Fidelity Life has announced its Fidelity Capital Guaranteed Bonds had cancelled their dividend due on January 15 after a collapse in US Treasury yields to their lowest levels since 1955 of 2.72%. Fidelity Life sold NZ$75 million worth of the bonds in April 2006 with the help of a capital guarantee provided by Westpac. The bonds were promoted by Fidelity Life, but their performance has no effect on Fidelity Life or vice versa. The fund managed by Tyndall Investment Management had sold options on these 10 year bonds that had to be exercised when yields moved outside a 50 basis point range. Fidelity said the net asset value of the fund was now NZ$63.35 million. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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