TIM 0.00% 4.4¢ timbercorp limited

timpb

  1. 2,123 Posts.
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    One of reasons hybrids have been sold off is that outlook for cash rate is around 3% for next year. TIMPB has two coupons left at 6.75% fully franked or grossed up at 9.64%. Based on face value at $2.05, this is 20 cents per TIMPB.

    So the economics are as follows:
    Buy TIMPB at 62 cents say
    receive 20 cents plus 4 shares per TIMPB in Sep09; Assuming TIM is 25 cents in Sep09, value is
    20 cents coupons plus $1.00 worth of shares = $1.20 (100% return);

    Today's 60 cents TIMPB suggests TIM should be 10 cents (non PV basis) so either TIM has further to fall or TIMPB has some way to rise.
 
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