Gcp Infrastructure Inves... Share Discussion Threads

[spectoacc] 22/8/2023 08:28

Does the divi survive the merger(s)?

The buy back hasn't been too successful so far - hopefully more so down here. SEIT another with an ongoing buy back starting from much higher.

[donald pond] 22/8/2023 08:20

Just one of those opportunities the market throws up. 10% yield on long term assets with reliable income flows and very low default rates. Would anybody be surprised if the share price was 90p in 12/18 months for a 40% gain

[timmy40] 21/8/2023 22:00

Seems to be falling way more than other infra funds ?

[spangle93] 21/8/2023 09:06

Thanks jonwig

Wish the market saw it that way. I've topped up on compelling bargains twice recently and the share price still keeps falling. :-(

[jonwig] 21/8/2023 08:23

QD (sponsored), "Merger to unlock compelling value" -

[hindsight] 18/8/2023 13:52

Brought in today, may not be bottom looking at bid/offer sizes but one home for some of BOI proceeds

[hpcg] 18/8/2023 12:37

Stockstockham - r.e. "No one else sees interest rates as at their peak", you'd be surprised. The investment world seems to have some huge schisms at the moment on inflation, short term rates, long term rates, and recession. There are still deflationists out there. Most of the noise is with respect to US of course, and the UK ranks well down the list of what anyone cares about, but it is the same here.

My personal opinion is that spreads on debt like instruments over 10 year gilts are sufficient and will return more than the former even if there are some write-offs. I don't foresee rates going especially low but even if they were to stick this high for an extended period this would still be the case.

[spectoacc] 18/8/2023 09:28

2008-2020 - because they couldn't reduce below the zero bound, hence QE

"..So [why] do we need to reduce activity?". Because, inflation. It's the fundamental point.

Recent inflation began as cost-push. You can only counter cost-push by stamping down very hard on demand. The BoE didn't do that, and now it's demand-pull (or wage-push, if you like).

It's early 90's redux, and we can only hope the outcome is a much less serious downturn. I think it will be, because the rate rises we've had are just taking longer to take effect. But I'd argue the risk is to the downside (ie, rates more likely to be 7% than 4%).

[donald pond] 18/8/2023 09:22

Interest rates lower inflation by reducing economic activity.But why then was the economy so sluggish from 2008-2020? And why, when growth is below 1%, so we need to reduce activity? I think people have no idea of the relationship between inflation, economic activity, growth and wages. I suspect UK inflation has very little to do with UK interest rates.

[hindsight] 18/8/2023 09:12

One point is the drivers of the housing market are FTBs and BTLs and they virtually all take out mortgages. Sales to them have dropped 50% and I'm surprised its only that fall having the data from one about the doubling of quotes. Fortunately never signed


Interesting comment in the IC last week - same stat as before but expressed differently - that only around a quarter of households have a mortgage, and only around a half of them (ie c.12.5% of UK households overall) have seen any effect from the rate rises so far, due to fixes.

[williamcooper104] 18/8/2023 09:06

So unlike in the 1970s this time round we don't get to leg our creditors with inflation

[williamcooper104] 18/8/2023 09:04

It's the public accounts it hits QE was buying long gilts with floating rate debt and thus shortened the maturity profile of our national debt from c15 years to 4 years (and then we thought RPI linked debt was cheap so binged on it too) So higher for longer can only mean austerity

[spectoacc] 18/8/2023 08:49

Interest rate rises lower inflation, by reducing economic activity and demand.

Question is how high they have to go to do that, and how long the transmission takes - longer than it used to.

On food/essentials - sure, there's only so much trading down can be done on cheese/eggs.

But food was only the 3rd biggest contributor to recent inflation - the largest by far were foreign holidays, and flights. Ergo, far too much money in the economy (perhaps no surprise after the extra £400bn of QE during Covid).

Also consider that if it takes longer for rate rises to affect inflation, it also allows longer for the positive side effects - eg the wealthy having more interest on their savings - to build too.

Everything says "higher for longer", as it has throughout. The absolute key is the employment market, since only unemployment (caused by high interest rates slowing economic activity) will counter wage demands.

Inflation will not go to 2% with wage settlements over 7%, barring a really serious collapse in commodity prices.

