[Comment] Telecom offers retail bond investors an inferior deal
Holders of Telecom's listed bonds, whose maturities range from March 2013 to March 2016, are not being offered any compensation, despite being asked to exchange their current position for a lower credit rating and reliance on a more risky income stream.
The listed bonds are to be allocated to "new Telecom" and will no longer have the benefit of the more reliable income stream from the Chorus network. Instead, they will have to rely on all those parts of Telecom subject to intense competition and constant price deflation.
As well, Standard & Poor's has said it will downgrade "new" Telecom's rating from "A" to "A-".
Instead of compensation, the bondholders are being offered a one-off "consent fee" of 0.25%, but only if they vote in favour of the spin-off of Chorus.
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