Woolworths Notes

By Jason Fittler

Term Deposits rates are falling and set to go lower, if you are a self funded retiree you need to start looking to take a little more risk to achieve a higher yield.

Continue to sit in cash and do nothing is not the best option at present.

The Woolworths Notes are worth a look first of all they are backed by Woolworths a solid Australian company this helps reduce the risk of the product.

The terms are as follows:

The notes provide you a yield of 3.25% above the 90 day bank bill swap rate which is currently 3.52%, at present the yield is 6.77%. This is a variable rate yield as such it will go up and down with the market. It will also depend on the price you pay for the investment.

The issue price of the investment is $100 which is what you will receive on expiry in 24/11/2036. However the first conversion date is 24/11/2016 if they are not repurchased at this time the margin moves up from 3.25% to 4.25%.

The distributions are paid quarterly in arrears and cumulative, ranking in front of any equal or junior ranking obligations.

The coupons are unsecured legal obligations of Woolworths and rank behind all senior debt but ahead of shares and other junior ranking obligations.

Currently trading at $103.90 they have a yield to maturity of 6.5%.

These investments can be bought and sold on the ASX so you are not locked in.

The Woolworths Notes are a good long-term investment for the income focused investor.

For more information on Woolworths Notes please contact us on 07 4771 4577.