Good to see someone else follows this security. I have been...

Good to see someone else follows this security. I have been keeping an eye on FXJPB but do not hold any. My sums on FXJPB are below. These figures assume that you purchase the securities at $85.50, that they are converted or redeemed at $100 on the step-up date in 2011, and that BBSW remains at today's rate until that time.

Expected dividends: $10.34
Capital gain: $14.50
Yield to maturity: 29.1% (approx. 18.5%pa over the next 1.5 years)

For me the real risk with FXJ is that its balance sheet still has a fair amount of debt, and very little by way of liquid assets. The vast majority of FXJ's assets are intangible and I have concerns about the ongoing sustainability of their business.

My preferred interest rate security in the media sector is SEVPC. My figures on these (assuming purchase price of $95.75, conversion in May 2010, and no change in interest rates) are:

Expected dividends: $5.98
Capital gain: $4.25
Yield to maturity: 10.7% (approx. 18.0%pa as an annualised rate over the next 7 months)

In addition, SEVPC will have a margin of 4.75% over the BBSW if they choose to step up the rate in May 2010, unlike FXJPB, which will have a margin of only 3.8%. Considering that SEV has over a billion dollars in cash and no other debt of any significance, I'd be putting my money in SEVPC rather than FXJPB.

Purchased at today's prices, and with interest rates remaining stable, we can expect that after step-up, both FXJPB and SEVPC will offer dividend yields of around 8.9%. Therefore considering that SEVPC has a far healthier balance sheet, I prefer SEVPC over FXJPB.