Last week Infratil announced its intention to make selective on-market purchases of the bonds over the next six months, up to a maximum of 3.7 million bonds. 

There are about $235 million of the bonds outstanding (face value).

Yesterday the firm bought 19,000 bonds at a price of 58c in the dollar ($11,020) and today it bought a further 80,000 at the same price ($46,400).  The bonds have been trading between 53c and 59c in the past 12 months.

The purchases were considered by the directors to be in the best interests of the company and shareholders, Infratil said.

Over the last four years, Infratil has repurchased about $4 million face-value of the bonds for about $2.3 million.   The company said the aim of these purchases was to ensure the market was liquid.

The coupon for the bonds is set each November at 1.5% over the one-year bank base rate.

When they were launched in 2006 the coupon rate was 9%, rising to 10.27% the following year, but it fell to 6.95% in 2008 as the Reserve Bank began cutting the official cash rate.

The coupon has continued to drop since then, reaching a new low of 3.97% at its latest reset last year.

At a price of 58c per $1.00 face value and a coupon of 3.97% they are yielding about 6.85% in the secondary market.

Infratil has so far ruled out buying back the bonds at a higher price on the basis that it would be a transfer of wealth from shareholders to bondholders.