Corporate Bonds - Barclays
Discussion
I've been looking at this bond for a few years now. The coupon is very high because of when it was issued (height of the crisis), and being a perpetual security with no fixed maturity date there is the risk that it could be called at any time. You could buy today at 134% (or whatever the actual offer price is at the moment), and then they redeem it and pay you 100% for.
The high reward is for the risk that it might not be around long enough to actually break even, let alone return a profit.
That's what's concerned me and stopped me from buying it almost annually since 2010... it would have been an excellent buy. If it remains in issue for at least another 3/4 years then it looks like a good buy even now. It's just sod's law that we'd buy it today and they'd announce its redemption tomorrow!
The high reward is for the risk that it might not be around long enough to actually break even, let alone return a profit.
That's what's concerned me and stopped me from buying it almost annually since 2010... it would have been an excellent buy. If it remains in issue for at least another 3/4 years then it looks like a good buy even now. It's just sod's law that we'd buy it today and they'd announce its redemption tomorrow!
Yep and if it doesn't count for tier 1 capital then its more likely to be called.
There has been some debate about this. Lloyd's recently called some of their stuff I believe. Or at least are in the process of doing so.
You can get Coop 2025 repayment bonds paying about 11% still I believe. Thats more solvency risk though..
Keep fishing around and sign up on LSE for ORB new issues.
The latest 6.25% Burford was a reasonable deal.
There has been some debate about this. Lloyd's recently called some of their stuff I believe. Or at least are in the process of doing so.
You can get Coop 2025 repayment bonds paying about 11% still I believe. Thats more solvency risk though..
Keep fishing around and sign up on LSE for ORB new issues.
The latest 6.25% Burford was a reasonable deal.
Edited by ringram on Wednesday 13th August 16:16
afrochicken said:
I've been looking at this bond for a few years now. The coupon is very high because of when it was issued (height of the crisis), and being a perpetual security with no fixed maturity date there is the risk that it could be called at any time. You could buy today at 134% (or whatever the actual offer price is at the moment), and then they redeem it and pay you 100% for.
The high reward is for the risk that it might not be around long enough to actually break even, let alone return a profit.
That's what's concerned me and stopped me from buying it almost annually since 2010... it would have been an excellent buy. If it remains in issue for at least another 3/4 years then it looks like a good buy even now. It's just sod's law that we'd buy it today and they'd announce its redemption tomorrow!
Thanks that explains it The high reward is for the risk that it might not be around long enough to actually break even, let alone return a profit.
That's what's concerned me and stopped me from buying it almost annually since 2010... it would have been an excellent buy. If it remains in issue for at least another 3/4 years then it looks like a good buy even now. It's just sod's law that we'd buy it today and they'd announce its redemption tomorrow!
ringram said:
Yep and if it doesn't count for tier 1 capital then its more likely to be called.
There has been some debate about this. Lloyd's recently called some of their stuff I believe. Or at least are in the process of doing so.
You can get Coop 2025 repayment bonds paying about 11% still I believe. Thats more solvency risk though..
Keep fishing around and sign up on LSE for ORB new issues.
The latest 6.25% Burford was a reasonable deal.
Would Burford bonds be as safe as one of the household names? I'd rather it was as safe as possible.There has been some debate about this. Lloyd's recently called some of their stuff I believe. Or at least are in the process of doing so.
You can get Coop 2025 repayment bonds paying about 11% still I believe. Thats more solvency risk though..
Keep fishing around and sign up on LSE for ORB new issues.
The latest 6.25% Burford was a reasonable deal.
Edited by ringram on Wednesday 13th August 16:16
ringram said:
Safe as possible = Gilts = No return
For the most part higher yield = higher risk
You can look at SLXX ETF or similar if you want a Corp bond fund.
Vanguard do a few too etc.
That might be your best entry rather than picking specific issues.
Thanks. Are there any easy-to-use websites for comparing AAA bonds?For the most part higher yield = higher risk
You can look at SLXX ETF or similar if you want a Corp bond fund.
Vanguard do a few too etc.
That might be your best entry rather than picking specific issues.
It's a PERP NC10 issued in 2008 with 1st coupon payment in June 2009, means the bank can't call (buy back) the bond until June 2019, so your coupons are guaranteed until then (unless BARC goes bust).
Bond is trading at ~133 so you'd still be quids in by 2019, obviously the longer it is uncalled the better the yield.
Don't forget this bond is a junior subordinated issue with BBB- rating, so in case the bank goes bust you'd be further down the repayments queue.
PS: Get some proper advice from a qualified IFA!
Bond is trading at ~133 so you'd still be quids in by 2019, obviously the longer it is uncalled the better the yield.
Don't forget this bond is a junior subordinated issue with BBB- rating, so in case the bank goes bust you'd be further down the repayments queue.
PS: Get some proper advice from a qualified IFA!
sidicks said:
Countdown said:
Would Burford bonds be as safe as one of the household names? I'd rather it was as safe as possible.
If you want 'as safe as possible', why are you looking at subordinated bank issues which are only just investment grade...??
I hadn't realised that Barclays were risky tbh. I couldn't imagine any scenario resulting in them going belly up.
matrignano said:
It's a PERP NC10 issued in 2008 with 1st coupon payment in June 2009, means the bank can't call (buy back) the bond until June 2019, so your coupons are guaranteed until then (unless BARC goes bust).
Bond is trading at ~133 so you'd still be quids in by 2019, obviously the longer it is uncalled the better the yield.
Don't forget this bond is a junior subordinated issue with BBB- rating, so in case the bank goes bust you'd be further down the repayments queue.
PS: Get some proper advice from a qualified IFA!
Cheers. Every day's a school day.Bond is trading at ~133 so you'd still be quids in by 2019, obviously the longer it is uncalled the better the yield.
Don't forget this bond is a junior subordinated issue with BBB- rating, so in case the bank goes bust you'd be further down the repayments queue.
PS: Get some proper advice from a qualified IFA!
Countdown said:
Because I'm a complete "noob"
I hadn't realised that Barclays were risky tbh. I couldn't imagine any scenario resulting in them going belly up.
The issue is that they have issued a range of debt and some will be (much) more risky than others!I hadn't realised that Barclays were risky tbh. I couldn't imagine any scenario resulting in them going belly up.
Buying individual bonds is not recommended for the novice - invest in a corporate bond fund to diversify your risk!
I am impressed you are looking at bonds, (I personally don't think normal consumers should be allowed to purchase equity, but that's another story), but as other say, diversify your risk and get a fund of bonds.
The rules are pretty simple though, high risk = high return, low risk = low return, ALWAYS. A nobel prize was won proving that.
You are at the disadvantage of being locked into sterling investments, or you could look at other countries where there are still return to be had at AAA levels (Australia for one).
That Barclays issue looks like you should stay well away from it.
Do you have an ISIN so I can take a look?
Cheers,
Tino
The rules are pretty simple though, high risk = high return, low risk = low return, ALWAYS. A nobel prize was won proving that.
You are at the disadvantage of being locked into sterling investments, or you could look at other countries where there are still return to be had at AAA levels (Australia for one).
That Barclays issue looks like you should stay well away from it.
Do you have an ISIN so I can take a look?
Cheers,
Tino
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