Retail Charity Bonds | Greensleeves Homes Trust | Roadshow Announcement

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  • Colin / Sussexmade,
    I thought the same 12 months ago when the CAF retail bond was issued
    http://www.fixedincomeinvestor.co.uk/x/forum.html#/discussion/comment/2265

    12 months later, the price is 111.42

    Not a bad return for 12 months, plus of course the 5% coupon
    Always a potential to make a capital gain, in particular with new issues
  • Hello Shaunm, thanks for that. Yep good return including that capital gain but if the difference of coupon of 0.75pct is taken into account over 10 years then that alone gives a boost of 7.5 pct which is shown in the capital gain that you now have. Also 12 months ago inflation was maybe 1 pct. and now projected at 2.5-2.8 pct this year. If Greensleeves offered 5pct. i probably would have gone for it but alas it didn't and i'm now jealous of your good fortune from last year. !
  • But the trouble is, I didn't invest!
    Although you look at inflation, interest rates have been and still are declining.
    Last weekend, I had notification by email from both the Yorkshire Building Society & the Principality Building Society that they were both reducing their interest rates.
    Compared to other savings rates, the Greensleeves Homes Trust is offering a good rate, hence the very early closure.
    On the other side, HSBC Bank PLC is offering 10 year mortgages at 2.64% (Fixed)!
  • I'm not so jealous now then. ! You are right about lousy rates of interest everywhere but its also true that inflation is now back with us-double trouble. There are still good rates available on retail bonds elsewhere and with longevity of just 5-7 years ( which works better for me ) and little nuggets all around but they take some work and effort to find.
    Shaunm next time you decide not to invest let me know, and i will given your recent performance.( p.s. its ok my luck/pick isn't always that brilliant either ).
  • Difficult to find anything these days. I bought some Nottingham BS pibs 7.85 % at 119 which should give me a yield of 6.6%. which is a little better than the 4.25 with Greensleeves.
  • I think I am missing out on some choices - the only retail bonds I can find with 5-7 years to run and with a YTM over 5% are - Eros , Wasps and Enquest (neither of which I have and at present am not considering for various reasons), IPF 6.125% and Premier Oil (both of which I have in sufficient quantity)

    Grateful for any I have missed that fit the given criteria
  • Edit - not neither of which - should read none of which
  • According to Fixedincomeinvestments ( within ORB/LSE discussion ) YTM of Burford Cap 6.125% 2024 is now 5.08; Paragon has 2 bonds 2022 and 2024 both on/just over 5%. These may not be to everyone's liking but think represent reasonable risk/reward.

  • Thanks - already have Burford 6.125% and both PAGs - must admit I was hoping there were some I hadn't spotted
  • Its a question of Risk / Reward. I think for the really high yielders you have to be prepared in your mind to take 100% loss, if you have that sorted and in small enough size not to kill you, then at least you won't get too stress if or when things start to go wrong.
    I picked up some Ladbrokes 2023 5.125, for 97.30 a couple of weeks ago, but I bought £200k (market size), they were hard to get and I paid £400 commissio
  • Also I bought some blue chip high yielders, BT-A.L, VOD.L and LGEN.L, which have performed nicely. I am aware that we are at record highs in the FTSE so we could have an equity correction though.
    I am a bit wary of equities, I can remember when the Tesco ORB bonds were first issued, people were saying they preferred the equity, that has proven to be a disastrous investment.
  • As you say it is a difficult decision time regarding where to place funds, with most safe "medium / short" dated Orb bonds providing a yield of under 4%.
    Only way to improve the yield is going for more undated securities (eg Prefs & PIBS) with the risk of capital values declining when the rise of interest rates are in everybody minds. Even Oliver indicates his dilemma on his last bond write-up
    "Moreover, given the dearth of ordinary bonds worth buying, any cash left lying around is apt to go to speculative investments. I am all for opportunistic investments and special situations but the danger, as yields remain low for so long, is that there is constant mission drift until most of your assets are at the casino. Maybe this charitable care bond is a useful prophylactic?"
    No easy answer, although it might be wise to reduce one's expectations on what is a "reasonable yield", especially as HSBC are offering 10 year fixed rate term mortgages at only 2.64% (1st 10 years fixed, 15 years variable)!
    Saving for the next Orb new bond maybe the best solution?
  • Shaun

    Agree with all you say; I also love the way Oliver describes "mission drift", spot on with his comments as usual

    I am a bit guilty of this inasmuch as I am tending to increase the % of portfolio holdings for new and some exisisting FI investments, rather than widen the net to include more exotic ones. In reality I am increasing my risk, but perhaps by not quite as much.

    Just bought a few more 1SBA - these, and its sibling 1SBB, have been discussed on this board and also at

    https://www.fixedincomeinvestments.co.uk/discussion/topic/longer-maturities-and-rising-gilt-yield-beneficiaries-ak44-and-1sba/

    These reset on 7 March 2021 to 5 yr Gilt +340bp , however, they can be called on any interest date.

