Bank of Ireland - BOI

I did a search to see if there was an existing thread but couldn't find one so maybe there's no-one else on here with an interest but BOI is one of my bigger holdings so try and keep abreast of the Irish situation. Interesting update from Bond Vigilantes today regarding possible impact of Trump's election. Pobably nothing we hadn't worried about already but good to have it reinforced:-


  • Hi Laughton, I have been following Questor 5% portfolio in the Telegraph and he recommended BOI Pibs, priror to 'Trump" I was considering a purchase of some on the recommendation but might now wait and see what happens in view of the Trump effect. Here is the link.
  • Laughton, thank you for raising this issue.
    Useful for other investors review their holdings should they have any.
    As part of a diversified portfolio, my holding purchased Dec15/Mar16 represents just 1.41%. Lower % holding than most other securities due to it's risk (default/No Expiry), however the yield 6.4% makes it worthwhile.
    With the possibility that interest rates likely to rise (the US, more than certain), but for the UK & Euro the picture is very unclear. Political upsets are more than likely to raise sovereign bond market yields. With equities securities being overvalued, perhaps UK Corporate Bonds may be treated as a safer haven, in particular short dated securities (2018/21), of which there are a number of Retail ORB bonds available. My gut feeling that the pound will strengthen, with the growing right-wing politics across in Euroland, especially as the House Parliament will need to vote on BRexit (nothing is straight forward!). Therefore inflation may again become more subdued, too much competition and world "Supply" is greater than "Demand".
    Be interested in other panel members views, in particular holding undated securities like BOI?
  • There appears to be a view amongst other investors on other boards, that BOI is now strong and resilient.

    As regards undated securities .........

    I think one's age must be one of the factors in deciding how much to put in perpetuals

    I am retired and have about 19% of my total assets (inc cash, excluding house) in dated fixed interest and 27% in un-dated.

    As I get older I currently plan on putting more into un-dated/perpetuals - in fact, by my own rough rules I should have been putting more into perps over the past year or so. So why haven't I ?

    I have 2 conflicting views

    One is that most (not all) of the usual suspects (ie those on the Canacord Weekly Lists of PIBs and Prefs ) will not change very much if interest rates slowly rise.

    Historically (ie before the banking crisis) the margin between these and the BOE base rate was of the order of 2%.

    As banks financial foundations get stronger and investor's confidence returns, I think the current margin of around 6% will be eroded - maybe not quite back to 2% but who knows. Consequently, this part of me says, don't worry, carry on buying at or around today's prices

    The other view is that since the banking crisis, there will for many years (20-30) be concerns over the banking industry and the margin will remain high - therefore once interest rates start to climb, the prices of these will fall and I can get a better deal by waiting

    (Of course, there is always the chance that base rate might even be lowered again, which would add more credence to the first viewpoint.
    Any rises might then be pushed further into the future, so it would make more sense - for me in my particular position - to buy more now

    So what am I doing ?

    Answer - bit of both - i.e. buying very small amounts of perps and keeping the rest of the "perp ear-marked" cash parked.

    I have other reasons for liking perpetuals as I get older - they are relatively maintenance free. When the day comes that I am unable/unwilling to manage my investments, these can , hopefully just sit there paying out there divs/interest, even more so if held within an ISA.

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