[donald pond] 18/8/2023 08:42

I just don't think interest rate rises work to slow inflation. Those 15% on floating rates will all be workers and in a tight labour market each rise in rates will lead to them seeking wage rises. Which embeds inflation, which was originally driven by global energy prices. I simply don't believe the price of eggs and cheese has doubled over the last 12 months because of excess demand that needs to be stamped out.

[spectoacc] 18/8/2023 08:27

Something will happen on ISAs I'm sure - who'll march in the streets for 6/7 figure ISAs?

Rates aren't at their peak - but agree the peak might begin with a "5" not a "6". Can't see rates not beginning with a 5 for a long time ahead tho. One or two more +0.25's I reckon, but with risk to the upside. RMII are simply wrong, tho will use "..Near.." as the get-out after the next MPC meeting.

Interesting comment in the IC last week - same stat as before but expressed differently - that only around a quarter of households have a mortgage, and only around a half of them (ie c.12.5% of UK households overall) have seen any effect from the rate rises so far, due to fixes.

Arguably the proportion who rent (rather than own outright) will be indirectly affected too, but shows how much heavy lifting needs to be done by interest rates. Business should be hit first, but seemingly still have pricing power when incomes remain high/wages are running hot.

Govnt borrowing getting very costly, & we're effectively borrowing to pay the interest on previous debt, never a good look. And for QE losses. And for spending that's still exceeding income.

[donald pond] 18/8/2023 08:17

I think most believe rates are near the peak. People don't expect them to fall quickly but I've not heard anyone suggest we need more than another 0.5-0.75%. The big issue imo is that for 25 years government has encouraged the private sector to invest in infrastructure. When the risk free rate is so high, few will do that. So the government will have to issue gilts at high rates or try somehow to pass the costs of net zero on. Or force ISAs to invest in their approved projects.

[stockstockham] 18/8/2023 07:27

No one else sees interest rates as at their peak. Whether the market is pricing in too much with current discounts is another matter.

[alanpro1] 18/8/2023 07:23

Interesting view from RMII. "OutlookOverall, we see interest rates are now at or near their peaks. The curve inversion within the UK gilt market is creating a compelling story for valuations across the front end of the fixed income curve. There will probably be no better time to be investing into short-dated credit and closed-ended real asset funds than now, as the high levels of short-dated SONIA have driven down valuations and increased share price discounts to NAV, which in our view are unlikely to be maintained. The market is behind the curve as the inflation story is now moving into the background and the outlook will be driven by systemic risks that have arisen by the velocity and extent of the interest rate rises within the United Kingdom. RM Capital markets Limited17 August 2023"

[ptolemy] 17/8/2023 08:58

H&S pattern playing out. Left shoulder 27/06, daily chart. Target 67p.

[donald pond] 16/8/2023 15:43

Me too. Happy to trade around a core position here. Low 70s is too cheap to last for long imo

[panshanger1] 16/8/2023 15:11

Added today

[hpcg] 11/8/2023 15:15

I've probably changed my mind on the deal based on the ability to pay down the revolver, with the quid pro quo being the risk of more losses within the larger portfolio. The NIM on the debt covered by the revolver is effectively 0.8%. Were rates to go up another 100bp it would be borrowing to lose money. I accept timing is an issue here, and borrowing to lend out today, with a sufficient margin on top, is fine, though presumably further up the risk tree. Nothing can be done about lending made at lower rates in the past, and is an inherent risk with duration. That is in the price now, I guess.

High rates are designed to discourage frivolous borrowing and direct it at the most worthwhile. I'm not sure why the country needs to build child care nurseries when there are acres of empty retail units in town centres that could be repurposed. Then we have the total waste of money on PFI for police head quarters buildings. I can't really see the next government going for that when even the Conservatives have cold feet. IMO the correct thing to do now is to scale back the book and the market will tell the company through the share price when it should lend new money.

[citytilidie] 11/8/2023 15:09

Personally, I think it is just a way for GCP to try and cut costs in what have been 2 underperforming trust companies. They can put all the spin the want to on the benefits, but that’s all it is.

[wskill] 11/8/2023 14:49

Tend to think brokers talk their own book whatever way it is positioned so mostly just background noise to me .
Do think this merger will be of benefit to GCP in the long run which is what we investors are after,Glad it did not go the same as CSH difficult to replace these high yielding trusts.