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Home» Personal» Investments» Other investments» Macquarie Generator Income Notes

Generator Income Notes

Features & benefits
More information
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FAQs

Features and benefits

Generator Income Notes (“GIN”) are structured income investments, which invest into Aria Notes, an investment program managed by AXA Investment Managers ("AXA IM") in Paris, France. Aria Notes are structured income investments of a type known as synthetic collateralised debt obligations, which invest into credit default swaps. These credit default swaps are designed to transfer the credit exposure between the issuer (Aria) and the noteholder.

Two separately managed investment portfolios.

The Principal Portfolio is currently an A- rated investment portfolio (as at 30 November 2009) which invests in a portfolio of underlying companies. The Principal Portfolio is actively managed by AXA IM.

The other portfolio is a non-rated Income Portfolio, which is also invested in a diversified portfolio of underlying companies. Following the Idearc portfolio event in April 2009, no further income will be payable from the Income Portfolio.

AXA Investment Management as the manager.

AXA IM has managed structured credit investments since 1997, with more than A$975bn (as at March 2009) in funds under management around the globe. AXA IM has an active management strategy which allows them to make regular trades for the improvement of the portfolio.

More information

ASX Code	GIN
Trustee	Generator Investments Australia Limited
Investment Manager	AXA Investment Management
Maturity Date	8^th October 2011
Liquidity	ASX Listed
Currency	Denominated in Australian dollars
Registry	Computershare

Brochures and forms

Frequently asked questions

1. What is the rating of GINHA?

The Principal Investment portfolio, which determines the ability to repay principal at maturity, is currently rated A- by Standard & Poor’s. The Income Portfolio, which determines the ability to pay quarterly income, was never rated.

2. If the rating on the Principal Portfolio falls, will it affect my return of principal payment?

No, the Standard & Poor’s rating is only an indication of the ability of the Notes to repay principal at maturity. It has no impact on the actual payment.

3. How many defaults can the Principal Portfolio withstand before the principal is affected?

As the average holding in the Principal Portfolio is 0.65%, we can estimate that the Principal Portfolio can withstand 10 average-sized defaults (as at 31 December 2009) with no impact on return of capital at maturity. This assumes a zero recovery rate, which is conservative.

4. Is it likely that my income will rise again?

Bondholders received BBSW + 2.00% from inception to October 2008. However, due to the defaults in the Income Portfolio, income is no longer being paid on the Notes.

5. When do the Notes mature?

The Notes mature on 8 October 2011.

6. Why was the income portfolio more susceptible to defaults ?

Generator Income Notes was structured such that the vast majority of the protection was placed in the Principal Portfolio. At inception, there was 10.3% protection in the Principal Portfolio compared to 0.15% in the Income Portfolio. Hence, the Income Portfolio was much more susceptible to defaults.

7. Why was there such a large holding in Lehman Brothers?

The Notes are actively managed by AXA Investment Management. The manager believed that the US Government would facilitate a bail out of Lehmans as had occurred with Bear Stearns, hence did not change its original investment in Lehman Brothers.

8. How is the Principal Portfolio managed?

AXA IM manages the Principal Portfolio with the goal of returning investors’ principal at maturity. As the Notes are actively managed, the manager may substitute companies in the portfolio for the betterment of the Notes. In December 2008, AXA IM reduced the Principal Portfolio’s exposure to General Motors from 0.65% to 0.2% prior to its default.

Generator Income Notes

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Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice contained in this website and before making any investment decision we recommend that you consider whether it is appropriate to your situation and seek appropriate financial, taxation and legal advice. We recommend that you read our Financial Services Guide before deciding whether to obtain financial services from us. If an offer document is available for a product referred to on this site, you should read it before making any investment decision. Information on this website is intended for residents of Australia only.

Except for Macquarie Bank Limited (MBL) (Australian Credit Licence (ACL) 237502) ABN 46 008 583 542, any Macquarie entity referred to on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.

Generator Investments Australia Limited (“GIAL”) is not an authorised deposit-taking institution for the purposes of the Banking Act (Commonwealth of Australia) 1959, and GIAL’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (“MBL”). MBL does not guarantee or otherwise provide assurance in respect of the obligations of GIAL.

Generator Income Notes are offered by GIAL as Trustee of the Generator Income Trust.

Past returns are not a reliable indicator of future returns.

The information in this fact sheet is general advice only and does not take into account your individual financial situation, investment objectives or needs, which you should have regard to in deciding whether this information is appropriate. Before making a decision to invest in the product you should obtain and consider a copy of the product’s offer document, which is available on our website: www.macquarie.com.au