Could someone kindly explain why BBYB price has fallen given the increase in the price of the shares please.


  • Has it? I thought it had been fairly stable and had actually gone up a bit over this week.
    If it has dropped a bit though - maybe it's the thought that time is running out to make conversion worthwile for holders.
  • It has been fairly steady over the last couple of months but did fall after going x divi at the end of December. This was to be expected as there is now one less divi payment to collect on call at 1/7/20
  • Hi - Not sure I agreed with your premise at the time of your post but certainly not now. Bought at 112.50 early December. To buy today would be around 114. That said, these "mature" in July 2020 and surely they would move towards par at the date gets closer.

  • Yes, agreed Dandigir.

    I bought more in November last year as a medium term "park" for cash now that bank deposits are so low.

    There are no YTMs in the usual suspects of Corporate Bonds that offer comparable returns for the same time to maturity apart from Eros, Premier Oil and Provident Financial 2021. These are all higher, although arguably more risky ( as of today) - although Premier shows signs of creeping above par in the near term

    BBYB also has advantage of having an assured capital loss (a feature not usually worthy of any praise !!) if anyone is likely to have any future gains to offset before or at "maturity" !

  • Read yesterday after the Carillion debackle that BBY were expecting a hit of £450 million on shared projects. Already have some BBY and was thinking of topping up but now a little cautious till the dust settles
  • First post - novice question.
    Interesting isn't it that despite the Carillion connections that BBYB have ticked up a little again today. I'd been hoping for a fall as an opportunity to buy some more. It is difficult to separate out the reasons for the strength of BBYB despite the clock inevitably ticking towards par in two and a half years time. Aurelius and hiriskpaul in a previous thread flagged up the stub value of the conversion factor as one element and that the company is now perceived as a more solid bet and will be re-rated onto similar yields as the rest of the FI market as another element at play.
    With the price of the BBY ords nudging 300p I guess the conversion elment is still priced in as a possibility. But by how much? I don't pretend to understand Black-Scholes pricing models but wouldn't common sense suggest that this element will not move in a straight line. There must be a point in the the next year or so where, if if the ord price does not go up "on target" for 405p, that the stub value is discounted all in one go as the market decides it is not achievable.
    Is this how these convertables tend to work?
  • I have been reevaluating things in light of what is going on with the Aviva preference shares.
    I might be completely wrong about this what do others think about the possibility of BBY buying back prefs before the maturity date to reduce the balance below the 44 million level in order to give them the option to convert into ordinary shares (I don't know at what ratio they would convert but this could be at 4:1 if the same as the holder's conversion option)?
    According to their website, there were originally 177 million at launch in 1994 and that had fallen to 112 million on 31 December 2015. There is a statement on the website saying "During the current and prior year, no preference shares were repurchased for cancellation by the Company." but there is no date on this statement. There is clearly a precedent for buying back and cancelling the shares. Is this a risk? The YTM appears relatively high and the market must be pricing in some risks.
  • I guess it will be many months before we know whether Aviva go ahead with their redemption plan followed by the inevitable court challenge. It would be a very aggressive move by anyone else to launch a similar scheme until the dust settles with Aviva and given there only two years left for BBYB I think the chance of any action are pretty slim.
  • Just to mention that I bought some more today ahead of the ex-div date - 112.2. Calculator gives a YTM of 4.92%. Happy with that given the short period.

  • I'm getting a higher figure than that using spreadsheet and XIRR - but easy to make a mistake

    I look at these daily and am so tempted, but I already own half the company

    Ex Div date is in May I think ?

    Mr Beatty
    (aka Woz)
  • Thank you Woz, I was hoping that someone might tell me that. I suspect you are right as I was wondering if the site calculator might not take into account that it is less than 3 months to the next payment. Ex-div 24/5.
    What did you make the YTM please?
    Thank you.
  • Haven't checked it today but when I wrote the above I made it around 6% ... ?...!

    So..oo tempted to own 3/4 of the company ..
  • “Given the strength of our balance sheet and the Board’s confidence that the Group’s full year earnings will meet expectations, we are raising the interim dividend by 33% and plan to repay the outstanding convertible bonds this year.”

