INVESTING

Novacare Solutions Partnership bonds

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This week Money asks FIIG where to invest and their pick is the Novacare Solutions Partnership bonds.

Novacare Solutions Partnership bonds

Novacare has two Australian dollar bonds in the over-the-counter bond market. The one we like is the indexed annuity bond, which pays principal and interest (adjusted for inflation) over the life of the bond.

Novacare Solutions Partnership bonds

An annuity bond is unlike other bonds in that it returns a portion of your original principal with every quarterly interest payment so that come the maturity date (2033 for Novacare), all the principal will have been returned.

In operation it is similar to a residential mortgage with principal and interest payments made over a number of years until the balance is zero.

Company description

Novacare is a Public-Private-Partnership (PPP) and the financing vehicle of the Novacare Consortium which was contracted by the NSW Department of Health for the financing, design, construction and refurbishment of various facilities at the Mater Hospital in Newcastle and the provision of specific non-clinical ancillary services.

The project construction has been completed and the project is now in the lower risk operational phase.

Novacare's revenues are not linked to the number of patients that use the hospital's services; rather they are related to the quality and availability of the Mater Hospital (to the level specified in the contract).

Investor information

  • Minimum investment per bond is $10,240 
  • FIIG is a dealer and we take a small brokerage fee when we transact, this is already included in the yield to maturity returns shown below 
  • A custody service fee is also charged 
  • Indexed annuity bond maturing 15 April 2033 with an expected yield to maturity of 5.08%* per annum (or 2.58% over inflation) - available to retail and wholesale investors

* Indicative yield to maturity assuming inflation averages 2.5% over the life of the bond (being the RBA target mid-point of between 2 to 3%). Prices and yields are indicative only and subject to change.

Novacare bonds

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