Capital Raising
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Anadara
Interest Rates Series 3:
US Interest Rates
INDUSTRY
Financial Services
RAISING
Uncapped
MINIMUM INVESTMENT
$4,600
Unit Price
$1
Investment Highlights
Company Overview
Transaction Overview
News
Transaction Summary
Anadara
Uncapped
Minimum Investment $4,600
Investment Highlights
Features
Anadara Interest Rates Series 3
Reference Assets
PIMCO GIS Income Fund – Class E JPY (Hedged) Accumulation
Performance Coupon
Yes, there is potential for an uncapped Performance Coupon at Maturity based on the Reference Assets Performance at Maturity, adjusted for any changes in the AUD/USD exchange rate during the Investment Term.
Conditional Coupon
50bp (0.5%)
Investors will receive a 50bp (0.5%) Conditional Coupon if the US Federal Reserve cut US Official Interest Rates to 4.99% or lower before 31 December 2024.Currency Exposure
Yes, the potential Performance Coupon at Maturity is adjusted for changes in the AUD/USD exchange rate during the Investment Term.
Limited Recourse Loan
Yes. Investors borrow 100% of the Investment Amount.
Investment Term
12 months
Annual Interest Rate on Loan
3.5%p.a.
Application Fee
1.1% including GST
Total Investment Cost
4.6% (payable upfront)
Minimum Amount Payable
$4,600 for $100,000 Loan and 100,000 Units
Break-Even Point
The Performance Coupon at Maturity needs to be equal to or greater than 4.6% for investors to at least break even. Refer to section 5 of the Master IM for more information.
Maximum Loss
Due to the limited recourse nature of the loan, the maximum loss that can be ever incurred is the Total Investment Cost. There is no additional risk of loss in relation to the Loan Amount.
Margin Calls
No
Taxation
Australian Tax Office Product Ruling PR 2024/6 has been issued in relation to the Master IM and confirms the tax deductibility of the Total Investment Cost.
The Commissioner of Taxation (Commissioner) does not sanction, endorse or guarantee this product. Further, the Commissioner gives no assurance that the product is commercially viable, that charges are reasonable, appropriate or represent industry norms, or that projected returns will be achieved or are reasonably based.
Company Overview
This investment has been designed for investors that believe US Interest Rates will fall over the next 12 months. US inflation has cooled even further and many economists forecasting that the Federal Reserve will cut US interest rates multiple times before the end of 2024.
We trade long bond fund positions for exposure to falling interest rates, as falling interest rates have a significant impact on bond fund Net Asset Values (NAVs) due to the inverse relationship between bond prices and interest rates. When interest rates decline, the prices of existing bonds increase, as they offer comparatively higher yields than newly issued bonds. This is because when interest rates fall, the fixed coupon payments of existing bonds become more attractive compared to new bonds issued at lower rates. Consequently, investors are willing to pay a premium for these higher-yielding bonds in the secondary market, resulting in the market value of the bonds held by these funds rising, leading to a higher NAV for these funds.
PIMCO is a global leader in active fixed interest, with deep expertise across public and private markets managing US$1.8 trillion in assets. PIMCO was established over 50 years ago and yields significant influence in debt markets globally.
The chart above demonstrates the inverse correlation between interest rates and bond funds. Over the last two years while interest rates have been rising, the unit price of one of PIMCOs income funds fell by almost 15% even though it continued paying monthly distributions to investors – this is because investors saw greater value and stability in government issued bonds than income funds.
For investors that share our view that US Interest Rates will fall during the investment term, Anadara has structured an investment that offers 100% leveraged exposure to the PIMCO GIS Income Fund – Class E JPY (Hedged) Accumulation via a tax effective limited recourse loan over 12 months.
Investors have an opportunity to receive two Coupons, a Conditional Coupon* that will be paid if the US Federal Reserve cuts US Official Interest Rates to below 5% in 2024, plus an uncapped Performance Coupon* based on the positive performance of the PIMCO GIS Income Fund JPY (Hedged) Accumulation fund during the investment term.
*Coupons will be adjusted for any changes in the USD/AUD exchange rate.
Australian Tax Office Product Ruling PR 2024/6 has been issued in relation to the Master IM and confirms certain aspects of the tax treatment of an investment under this Term Sheet IM. Learn more HERE
Key Dates
Offer Opening Date
16 September 2024
Offer Closing Date
4 October 2024
Interest Payment Deadline
4 October 2024 (5pm AEST)
Commencement Date / Issue Date
11 October 2024 or as soon as reasonably practicable thereafter as determined by the Issuer and as notified to you.
The Commencement Date may be deferred as determined by the Issuer if any of the Terms of the offer cannot be achieved by the Issuer. Other relevant dates may be adjusted accordingly if required.
Conditional Coupon Observation Date
31 December 2025
Maturity Date
3 October 2025
Conditional Coupon Payment Date (if applicable)
10 January 2025
Settlement Date
10 Business Days after the Maturity Date, or such other date as determined by the Issuer in its discretion as is reasonably necessary for the Issuer to fulfil its obligations under the Terms.
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