Investec Pref Discussion Threads

[papy02] 08/4/2024 17:21

Thank you ROTA ! Yes, very interesting.

Despite a floating rate share of 75%, it still seems to have a positive duration, (albeit only 1.3 yrs) so maybe not a hedge for conventional Prefs.

But it looks like the complete soup to nuts in it’s own right. It may be a variable rate investment but if they achieve 4% over SONIA the yield will be hard to beat with Prefs even if rates drop a lot. The Prefs would reprice upwards in that case of course, but I’m not particularly keen to be in that business (betting on the direction of interest rates).

I’ve taken an initial position, and will research further.

Many thanks again

[return_of_the_apeman] 08/4/2024 03:57

Perhaps this fits for you Papy02

[papy02] 04/4/2024 10:36

Thanks ROTA. Have done. I remember looking at CEBB before and hesitating due to lowish (imv) YTM. A mistake as price up 10% ish since!

It’s really tough to predict how the linkers/floaters prices will react to interest rate perceptions- cuts or rises. As the recent history is mainly the bond lunacy period where interest rates were on the floor but prices were around the same as now - but it would be foolish to assume a replay of the lunacy. So I try and estimate what rational prices would be at different base rate expectations, but that does have a CAPM feel about it - great theory, shame about the lack of correlation to the real world !

[bondofbond] 04/4/2024 08:29

There is no proper ringfencing of preference share capital between the UK plc and its South African parent - in fact, Investec Group still counts INVR (issued by Investec Plc) amongst its regulatory (and accounting) share capital under South African rules. So my assumption is that INVR carries SA country risk, with little protection granted by the fact that the issuer is a UK Plc. As a thought experiment - if Investec Group gets in trouble, why wouldn't they tap into all capital resources avallable to them?
You can find INVR shown as consolidated within Investec Group SA on page 127 hxxps://www.investec.com/content/dam/investor-relations/financial-information/group-financial-results/2023/Investec-Annual-financial-statements-Online-March-2023.pdf

[return_of_the_apeman] 03/4/2024 16:47

Ask on here, if you are looking for alternatives ;-)

[papy02] 03/4/2024 14:00

Thanks Cerrito. Very helpful.

[cerrito] 03/4/2024 10:41

Papy02
I also have concerns ref SA and have had since I first purchased INVR 10 years ago and yes it has constrained my holding.
FWIW I note that on the the last TU INVP says that of the £31n core loans £14b are in SA and £17b ex SA and £19b of deposits in SA and £21b ex SA.
My reading is that servicing of the INVR dividends is not dependant on capital flows from SA.

[papy02] 28/3/2024 22:14

Thanks,

Yes my worry is about SA failed state risk.

Will also post to the FIX board tomorrow.

Thanks again

[cassini] 28/3/2024 13:10

There's Investec plc and Investec Limited, the first is the UK side of things, the second is the SA side. They havv business in Asia too.

I believe they are legally distinct but nevertheless operationally intertwined.

I presume you are worried about SA becoming a failed state?

I'm afraid I don't know enough about the subject to say whether some 'event' in SA could derail INVR.

INVR is the only linker pref I know of, try the FIX board for info maybe?

[papy02] 28/3/2024 11:59

I have an excessively large (for me) position in these.

The reason is I hold an equal amount of INVR to a basket of 2 conventional Prefs (NWBD, GACA), to mitigate capital gains/losses due to interest rate (perception) changes. (As INVR price moves inversely to conventional Prefs). It has worked perfectly from that perspective since I invested mid last year. And delivered a great yield from the combined holdings, while running close to zero “duration risk”.

My problem is I would like to scale up this approach. I can diversify the conventional Prefs no problem, but I don’t know any “linker” other than INVR.

I am particularly uncomfortable about the (admittedly tenuous) South Africa link with Investec. I’d prefer to own nothing with even a tenuous exposure to SA.

Has anyone here dug deep into the SA link, and is willing to share their conclusions?

Or any other candidates for a “linker” other than INVR? Where yield is a function of BoE base rate or similar.

Many thanks

[cassini] 13/3/2024 01:22

rimau1,

I did sell at 511.26p the day after I posted I think, but have come to wonder if I did the right thing. Obviously not on one level as the price is now higher!

I made a profit, so I'm not too worried about selling out but I'll keep an eye on this one and may reenter if the price action looks favourable.

Inflation looks sticky, so base rate cuts may be further down the line than is being forecast.

I see the US 10 year Treasury interest rate dropped down to about 4.08% over the last few weeks but has just started rising again, so the market currently must think risk is rising and interest rates ought to be higher.

Hmmm, what to do, tricky...

[rimau1] 03/3/2024 15:13

Hope you didn't sell Cassini, i managed to top up but had to pay 5.15 and the spread is horrible. This is a nice higher for longer hedge that still pays well whatever the outcome. I have no idea why it fell from 5.50 to 5.00 but there was no stock available at 5.00 sadly.

[aishah] 08/2/2024 11:15

Thanks, I had a stop loss at 500p bid which has kicked in. Still think rate cuts are not imminent but yes the perception of a few bps cut in the coming months will impact here.

[aishah] 08/2/2024 08:23

Any views on continuous weakness here?

[aishah] 01/12/2023 09:05

Rates are unlikely to be cut during the next accrual period to March. So decent double digit yield on offer here. Pity you can't get an online quote to buy more than £4k worth on HL!

[joey52] 15/11/2023 08:35

Dividend announced this morning 29.08904p

Last day to trade cum-dividend Tuesday 28 November 2023

Shares commence trading ex-dividend Wednesday 29 November 2023

Record date Friday 1 December 2023

Payment Date Tuesday 12 December 2023

[rimau1] 14/11/2023 07:30

Good, then it should take you 2mins to compute the actual dividend payout and let me know... tia

[aishah] 14/11/2023 07:00

The dividend accrual dates are 31st March and 30th Sept. So the base rate weighted avg needs to be applied from 1st April to 30th Sept for the next divi payment imo.
Running yield really good though as you indicate.

[aishah] 14/11/2023 06:04

Anyone have workings on how much the next payout will be based on the base rate rises over the period? tia

[badtime] 25/10/2023 15:25

Can't be much stock around ..seems to move on very little

[holts] 06/10/2023 16:18

I am struggling with the logic here , maybe I don’t understand It .

The suggestion is rates may be staying higher for longer , to me this makes this a better buy , however the price suggests otherwise .

What am I missing ?

Or is it simply the belief is rates will have to be slashed in reaction to an as yet unknown crisis .

[aishah] 06/10/2023 14:20

Keeps drifting lower. Might add on persistent weakness

[cwa1] 29/9/2023 11:14

Start of June/December