City Merchants High Yield Share Discussion Threads

[kiwi2007] 28/12/2018 10:22

https://www.ft.com/content/80771252-0a22-11e9-9fe8-acdb36967cfc Investors flee risky US corporate debt High-yield bonds and loans on course for worst month since 2011 as outflows swell Joe Rennison and Nicole Bullock in New York 5 HOURS AGO Print this page0 US investors have pulled back sharply from the riskiest corners of the debt markets, putting junk bonds and loans on course for their worst month since August 2011, when the market was reeling from a downgrade of the US government’s credit rating. The broad sell-off comes alongside a downturn in US equities that reflects gathering concerns about the global economy, but unlike in equities there has been little sign of a rebound in investor confidence since Christmas. The credit premium on high-yield bonds — that is, the extra yield being demanded compared to risk-free Treasuries — has jumped by 1.1 per cent since the start of December, according to an index from ICE Data Services. That is the biggest rise in more than seven years, sending the yield on the index above 8 per cent. Meanwhile, the average price of leveraged loans — that is, loans to risky borrowers such as companies taken private in leveraged buyouts — has fallen 3.1 per cent this month to just below 94 cents on the dollar, according to an index run by S&P Global and the LSTA. That is also the biggest one-month move since August 2011, when the US government lost its triple-A credit rating. The volatile market conditions have kept US companies from issuing any high-yield bonds in December. Falling oil prices have also punished the market, since energy companies make up a large proportion of borrowers. “The market just continues to weaken,” said John Dixon, a high-yield bond trader at Clearview Trading Advisors. “There is a lot of year-end selling. Oil is down. It’s a broad-based sell-off.” Investors pulled $4bn from funds invested in US junk bonds for the week to December 26, the seventh straight week of withdrawals and the largest weekly outflow since the beginning of October. Loan funds also saw large outflows. Investors took out $3.4bn, making it the sixth straight week of withdrawals, according to the data from EPFR Global. “With so much negative sentiment toward anything that is perceived as a risk-on asset, cyclical or credit-oriented areas have been sold off,” said Matthew Bartolini, head of Americas research for State Street SPDR exchange traded funds. “Investors are rotating out of risky sectors and moving into perceived safe havens.” Junk bond risk premia continued to rise, and loan prices continued to fall on Thursday, even as the US equity market enjoyed a second day of gains. The equity market has trimmed its losses for December to 9.8 per cent, but investors remain wary about tightening financial conditions and the potential ramifications of the trade dispute between the US and China for global growth. EPFR data showed US equity fund outflows of $6.4bn in the week ended Wednesday, slightly more than the previous week but much less than the $28bn recorded earlier in December.

[kiwi2007] 19/12/2018 08:34

Pity they've hedged all of the US portfolio (30% of the fund) back to the GBPound.

[kiwi2007] 09/10/2018 10:16

The risk seems mainly to the downside on corporate debt. This is a good company but if the floodgates open they'll be caught like everyone esle. Bailed out this a.m.

[andyj] 22/3/2018 04:08

I am reconsidering my investment here though. It was 180 eight years ago, so hasn't provided capital increase, the TER is 1.01% and the dividend at 5.3% is the only reason to hold. However what concerns me is the potential to fall further, a small drop and the profit margin from the yield is erased. There are numerous funds offering slightly less yield but with greater growth potential.

[andyj] 22/3/2018 04:02

The fall to 180 happened in the correction in February, before Aviva's announcement. Rising interest rates, etc.

[pvb] 20/3/2018 23:16

Is recent fall due to damage inflicted by Aviva Preference Shares business? It is affecting other prefs, not just Aviva's.

[pvb] 05/7/2017 16:35

Current NAV per share around 193p: https://uk.advfn.com/stock-market/london/cmhyt-CMHY/share-news/City-Merchants-HYT-Net-Asset-Values/75172789 So currently at a premium.

[kiwi2007] 23/1/2017 22:23

Market and economic review The European high yield bond market ended 2016 with a month of strong performance as the government bond led sell-off of recent months moderated. Returns were positive across a broad range of sectors with some of the best returns coming from insurance and Natural Gas companies. European high yield bond issuance was low with Barclays reporting €0.9bn of new supply, which compares to €4.3bn issued during December 2015. For the full year Barclays report a 19% fall in European Currency high yield bond issuance compared to 2015. Largely reflecting the very low levels of issuance at the start of the year. Index data from Merrill Lynch shows that European currency high yield bonds returned 1.9%. (Sterling hedged, total return). Portfolio review We remain defensively positioned, with a relatively high allocation to liquidity (cash and government bonds.) High yield bond exposure is focused on higher quality companies that we consider unlikely to default. Around 24% of the portfolio is allocated to bonds issued by banks. Our highest exposure in this sector is to the junior tiers of bank capital. A smaller allocation is held in subordinated insurance bonds that we think are attractively priced. Outside of the financial sector, our largest allocation is to the food sector where we have exposure of 7%. We also hold around 11% of the portfolio in non-financial hybrid bonds (a type of relatively junior debt in a company’s capital structure). Our focus with these bonds is toward issuers that we think have strong balance sheets and good cash flow.