  • I have had a quick scan through the prospectus and cannot find anything which gives conditions of early redemption/repayment, only that they could extend the date past July 2020.

    The only redemption value quoted is 100p

    Anyway they're flush with money so they'll see us right won't they ...........


  • Aren't they talking about their convertible bond rather than the prefs?

    Even so I cannot imagine any issuer trying to redeem prefs at anything other than market value in the current climate following the Aviva fiasco.
  • Yes - I'm sure you are right - just saw the word "convertible" and instantly thought of the convertible prefs.

    If it hadn't been for the recent hoo-ha about the irredeemable prefs initiated by the Aviva statement I may not have been so quick !!

    Thank heavens - can't face another torrent of views that that initiated on the other two boards !!!!

  • Oooops! Sorry for setting your hearts a flutter.
  • Are we talking about the 10.75% convertable red prefs here
  • Balfour Beatty (LON:BBYB) available at just under 110.25p this morning for what I calculate to be a IRR of 6.12% (if you think you're interested then please do your own calculations)

    Just couldn't help myself - much better than money in the bank (to me anyway).

    Goes XD in about 3 weeks time.
  • Laughton, Is Stamp Duty applicable?
  • Good report today re cash position. Anybody know anything further re the bond buyback
  • Colin, on 4 December BBY issued an RNS saying the convertible bond had been fully repaid.
  • Thanks beekey, Mine are the red pref shares which are unaffected. More than happy to sit with the 10.75% till 2020.
  • All this uncertainty.

    Bought a few more of these today @ 106.368p. I make that a YTM of a shade over 4.6% for something that matures in less than 10 months so I'm happy with that.

    It definitely beats what the cash was earning in my ISA (that's zero, in case you were wondering).
  • Agree. Bought some too this morning for both SIPPs and ISAs. Same price.
  • Laughton, maturity/redemption is about 8.5 months so good yield till then for sure. Looking again at options on company website investor relations section i cannot see that they as a company will do anything other than redeem at par on July 1st next year. Ref Finn2 comment above in March 2018 they don't appear to be buying in their own equity as the figure appears still to be 112 million in issue but guess that could change. Over 100,00 shares traded today i see but mostly in 10/20 thousand lots so guess just private individuals like us ?
  • Laughton, Dandigirl - Not my usual policy to purchase a security when their maturity is less than 12 months; often I do the opposite & sell due to low yield. Will be shortly selling my Tesco TSC5 maturing November 2020, yielding only 2.67% . A Yield or gain of 4.6% implies there is some risk of non payment. Although non payment on maturity is very rare, it may start to rear it's ugly head. The current pricing of the Alpha Plus bonds ALP1 & ALP2 may indicate they are having re-financing difficulty?
    Unless the current organisation is making reasonable profits after "interest payments" or / and cash is on hand then re-financing may become an issue. Suspect stormy winter waters lie ahead! Not sure whether the current stormy weather & rain is effecting the rugby pitch, Wasps bond price is down to 76.75 (I didn't subscribed to this issue, it was too risky).
    Be prepared to "batten down the hatches"!
  • Hello shaunm: You are not comparing like with like. BBY is a FTSE250 company with a market cap of some 1.6bn. It is in as good as shape as it has been in recent years. Consider is most unlikely that the opportunity to refinance such high cost 'debt' would not be taken.

    As regards, Wasps, we do have some but went in with our eyes open. We like rugby and wanted to support Wasps. The issue is secured on the stadium. Think they will have to refinance most if not all at maturity and would be content to roll over. No need to mention the accounting issues!

    Alpha is just a tiddler. Look at the debt in relation to balance sheet footings. It is loss making. Not a fan of Ritblat. Appreciate that it is secured. There is more in the separate discussion on this site. Similarly, it will have to be refinanced [or wound-up!]. If so, we will look carefully at any refinancing terms and could be tempted, notwithstanding Ritblat. They should get to it soon - they will probably have to bring forward their year end financials and come to the market at the same time.

    Neither Wasps nor Alpha are in the same league as BBYB.

    We had a bit of spare cash lying unused in SIPPs and ISAs and BBYB was a good place to park it for the short term. One year fixed bank risk pays around 1.8% so the yield here is just great. Consider the risk to be acceptable.

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