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Buyback facility set up for bonds

Macquarie's Generator Bonds haves had a credit rating upgrade and a buy-back facility has been launched for investors in its Commodity Bonds.

Wednesday, 14 November 2007
Generator Bonds (NZX Code: GTR010) rating has gone from A- to AA- and it has introduced a buyback facility for its Commodity Bonds (NZX Code: MCB010) issue.

Generator Bonds and Commodity Bonds are both NZX listed high yield structured investments.

Generator Bonds were issued in 2003 with a credit rating from of A-, and they have one more year of their five year term to run.

The Commodity Bonds are only one year into its five year term.

"The security of Commodity Bonds is linked to a range of commodity prices, with higher prices supporting higher bond security," Macquarie Global Investments' Head of Product Development Craig Swanger says.

"Commodity Bonds investors' capital will be repaid in full at maturity even if prices of relevant commodities fall by 50% over the five year term.

Commodity Bonds' NZX listed price has been affected by broader market concerns about fixed interest markets in general and in particular, structured finance deals like collateralised debt obligations.

Swanger said the security of many structured products had been questioned during the recent market correction, with some adversely affected by negative market sentiment generated by unrelated factors such as the performance of some high profile managed funds. For example the Commodity Bonds' NZX price had fallen as low as $89.00 from its $100.00 issue price.

Because of this, Generator Bonds and Macquarie Investment Management have gained the necessary approvals to offer an off market buyback facility.

The indicative buyback value for the upcoming buyback is $98.57 - a substantial premium to the NZX trading price at the time the price was announced.

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