[pvb] 14/12/2016 20:06

US rates up 0.25%

[kiwi2007] 15/11/2016 14:51

Top 10 issuers % portfolio Lloyds Banking Group - Lloyds Bank & LBG Capital 7.875% Perpetual, 7% Var Perpetual 4.4 Aviva 6.125% Perpetual, 8.875% Preference 3.6 US Treasury 2.5% 15 Feb 2046 2.9 Société; Genérale 8.875% FRN Perpetual 2.8 General Motors Wts 10 Jul 2019 2.7 Telefonica Europe 6.75% Perpetual, 5.875% Perpetual, 4.9% Cnv 25 Sep 2017 2.7 Intesa Sanpaolo 8.375% FRN Perpetual, 7% Perpetual 2.5 Credit Agricole 7.589% FRN Perpetual, 8.125% FRN Perpetual, 7.5% Var Perpetual 2.4 Standard Chartered 5.7% 26 Mar 2044, 5.125% 06 Jun 2034 2.2 Twinkle Pizza 8.625% 01 Aug 2022, 6.625% 01 Aug 2021 1.8

[kiwi2007] 15/11/2016 14:47

Market and economic review The European high yield bond market gave back some of its recent strong performance. Sentiment fell at the start of the month amid a lack of new policy announcements by the European Central Bank and concerns that the US Federal Reserve (Fed) might hike interest rates. The subsequent decision by the Fed not to hike rates saw markets recoup some of these earlier losses. However, concerns about Deutsche Bank, following a potential $14bn fine for mis-selling mortgage products were a further weight on sentiment. Data from Barclays shows that there was €12.4bn of high yield bond supply in Europe, which compares to €1.9bn in September 2015 and €5.5bn in September 2014. Year to date supply however remains below 2015 levels at €44.8bn. Index data from Merrill Lynch shows that European currency high yield bonds returned -0.4%. Sterling investment grade corporate bonds returned -1.4% and euro investment grade corporate bonds returned -0.0%.(sterling hedged, total return). Portfolio review We remain defensively positioned. Exposure is focused on higher quality companies that we consider unlikely to default. Around 24% of the portfolio is allocated to bonds issued by banks. Our highest exposure in this sector is to the junior tiers of bank capital. A smaller allocation is held in subordinated insurance bonds that we think are attractively priced. Outside of the financial sector, our largest allocation is to the food sector where we have exposure of 8%. We also hold around 11% of the portfolio in non-financial hybrid bonds (a type of relatively junior debt in a company’s capital structure). Our focus with these bonds is toward issuers that we think have strong balance sheets and good cash flow.

[pvb] 10/11/2016 20:12

NAV per Ordinary share (unaudited) with Debt at Par & Fair Value EXCLUDING undistributed current year revenue 183.63p INCLUDING current year revenue 184.95p

[pvb] 12/9/2016 18:37

NAV per Ordinary share (unaudited) with Debt at Par & Fair Value EXCLUDING undistributed current year revenue 185.96p INCLUDING current year revenue 188.05p

[jonwig] 24/6/2016 08:00

Citywire reported it, they didn't originate it, but here you are: If a leave vote prompts the Bank of England to restart quantitative easing by buying up bonds again, an investment trust like City Merchants High Yield, which invests in high yield European debt, could benefit. ‘The fund has a strong long-term performance record and the highly-respected team has historically been able to take advantage of value opportunities following volatility of market set-backs,’ said Winterflood. ‘While we share the Invesco team’s view that the asset class is no longer as compelling on value grounds, we believe that the current yield of 5.5% remains attractive at a time of low interest rates.’

[kiwi2007] 24/6/2016 07:38

CityWire wrong again ;m

[jonwig] 24/6/2016 06:05

Citywire has some ITs for a "leave" vote - PNL, CMHY, PIN included.

[my retirement fund] 12/2/2016 12:16

6% just doesn't do it for me these days

[my retirement fund] 12/2/2016 03:27

Well if it can carry on in this direction the yield will become tempting

[kiwi2007] 29/1/2016 14:37

Interesting but bearish article on high yield: High yield bond bears: flee to the hills Kadhim Shubber Author alerts | Jan 26 13:08 One stereotype of equity investors is that they stay seated and calm long after bond investors have hit the fire alarm and exited the building. It is perhaps a little unfair today, given that everyone is panicking. But two bearish high yield credit strategy notes this week suggest that evacuating one building may not be enough and that it’s perhaps time to flee the entire city and head for the hills.......lots more @ http://ftalphaville.ft.com/2016/01/26/2151148/high-yield-bond-bears-flee-to-the-hills/

[p@] 28/1/2016 12:43

At 1.74p I would too!!!!!! From RNS The Board of City Merchants High Yield Trust Limited (the 'Company') announces that it has agreed today to issue and allot 100,000 ordinary shares of no par value in the Company at a price of 1.74p per share under its block listing facility. This allotment is to satisfy secondary market demand and is made under the annual author edit-I wonder how much the writer or the checker is being paid?....LOL

[pvb] 28/1/2016 10:58

Winifred Robbins, director, has purchased a very large number of these over the last few days. Though not yet at a discount to NAV. Or is that expecting too much in these times with the current yield on the shares?

[dragonsteeth] 06/4/2015 12:07

kiwi, yes agree with that , I hold New City but not City merchants so was thinking of switching. This from the Annual Report as of 1st April has made me stop and think though ; "We think that, although the demand for income will remain an important factor in total returns across bond markets, duration is once again likely to be the dominant factor. In this context the economic backdrop remains relatively supportive: inflation is low while economic growth is generally weak and this should allow central banks to remain accommodative for some time to come. However, with a large part of the investment universe already reflecting this benign outlook the opportunity for disappointment is, in our view, not insignificant."