Unlike previous Places for People retail bond offerings, these carry no guarantee from the principal asset holding entity within the group, Places for People (Homes) Ltd.
Not sure how good the guarantors are! The financial statements supplied to Companies House for Places for People Ventures Operations Limited, for the year ending 31st March 2016 was signed off by KPMG LLP (Independent Auditor, Andrew Sayers) on 15 September 2015 Clearly 2015 should read 2016, but if the auditors can't put the right date in, was else could be incorrect? See https://beta.companieshouse.gov.uk/
Agree it's not very exciting but there aren't many alternatives that look better value. I have the existing bond maturing in December plus the proceeds of the recent Lloyds bond maturity and the Enterprise Inns tender to reinvest, so I suspect I will apply just to keep up my bond asset allocation and to diversify from other holdings. Who knows maybe interest rates will still be low in 7 years. Good heads up guys on potential extra risk that I will look into.
Frugal, I agree its not the most exciting, however I do like that it is only 7 years, the coupon is reasonable considering the current market yields available on retail bond issues. My main concern is how good the "security" is behind the 4 companies, perhaps Oliver can enlighten us with a write-up. Plan to invest, but not sure at what level.
Not for me, I have been bullish on bonds for more than 10 years, put my money where my mouth is and have done quite well but something has changed. My fear is that central banks have decided that ultra low interest rates have done more harm than good and are going to start pushing them up fast. In the UK the excuse will be the return of inflation, in the US it will be Trump's $1T infrastructure spend. I could just about swallow 4.25% on a 5 year but 7 is too long.
In normal circumstances an unregulated unsecured unrated property developer/come leisure centre manager would need to issue 7 year £ at more than 4.25%. But this business is well managed (not guaranteed) by Places for People. PFP is a strong and significant investment grade “Registered Provider” of Social Housing. Whilst not impossible, it does seems unlikely they would allow their image to be tarnished by something going wrong with this bond. It is also hard to think of any bonds that are generously priced in the present day? (Fang, “not junk” bonds yielding 6%, please share?) 4.25% unsecured is perhaps not generous but at gilts +325 this compares to gilts +135 for the secured institutional bonds. On that basis there seems little wrong with including them, at par, to a diversified income producing portfolio and holding to maturity?
I am applying for this as it will enable me to sell bonds I am holding which have a lower yield to maturity so I will get an instant gain which is always good. One of the guarantee companies has preference share capital of £200m so the security is acceptable to me.
Agree with zephyr, 7Y gits about .90 so this is plus 335, which is very high. Its a housing association essentially, they are not going to trash their reputation with a small issue which is backed by commercial arm. Bonds might go down as rates rise, who knows, but relative to others out there, eg A2D, yields 3 (22maturity) and 3.4 (26), this is cheap. Also a small issue to replace maturing current retail bond and keep diversification of funding, so priced to sell imo.
Euro17, many thanks for the update Placed my usual order for a new retail orb bond. Helps with the portfolio diversification Like Gliderpilot, I have been reducing my exposure to some of the previous issues which have "lowering yields to maturity" Uncertainty with Euro Government gilts may persuade foreign investors to look at the London ORB bond market. Interesting times ahead. I don't have a problem with a 7 years bond With the record number of EU nationals coming to the UK, I cannot see "wage inflation" taking off, Re BRexit, the Conservatives will be committing suicide if they continue their "Exit" policy, the £ I think is gaining ground on the basis that a u turn is required (Houses of Parliament should have the final say, they are better informed than us (general public) as to what is best for England, Wales, Scotland, Northern Ireland), without forgetting our neighbours (Eire, France & Germany etc).
Another excellent analysis by Oliver. The most important aspect of the offering, for me, is the negative pledge. I will be subscribing for the income whilst not expecting any near term capital gain.
Selftrade have allocated mine to me with a settlement date of 15 December (although the money has already left my account!). The security has been traded on a "when issued" basis so if it doesn't actually get admitted to trading proper any transactions are 'void'.
My allocations have appeared in my Youinvest and Selftrade accounts already. The Bond price is being displayed on the LSE website, but I a am not sure whether retail investors can trade yet.
Comments
On the plus side, a good credit and equates to equivalent UK Gilt +325bps.
On the minus side, they aren't secured on property which I would expect for such a measly yield.
So same name as before but different risk?
The financial statements supplied to Companies House for Places for People Ventures Operations Limited, for the year ending 31st March 2016 was signed off by KPMG LLP (Independent Auditor, Andrew Sayers) on 15 September 2015
Clearly 2015 should read 2016, but if the auditors can't put the right date in, was else could be incorrect?
See https://beta.companieshouse.gov.uk/
My main concern is how good the "security" is behind the 4 companies, perhaps Oliver can enlighten us with a write-up. Plan to invest, but not sure at what level.
Not so long ago anything under 6% was pooh-pooed - now look where we are !!!
Looking at the yields of existing bonds out there, the coupon doesn't look too bad if you're looking to diversify.
4.25% unsecured is perhaps not generous but at gilts +325 this compares to gilts +135 for the secured institutional bonds. On that basis there seems little wrong with including them, at par, to a diversified income producing portfolio and holding to maturity?
Its a housing association essentially, they are not going to trash their reputation with a small issue which is backed by commercial arm.
Bonds might go down as rates rise, who knows, but relative to others out there, eg A2D, yields 3 (22maturity) and 3.4 (26), this is cheap.
Also a small issue to replace maturing current retail bond and keep diversification of funding, so priced to sell imo.
Nor can one place a verbal order!
I'm not too pleased!
Placed my usual order for a new retail orb bond.
Helps with the portfolio diversification
Like Gliderpilot, I have been reducing my exposure to some of the previous issues which have "lowering yields to maturity"
Uncertainty with Euro Government gilts may persuade foreign investors to look at the London ORB bond market.
Interesting times ahead.
I don't have a problem with a 7 years bond
With the record number of EU nationals coming to the UK, I cannot see "wage inflation" taking off,
Re BRexit, the Conservatives will be committing suicide if they continue their "Exit" policy, the £ I think is gaining ground on the basis that a u turn is required (Houses of Parliament should have the final say, they are better informed than us (general public) as to what is best for England, Wales, Scotland, Northern Ireland), without forgetting our neighbours (Eire, France & Germany etc).
PLACES FOR PEOPLE FINANCE PLC STG 4.25% GTD BDS 15/12/23 (WI)
Current price = 100.50 (Mid)