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Woolworths hybrid – preliminary notice on new issue

woolies1From 3D Planners:

We have recently been notified that Woolworths will be issuing a retail “hybrid” preference shares much like those many of you have in the Commonwealth bank or the ANZ. These type of hybrid shares pay a fixed rate of interest and do not fluctuate in value very much.

While details are still sketchy until they officially launch this next week, the likely margin above bank bills should be similar as the bank hybrids, with a range of 3.00-3.50% p.a. (i.e. total yield of approximately 7.70% p.a. or above).

This will be an important one to the investment public as it is one of the few top quality NON-BANK hybrid being issued, thus diversifying you away from the banking sector, while comforted in the knowledge that Woolworths is one of the most defensive companies in the ASX with a stable and rising earnings picture. While we do not know at this stage the allocation we can get, we encourage you to have some allocation in this to add to the income on your portfolio. With markets likely to find it tought to make a sustainable run over the next few years, the stable income generated by securities  such as this Woolworths hybrid will be important to the long term return of your portfolio.

Due to the strength of the brand, stability and balance sheet, we encourage you to partake in this offer once we get a confirmation of our firm allocation. You may already be a Woolworths shareholders, and if so, you will receive a booklet to encourage to participate through their forms. However, with the large oversubscription expected, you are unlikely to get anywhere near your allocation. So please disregard these as we will notify you soon of the amount we think is suitable for your portfolio (if eligible) over the coming few weeks.

For those of you with 3D Planners, we will bid enough so that you can have an appropriate allocation for your portfolio. Please let us know if you have any questions in the meantime.