    There appears to be a good chance that these will be called at some time in the not too distant future , and if you do some YTM calculations for a couple of guessed dates , they seem moderately attractive. If they are reset before call, then I am happy with the gilt linked return

  • Thanks to Shaunm, Paddy, Wozzitworthit and Colin for your comments and 'soft' tips. Always useful to see others points of view.

    Just as a matter of interest has anyone heard even a whisper of any new likely ORB bond issues. ?
  • I am getting a bit disappointed by the performance of this one - now trading just above par.
    I was expecting it to be around 103 in the current market. With the prospect of another housing association bond launch, I wonder how much appetite there is for it. Maybe it's a matter of publicity - Greensleeves doesn't appear in the GBP or ORB bond lists on this site even.

  • As long as there are lousy interest rates on fixed interest bank deposits , I would think that these will still be taken up, especially as the last ones have closed early, plus RPI now hitting 3.7%

    I agree though that appetites my dwindle if housing related issues keep appearing.
  • This (Greensleeves 4.25% 2026) is selling below par now. I don't understand why its yield is so much higher than comparable property / social housing bonds.
  • I tried to buy some yesterday at 99:60, fill or kill, didn't get any. Yes this bond has drifted lower, I think it is just investors moving around funds, perhaps moving some funds into the recent distressed higher yielding bonds. It doesn't take a lot of volume to shift the price on the charity bonds.
  • edited August 2017
    Finn2 I have been thinking the same and for some reason Helical bar 6% 2020 have also dropped down to 105 in the last couple of days. I looked for any news but there seemed nothing new. I am tempted, only 3 years to run and a lot of assets.

  • Yes, it's not just Helical Bar, a few of the property bonds with 2 to 3 years left to run are offering quite attractive yields (relatively). The news on London commercial property is good at the moment. I am holding a few and intend to keep them until the final year. It appears at that point that the yield on other bonds drops to between 1 and 2% and I hope I can still walk away with a bit of a premium.
  • The possible reason for the lower price, maybe that some of the "Retained Bonds" have been placed onto the market, thus depressing the price. Only a guess!
    "Issue Date: 30 March 2017
    Total principal amount of the Bonds issued (including Retained Bonds): £50,000,000
    Total principal amount of Retained Bonds £17,000,000
    Estimated net proceeds of the offer: £32,630,000
    Estimated expenses relating to the offer: £370,000"
  • As per prospectus
    "What are Retained Bonds?
    When the Bonds are issued, the Issuer will immediately purchase some
    of the Bonds (the “Retained Bonds”). The aggregate amount of these
    Retained Bonds will be specified in the Issue Size Announcement.
    These will be held on behalf of the issuer by a custodian until a later
    date, when, following agreement with the Charity and the Manager, the
    Issuer may sell some or all of the Retained Bonds to a third party in the
    market or by private treaty on the basis that no Retained Bonds will be
    sold unless they receive the same tax treatment. Additional proceeds
    raised from the sale of the Retained Bonds will then be loaned to the
    Charity under the terms of the Loan Agreement.
    Any Retained Bonds shall, following a sale to any third party from time
    to time, cease to be Retained Bonds. Bonds which have ceased to be
    Retained Bonds shall carry the same rights and be subject in all respects
    to the same Terms and Conditions as other Bonds. You are referred to
    the sections headed “What are Retained Bonds?” and “How will the
    Issuer deal with the Retained Bonds?”
  • Well spotted. That could certainly explain a lot. It would be interesting to see how many they still hold and that might give an idea of when the price might begin to rise.
  • My understanding, is that they are Bond's they have issued to themselves so as to speak, kept in Treasury. This would be a cheaper alternative to a 'tap' issue. But yes, all else equal, since there is more potential supply of the bond, it could hold down the price.
  • My own view is that the issue is fairly priced in comparison to others of similar duration, at 4.1% it is between the 3.4% ytm for CAF and 4.4% for Burford both of which are also 2026 maturity.
    Also it does operate in the, hardly thriving, care home sector.
    I believe they still had over £20m of the bond issue in the bank at year end in March(?) but may have spent around £5m recently on another property. If that's so there should be no need to touch the retained bonds just yet.
  • Interest was due on 30th September but nothing has been credited to my HL accounts so far?
  • I hold these bonds in AJ Bell YouInvest and HL , the GSHT Coupon was paid into my YouInvest account yesterday, nothing yet in my HL account, I reckon it is a HL issue.
  • I hold some of these with Youinvest and Selftrade. I have had the interest paid into my Youinvest account but not from Selftrade. However, this is not unusual, Selftrade normally pay coupons 2-4 days later !
  • Credited this afternoon at close of business to both SIPP and ISA.
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