BNZ, which this offer competes with. Also it is up against the raft of other fixed interest investments.
Is it long term, short term or medium term?
This is a longer term investment with a maturity date seven years away on December 15, 2015.
What is the unique selling point?
This is a pretty plain looking corporate bond offer. Its main benefit is that investors get a fixed income opportunity to invest in New Zealand's electricity sector. While the rate isn't that attractive, it will look better if interest rates keep falling.
How strong a stomach do you need for it?
The bonds are unrated, but if rated would probably sit around the BBB level.
What's the hitch?
The rate doesn't look that attractive compared to other recent offers. Also the being bonds they do not get the benefit of the portfolio investment entity (PIE) tax structure and they are not covered by the government's deposit guarantee scheme.
