Investec Pref Discussion Threads

[joey52] 15/6/2023 17:54

Thanks once again for the info and your thoughts, they are much appreciated.

[return_of_the_apeman] 15/6/2023 17:09

Have you tried ringing them? - most will deal bonds like IPF3 via the phone at the same online trade cost. You will have to answer a couple of simple questions like have you bought bonds before

I have IPF2 which matures earlier but have passed on IPF3 for 2 reasons
1. If the are offering me 12% and are going to loan that out to other people then they must charging significantly more which worries me around affordability. I expect there are default stats and I reckon if I looked these might be OK or even great but we are not at peak pain yet
2. It seems all to common for blame about mis-selling to be lodged at the door of lenders especially when people start not being able to pay, which seems a bit unjust but happens and can result in companies going under

Plenty have bought IPF3 or converted from IPF2 so it is just my thoughts and bias

[joey52] 15/6/2023 16:48

Missed last dividend, took time to read up on it.
Still considering as interest rate rises incoming.
Was also considering IPF3 but my brokers don't seem to offer them.

[joey52] 15/6/2023 16:42

Missed last dividend, took time to read up on it.
Still considering as interest rate rises incoming.
Was also considering IPF3 but my brokers don't seem to offer them.

[return_of_the_apeman] 15/6/2023 16:07

Quiet here isn't it, given the increasing certainty of further rate rises
More sold than bought last week and volumes are negligible, I would have thought there would be more interest

522.3 to sell now for anyone wanting out

[return_of_the_apeman] 08/6/2023 08:29

X-div today

Forward indicative yield at today's price of 521.5 is 10.5%

For anyone wanting out, sell price is 505

Gla

[joey52] 06/6/2023 20:12

Thanks for the info and background.
Nice to learn something new.

[return_of_the_apeman] 06/6/2023 19:14

Welcome joey52

Is it good value though right now?

If you bought at today's price

The 329 year long term average for the base rate is between 3.5% and 5%, which would return 8.5% to 11.3% (so 9.9%) over a very long period indeed



If we look at more recent history from the 1950s up to 2009, if this product had been available you been close to Buffett himself with no effort (calcs not done but base rate vs inflation chart says it all I think)



2010 to 2020, would have been some pretty dire stuff, you would think this would be on it's knees with the pathetic yield during those years, however the price still averaged over 450p

This leads me to believe that those that buy this are willing to hold for the long term, probably allocate between 3-4% of their portfolio to it and don't sell in the wilderness years*

*there was some selling down to 305p and 330p on the long term chart during the 2009 -2020 period, but this recovered quickly enough and does it really matter if the normal over the long term is 10%+ income? You could just hold and forget

Just some thoughts

[joey52] 06/6/2023 16:46

Interesting, not seen anything like this before. Followed from the fixed rate discussion board.
Thanks for detailing how it works.

[return_of_the_apeman] 06/6/2023 16:16

The current base rate is 4.5% as of 11 May 2023
82% of experts predict that the base rate will be higher than 4% at the end of 2023
45% of experts predict that the base rate will sit at 4.25% by the end of 2023
18% of experts believe the base rate will be 5% or higher by the end of 2023



We shall see

[return_of_the_apeman] 06/6/2023 15:39

Next ex-dividend date this Thursday 08/06/2023 with payment on 23/06/2023
21.58904p accrued and due

[return_of_the_apeman] 06/6/2023 15:22

Prices above are already out of date - this is moving on very low volume, so you will need to substitute 530 above for the current quoted price

Remember liquidity can work both ways :-)

GLA

[return_of_the_apeman] 06/6/2023 15:20

!FOLLOWFEED
INVESTEC PLC (INVR) NON-RED NON-CUM NON-PTG PREF

Something to consider, if you feel interest rates will continue to rise and/or stay higher for longer, you might want to consider the INVR pref

Section 3.2 of the prospectus outlines the payments based on UK base rates
Which equates to
10*(1+base rate), so currently 10*(1+4.5) = 55p per year

To get the actual interest you have to pro-rata the different base rates in the accrual period, so as the base rate rises you get slightly less, and as it falls you will get more than the rate on the day of the divi

Some indicative figures below

Base rate Payout
2% = (20+10)/530 = 5.7%
3% = (30+10)/530 = 7.5%
4% = (40+10)/530 = 9.4%
4.5% = (45+10)/530 = 10.4%
5% = (50+10)/530 = 11.3%
5.5% = (55+10)/530 = 12.3%
6% = (60+10)/530 = 13.2%

Link to prospectus


Feel free to mention any other floaters on this thread :-)

Goes ex-dividend around the first week in June and December with payments around 2 weeks after