TO: rembrandt re: Margin Lending Question rembrandt and others...

TO: rembrandt re: Margin Lending Question rembrandt and others with interest in instalment warrants. When investing in instalment warrants you assume all benefits of ownership of the underlying security. That is right to dividend, franking credit etc.) However you are protected from total loss since the issuer take out (and you pay) a put option against the stock. This is mostly known as a 'borrowing fee' - unlike interest which is another component.

You can 'only' lose the amount you paid up front and will not get a margin call. Most instalment warrants are now re-set every 12 month.
Currently there is a good deal of talk in the papers, seminars etc. about instalment warrants. This is due to end of financial year. On warrants you pre-pay inetrest which is deductible this year. btw - instalment warrants are one of the few legal ways of gearing in a DIY Super Fund.
Macquarie are one of the brokers with a current series of seminars on this subject. Also check their web-site for details on Instalment warrants.

If I stand corrected on any of the above pls. let me know.