directors buying, page-11

At step up date, like with most hybrids, FCL will either pay increased margin, payout cash to holders or convert to equity. I believe, if credit markets are back to normal, they will pay out. This is because the issue size is fairly small.

In the worst case scenario, they will step up and will redeem at a later date. After step up, margin will be 4.7% over BBSW. Assuming BBSW is say 4%, and assuming you buy FCLPA at 22, you can see that the yield is roughly 40% per annum.

Until step up date, assuming 3.5% BBSW average, the yield is roughly 26% per annum. So I think if you were to invest in a note that had a return year-in and year-out of 26% per annum climbing to 40% per annum, that it would compound nicely and at a rate greater than the equity would grow at.

If it is perpetual that is not a problem as you will be able to sell FCLPA at a better price when things improve, maybe not 100 but certainly north of 50. In the meantime, just buy FCLPA for the yield