Unite Group PLC 6.125% 2020

FixedIncomeInvestor

Unite Group (the FTSE 250 provider of student accommodation not the public sector trade union) has launched its first retail bond offering.

“Buy to lets” aimed at students have been popular among pro-active private investors for some years. It has been appreciated that this has been a growth area in the rental market with good returns to be made. This is where many of the most savvy property investments have been made by individuals. Unite represents the professional or institutional approach to providing accommodation for students and they are the market leader.

Read the rest in Bond of the Week
http://www.fixedincomeinvestor.co.uk/x/analysis.html?type=bond-of-the-week&cat=analysis-comment&y=2012&aid=859

Bestmate

I fancy this one. Can anyone see a significant downside?

ArkWelder

Two threads for the price of one. A few comments on the other thread:

http://www.fixedincomeinvestor.co.uk/x/forum.html#/discussion/11/new-issue-on-orb-unite-group-plc-announces-6-125-bond-issue

Couponcopia

These rely on the trend that, despite student fee increases, demand will persist for student accommodation in module-like apartment blocks. I think it will. Moreover, unlike the Stobart which notably failed to make its quota I will stick my neck out and say that there will be stronger interest in this issue, to the point of a likelihood of trading slightly above par.

Practical upshot: despite their being unsecured, I'm in for a modest 3k of these.

moiralevy

I think that student university fees will have to come down otherwise we will find 50% of all places taken up by overseas students. no bad thing for unite

shaunm

With maturity in 12 months time, and the yield now 2.25%, decided to sell my final holding at 103.89
I tend to sell securities when the yield starts to reduce in their final year before maturity
Better yields, I hope will be available else where (although with some added risk)

Euro17

For those who own these bonds, I received this secure message today :

Notice is given to the Bondholders that, in accordance with Condition 5(c) (Redemption at the option of the Issuer) of the Bonds, the Issuer will redeem all of the outstanding Bonds on 19 December 2019 at the Redemption Price (to be calculated by Conv-Ex Advisors Limited as independent financial adviser in accordance with Condition 5(c) , together with interest accrued to (but excluding) the Optional Redemption Date.
Further information may follow in due course.

geoffp

We had a number of early redemptions last year. So far this is the only one that has affected me this year so. hopefully, it won't lead to others. It's only just over 6 months early but where do we re-invest the proceeds?

shaunm

Geoffp, possible re-investment
My only recent investment, with the exception of "infrastructure funds, now mainly over priced", has been the One Savings Perp Bond 1SBB, now with a coupon of 4.6% which had a reset in August 2019.
Infor per announcement in Aug 2019
"In accordance with the terms of the Bonds, the interest rate payable on the Bonds is subject to a resetting process from time to time, with the next reset becoming effective from and including 27 August 2019.Following the procedure set out in the terms of the Bonds, the interest rate has today been reset by the Company's appointed Agent Bank, Peel Hunt LLP ("Peel Hunt").The revised rate of interest which shall be payable from and including 27 August 2019 is 4.6007%This rate will remain the effective rate payable on the Bonds until the next reset of interest rate is due to take effect, which will be on the fifth anniversary of 27 August 2019."
Provides some form of protection from increases in interest rates
Reset every 5 years, 4% plus 5 year gilt yield
This security provides 4% of my total portfolio, so a fairly important long-term holding

Does anybody else have any tips, especially securities that have reset rates?

Ps I sold my Unite holding back in June 2019, @ 1.039, as the yield was low at 2.25%
Being interesting to see what price they are being purchased by Unite

sussexmade

shaunm thanks for the heads up herein. I will look at 1SBB as have also a bit of churning to do.
BTW is anyone brave enough to even consider Wasps at around 27pct discount to par and with good coupon.? I know the history and risks but just wonder if it's worth a smallish punt just for the running yield for a short period of time-certainly not to maturity. The price spread is a bit wide but should be covered with 3-6 months interest.
What could possibly go wrong ? !!!

shaunm

Wasps - Worth reading their latest accounts to 30th June 2019 and their recent performance on the pitch.
Not for me I'm afraid - too risky

arjungaur

i am looking to short this one, you can do an otc transaction with me, say 10 bucks a point, i am hoping for more bad news, or just technicals, maybe retest 67

roger

Sussexmade: “BTW is anyone brave enough to even consider Wasps at around 27pct discount to par and with good coupon.?”

As a breed it seems that we fixed interest investors tend to very cautious about risk. Possibly related to the fact that we also tend to be grey haired wrinklies rather than bright young things.

The answer to your question is, “It depends.” It depends on what your risk level is and how prone you are to sleepless nights from worry.

I bought Eros at 68 now 74, PMO at 86 now 102, BUR1 at 97 now 103 and BUR2 at 92 now 102.

I also bought Wasps some time ago when they were not considered as risky as they are now. My 93 has plummeted to 73.

Personally, if I didn’t already have them, I would go for both Eros and Wasps at today’s prices.

sussexmade

Thanks for the input Roger and delighted to hear your good fortune with Eros, PMO and BUR 1 and 2 ( on the latter two I am only in at issue date/par and maxed out ! ) .

My risk appetite is a bit increased recently with a few gains on some stock ords but a bit pedestrian on bonds with current running yield around 5.50pct.
I have followed Wasps bond for quite a while and even dismissing the latest stadium valuation as being rather fanciful they appear to be fair value. I would be happy with maybe 18/24 months worth of the current yield and could tolerate a slight dip on capital.
So, maybe just 2 upto 5 % of total funds might be the way to go on this one.

arjungaur

And when i thought about my challenge, balancing risk and reward, i realised that risk and reward naturally go together. I could see that to get the most out of life, one has to take more risk, and that knowing how to appropriately balance risk and reward is essential to having the best life possible. Imagine you were faced with the choice of having a safe, boring life if you stay where you are, or having a fabulous one if you take the risk of successfully crossing a dangerous jungle. That is essentially the choice we all face - https://www.principles.com/principles-for-success

frugal

. . . just make sure the dangerous jungle doesn't kill you, don't risk everything. The books are written by the survivors.

arjungaur

The dead couldn't overcome their ego and look through other people's eyes their very own blindspots : )

geoffp

For those who may be interested redemption on 19 December will be as follows -
"The Redemption Price (calculated by Conv-Ex Advisors Limited as independent financial adviser in accordance with Condition 5(c) (Redemption at the option of the Issuer) of the Bonds) is £102.38 per £100 principal amount of the Bonds. Interest accrued to (but excluding) the Optional Redemption Date of £0.12 per £100 principal amount of the Bonds will also be paid to the Bondholders."

Euro17

For those who are interested, I received £102.38 per £100 principal amount in my Selftrade account this afternoon. No sign of the £0.12 per £100 interest yet, but usually that follows a couple of days after the repayment.

arjungaur

anyone aware of what happened esp vs digs - https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/DIGS/14355207.html