Raven Prop P Discussion Threads

[kenny] 25/4/2021 11:10

"Myth-Busting: Money Printing Must Create Inflation"

[kenny] 23/4/2021 13:09

"The Bank of Russia increases the key rate by 50 bp to 5.00% p.a."

[kenny] 22/4/2021 15:39

Underlying government bond yields are moving consistently higher as the outlook for growth and inflation continues to surprise to the upside. Year-to-date returns for global investment grade are -3.28% versus +0.67% for global high yield.

So what is the reason for the differential in credit returns? Quite simply, it’s the composition of the underlying yield from risk-free and credit spread. Within investment grade, 54% of the yield is from spread (92bps of spread against 1.71% yield) in comparison to high yield where 87% of the yield is from spread (375bps of spread against 4.31% yield).

This makes the asset class far less sensitive to underlying risk-free rate moves, which logically makes sense. As a lower-rated cohort of companies within fixed income, high yield corporate spreads are more tied to economic recoveries than investment grade, which is more tied to the move in underlying rates (the two should in theory be inversely correlated). As a result, high yield tends to do well in a rising rate environment with its lower duration characteristics and its corporate spreads tied to economic fundamentals.

In short, high yield is a quasi-asset class that sits somewhere between traditional fixed income and equities. It straddles the dynamics of both markets which has resulted in the asset class achieving equity like returns, but with around half the historical volatility.

[kenny] 22/4/2021 15:33

"Russia to Withdraw Troops From Ukraine Border, Crimea"


This news has lead to the rouble gaining about 1%.

[kenny] 22/4/2021 10:51

CC2014, I agree with your comments above.

I wonder if we are back to the circumstances that applied pre-Covid, which was a "TINA" market, namely "There Is No Alternative" - because interest rates are likely to stay low for many years.

[gary1966] 22/4/2021 09:48

CC2014,

Possibly switch into large, long established high yielding companies?

[cc2014] 22/4/2021 09:19

Hi Kenny.

I agree there is absolutely no fear. The market is buying everything. Bonds and equities regardless. It worries me a bit.

I am actually looking at selling some (more) of my fixed interest (not RAVP) because the yield genearlly is getting crazy low but no matter how hard I look I can't find anyting I want to switch into.

I note much of the pref movements may have aligned with the ISA new year.

Not much to do here except wait. A share price of 160p (lol) would still give a running yield of 7.5% which well exceeds the running yield on every other pref (noting of course this is Russia). I don't think we'll exceed 140p though until the Rouble changes direction.

[gfrae] 22/4/2021 08:44

The buy back and the j/v will almost certainly significantly increase NAV...20% odd of the company is being bought back ex the amount being placed at almost half NAV.
I am not even going to attempt to work it out.
There will also be a boost from the removal of the overhang though offset by possible flipping by hedgefunds.

[kenny] 21/4/2021 23:49

Seems to be good demand for preference shares, at present. More or less all of the other UK preference shares I monitor or hold have moved up over the last few weeks. Some preference shares, like LLPC, AV.A and AV.B have even exceeded their pre-Covid price levels.

No sense of fear of higher interest rates in sight.

[flyfisher] 20/4/2021 12:49

Thanks kenny, i have edited the post.

Nav has fallen since then in line with further rouble weakness, currently around 36p.

[gfrae] 20/4/2021 12:46

Having briefly read... I assume RAV NAV will over the period of the j/v and as a direct consequence of it increase. The company has a call over the unencumbered j/v shares at their cost price.

[kenny] 20/4/2021 11:47

flyfisher - I think the 53m contribution shares are valued at approximately 28.8p each.

Also, the NAV before the transaction was 41p per ordinary and moves to 42p.

[igbertsponk] 20/4/2021 10:13

Circular out

[igbertsponk] 20/4/2021 10:08

ta for nudge, sorted.

[flyfisher] 20/4/2021 08:05

At first glance.
The company contributes £15.3m into the j/v for which manco contributes an equivalent amount of 53.030310m ordinary shares.

Also the vtb loan is to RAV and is higher in ranking to the prefs, so we are subordinated.

[zangdook] 20/4/2021 07:14

When you have a moment, you could update the greatly superior header to remove mention of RUSC.

[kenny] 19/4/2021 18:07

The company has just issued the document. Meeting to approve fixed for 6 May.

[kenny] 19/4/2021 12:40

flyfisher - the agreement with Invesco has a long stop date of 10 May so you would think the documents would be issued soon in order to give investors time to decide which way to vote. Leaving, say, 14 days for that would mean the documents should be issued this week or early next week.

[flyfisher] 19/4/2021 10:47

Why is it taking so long to complete the invesco transaction?

[cc2014] 19/4/2021 10:03

Nothing to do but sit back and enjoy Monty and for me thank the trading gods that on the day the price fell close to par I had the cash sitting there doing nothing which allowed me fill up not only my boots but also my wheelbarrow.

Going out for a walk now for a few hours and when I get back I look forward to the share price rising some more.

[pogue] 19/4/2021 10:02

tradertrev
yet you still waste time to post saying you are not reading anything I post. How old are you exactly? lol

[igbertsponk] 19/4/2021 08:58

Haven of tranquility here!
Unlike the other place when dissenting voices are immediately piled on with allegations of trolling.

Meanwhile the price ticks up and I'm glad I added recently.

[montyhedge] 19/4/2021 08:31

Yield 10.25% at 117p, don't you just love these.

[tradertrev] 18/4/2021 22:43

Happily I have had mrf and pogue filtered for many months - I find it saves me a few minutes of my life.