Close Enhanced Share Discussion Threads

[davebowler] 29/9/2008 10:50

Surely we also have recourse to the Board/Close Bros too owing to their previously announced stance;






As part of its investment portfolio, the Company holds a debt security issued by Glitnir
Banki HF ("Glitnir") with a nominal value of
£6,740,000 and a market value, as at the reporting date, of £19,417,777. This represents
18.91 per cent of the value of the Company's net
assets as at the reporting date.

On 21 April 2008, Standard & Poor's Ratings Services lowered its long-term counterparty
credit rating on Glitnir one notch from A- to
BBB+, with a negative outlook. Moody's rating has remained unchanged since 28 February 2008,
at A2, with a stable outlook. As a result of
the downgrade, the Board considered both the sale and the retention of the Glitnir debt
security, acting in the best interests of the
Company and Shareholders.
The Board reviewed Glitnir's financial results for the first quarter of 2008, including
its liquidity and capital adequacy position, as
well as recent research updates from the ratings agencies. Whilst Glitnir's profitability has
been, and is likely to remain, volatile due to
difficult conditions in capital markets and investment banking and the Icelandic economy, the
ratings agencies noted Glitnir's strong and
sound levels of liquidity, and its ability to meet commitments falling due over the
short-to-medium term, even under comprehensive stress
test conditions. They also considered that, should systemic support ever be required from the
Icelandic authorities, it would likely be
forthcoming. The ratings agencies are not, therefore, suggesting that Glitnir will likely
default on its liabilities. In fact, to the
contrary, a BBB+ rating is defined by Standard & Poor's as investment grade, with an
"adequate" capacity to meet its financial commitments.
The Board also considered how the Final Capital Entitlement of the Shares might be
affected by any sale of the Glitnir debt security and
noted that there could be a significant cost involved, resulting in an irreversible reduction
in the terms stated in the Company's
investment objective and expected by Shareholders.
On the basis of the prevailing facts, the Board therefore concluded that it would not be
in the best interests of the Company and
Shareholders to sell the Glitnir debt security, but will continue to monitor the

[skyship] 26/9/2008 14:53

I see Weiss/Brookdale have increased their stake to 7.3%. Many on this thread will recall that organisation as a regular accumulator of the SPLIT caps. Their recent arrival is one of the bull points; but I daresay they will be hedging their position a la Erstwhile!

[praipus] 23/9/2008 19:10

Still holding CRUD ETF for crude oil as a hedge against the once widely predicted $200 oil price.

The course of high finance never runs smooth and the introduction of derivatives with counterparty risk isnt new and eventually becomes part of the market landscape IMHO.

CFD's for example prevalent in the run up to the first Wall Street crash are still with us today.

Erstwhile2 forgive me re posting the following as a reminder of how humble we have to be in the face of the markets and your former view on ETFs.

Praipus - 23 Jun'08 - 11:11 - 209 of 248 edit


Incisive as ever, thanks erstwhile2.

Begs the question: So what is the counterparty situation with ETF's?

NabCom - 23 Jun'08 - 11:38 - 210 of 248


Precious Metals: "backed by physical metal"

Others: "backed by Commodity Contracts from either AIG Financial Products or the Royal Dutch Shell Group"

erstwhile2 - 23 Jun'08 - 13:01 - 211 of 248


Praipus: NabCom is partly there but omits the main point....the credit risk with the commodity ETFs is de minimis as there is typically an "in-specie redemption @ NAV" provision for these ETFs for large blocks, with approx 3 day settlement. So you have, at worst case, 3 day credit risk; arbitrage therefore demands that the ETFs should not trade far away from NAV.

If you think AIG or RDSA will go bust IN 3 DAYS without anyone having any forewarning of the deteriorating credit situation, your credit aversion is higher than mine.

[bangor] 23/9/2008 11:08

I have sold my CED positions. Watching ETFs default was a salutary lesson. My AIGA looked like it would be worthless for a while. My LSIL, which we are assured will rise at double the rate of silver, has done nothing of the sort. In short, synthetic and structured products are dodgy.

I am currently keeping gold and silver ETFs which are (theoretically!) backed by bullion. I am not suggesting for one moment there is anything wrong with Close/CED but am more cautious after these experiences.

Good luck to holders.

[jagworth] 22/9/2008 23:33

Some news about Glitnir

Glitnir, the Nordic Bank announced today that it has entered into merger talks
with the Byr Savings Bank in Iceland.

A statement from Glitnir said: "Glitnir Bank and Byr Savings Bank announced today that they have initiated discussions on the possible merger of the two companies. This entails that the boards of both companies will not enter any dialogue with other parties while negotiations take place. The results of the negotiations will be made official as soon as they have been concluded."

Nordic bank Glitnir has its headquarters in Reykjavik, Iceland.
The Bank has extensive operations in ten countries.
It counts Iceland and Norway as its home markets, where it offers a full range
of financial services; including corporate banking, investment banking,
capital markets, investment management and retail banking.
For more information, visit www.glitnirbank.com

[wolstencroft] 22/9/2008 21:37

erstwhile; I have to agree despite having a large holding here. I think PHAU is safe and bought that today but will not take any more positions here.

[skyship] 22/9/2008 09:53

Just in case anyone else was concerned at their "AIG-linked" ETF trades - they're not back yet, but normal service will be resumed soon:

[skyship] 19/9/2008 09:29

To be fair, strictly speaking Erstwhile is right, my position in the Cotton ETF is/was a very small piece of naked speculation; but I am not so purist as to believe that no investment should be speculation. I loosely asset allocate my SIPP portfolio between ultra-safe and downright speculative, but the weighting of the latter is quite naturally very small - almost just for fun.

Actually I've done quite well with minor forays into ETFs, the main player having been PHAG - the silver ETF. Though took a bit of a haircut there on the last foray!

My regular forays into CED have been wholly profitable; but for the moment I'm holding off due to the counterparty uncertainties; and I wouldn't be able to arbitrage in the futures market as the account I'm managing is a SIPP.

[praipus] 18/9/2008 10:26

Didnt the cities motto used to be "My word is my bond"?.....lol....they seem like far off days now.

erstwhile2 - always fascinated by your posts. On th subject of "non-informed speculation" how does the informed speculator trade commodities?

[nabcom] 18/9/2008 08:35

Hold CED2 and was thinking of adding till this week, same worries

[skyship] 18/9/2008 08:30

Yes, the "INAV" has improved slightly - now 260p.

However, as Erstwhile has posted, it is the counter-party risk that is now deterring me. I hold the cotton ETF which turns out to be issued by AIG! Suspended at nil value!! Though should return after the Govt bail-out - HOPEFULLY.

E - From your perspective, do you have a view on that?

[davebowler] 17/9/2008 15:20

Nice jump in Gold.

[davebowler] 12/9/2008 12:01

Skyship- its happened;


Based on the values of the commodities as at 10 September 2008 and assuming these values
were to remain unchanged through to the end of
the life of the Company, the final capital entitlement per Share on the Redemption Date would
be 254 pence. This is not a forecast nor is
it a reflection of the net asset value per Share and takes no account of any unforeseen
circumstances and is provided for informational
purposes only and should not be relied upon for investment decisions.

[skyship] 09/9/2008 16:01

Spot INAV back to 257p as all commodities take a further bashing. Sp back to 204/209p. IMO they'll be cheap again if we get another sell-off to under the 200p level.

[skyship] 05/9/2008 11:56

Erstwhile - thnx for that. Can you post a link to the futures prices?