Provident Financial 6% Sept 2021

sussexmade

Things look a bit more stable at Provi now and ords share price looking stable over the last few months albeit couple of percent lower today.
These bonds are currently on a YTM of around 5.05 % and running yield of 5.93% excl dealing charges. With such a short time until maturity and just I think around £60m in issue I suspect they will be allowed to mature and unlikely at the moment to extend with a bribe.
I already have quite a few of the 2023 ( about 3% of total portfolio ) but tempted to have a few of these too, am I being over optimistic and missed something ? Maybe maturity will be pushed back ?
All comments welcome.

Laughton

I've probably made a schoolboy error but got a quote to buy at 1.0124 and allowing £9.90 dealing cost I make the YTM 4%.

I already have some - what might the "bribe" be? Surely if pushed out 2 years then presumably it would have to match those PF23s (7%). That would be nice.

dandigirl

We have quite a lot of the 21s. Less of the 23s. Thought about adding more but we are conscious that £250m falls due in 6/23 with the £60m 23s falling due in 10/23. That's £310m falling due close together.

Probably O.K. but..

Have also been holding off as a Trading Statement is normally published around now.

JammyDodger

PF23's are at around 5.125% YTM right now

I have both the 21's and 23's. I don't really want any more 21's as I would rather have something with a longer dated redemption and I feel the moment has passed on the 23's at 100p to buy.

Happy to hold both but not inclined to add.

tbh nothing in the bond area takes my fancy at the moment. Perhaps it's because I cannot find the mindset to move on from the yields that were available 3-6 months ago but with most issues trading at above par and some above the pre-Covid price it seems to me the world has gone mad.

sussexmade

Laughton, I got the ytm from the calculator on here at price 101.00 ( as at 15/1/21 ).. Have to admit it looks wrong as 6% for about 2/3rds of a year is 4% and when you add compounding it's no more that 4.25% gross before comms etc

dandigirl, yes there's a lot of money to be found in just a couple of years or so but that's what makes me feel they might just push these out timewise and include an inducement of some sort but probably not as attractive as the IPF extension.

JammyDodger, thanks I feel a bit like you that prices in general on ORB are not that attractive but I am only thinking of the Provi 21's being better than anything else to park monies in the short term. However on reflection I am getting cold feet and don't think the return is worth it on such a risk as Provi . As Laughton stated an uplift to 7% for extension might be worth consideration.

JammyDodger

I not sure about the extension on the PF21's as PFG now have a bank licence and can access the savings market thus they would want to replace as many of these bonds with personal savings as they can.

However, the bit I don't understand is that the FCA will have determined the maximum they can borrow from savers and they will still require some Tier 1&2 capital so I don't think it's a given that the whole bond will be repaid

sussexmade

JammyDodger, probability quite high I guess on tier 1 & 2 cap. requirements. Anyway all in all think it's not the place to park short term monies, but where is ?