RETAIL CHARITY BOND - GOLDEN LANE HOUSING

New bond for Golden Lane Housing for "Retail Professional Investors". Link below.

https://mailchi.mp/c3b83426f691/sustainability-bond-framework-10349725?e=6dce857cd1

Duration and pricing tough to call.

Suspect we will take part, whatever. :smile:
«1

Comments

  • Thanks for the heads up dandigirl. See the 4.375pct bond of about 11 million is supposedly maturing on 29th July so guess it's a replacement. The 2027 @ 3.9pct quoted spread 102ish to 108ish but realistically 103.5 to 106.5, think the issue size was also quite small. Would imagine this will have a maturity of 2028 to 2030-coupon mmm tricky but in range 4.50pct-4.95pct ? ( based on fairly recent AGT and Greensleeves ). In hindsight I think AGT given their current premium bond price could have got their issue away at 4.5pct. Inflation increasing but possibly falling back again in a couple of years.? Tricky to call this one.
  • Yes, it's not easy to guess, but the last bonds I bought were Greensleeves Homes retail charity 5%, Alnwick garden retail charity 5% and Bruntwood 6%. Given the recent RPI index increase at 3%, I would hope for nothing less than 5%. However, since these bonds are pretty rare these days, I won't be surprised if they set them lower.
  • Alnwick came to the market at the worst possible time with Covid. I remember because I applied and then phoned my broker about a week later to cancel as things looked dire at the time.

    Greensleeves are coming to the market at a really good time. Arguably close to the inflection point before yields start moving up.

    At 106.5p, the 27 has a YTM of around 2.8% and therefore I would guess if they are going for a 31 then we are looking at 3.5%?

    Sadly, that won't be enough for me. I'd very much like to support this great charity but I will require somthing higher.
  • I'm registered with RCB news updates but heard nothing more on this. Has anyone any news at all or are we still in due process ?
  • They have been running the roadshows. It's in the same style as the other RCB's.
    It's a 10 year bond with option of an extension for a further 2 and the book will open soon.

    The coupon pricing will be known when the book opens
  • Golden Lane Housing Ltd 3.25% Social Bonds due 2031

    https://rcb-bonds.com/news/

    3.25% for 10 years? Given that Greensleeves offered 5%, why are these so low?
  • Thanks for the link steven21020. Wow, lower than expected by most and not going to be for me at that rate. Think I will try day trading on Burford ords or even the bonds. !
  • In my earlier post I guessed 3.5% and it's come in even lower than that. I'm sure the lead manager has sought out views from the institutional investors and will be able to get it away at that price.

    This is yet another reflection on just how ridiculous yields are getting as the central banks print more and more money. It has to flow somewhere and this is the outcome.

    I do like supporting these charities and I'm happy to accept a slightly lower yield because sometimes what I invest in is more important than getting the maximum possible return for the risk, but sadly 3.25% is too low for me over 10 years.
  • Very good deal for MCAP if they get it away, the low yield obviously driven by institutional investors, not retail investors.
  • Not for us after all. OSBs are yielding around 4% with a rate review [uplift?] at year 5 - and probably a better credit risk.
  • Agree with the previous comments. I’m usually quite keen to put some money in these charity bonds - invested in the recent Greensleeves issue. It’s not so much the rate but being tied to that rate for 10 years - it’s just too long with the looming risk of inflation and rising interest rates. Wish them all the best though - it’s for an honourable cause.

  • edited July 2
    I will put some in, can't see it on YouInvest or HL yet.
  • IDealing have it listed, I’m sure Youinvest will follow soon - they usually take part. Interactive Investor probably not. I don’t use HL.

    OSB bonds are old Kent Reliance PIBS now Perpetual notes of One Savings Bank. Their original rates have lapsed and are now floating rate notes. 1SBA=5yr gilt+3.4%. 1SBB=5yr gilt+4%. 5 yearly resets with option to be called on the reset date. Check the OSB website for the prospectus with all the details. I hold 1SBB only. They are both trading below par but the prices are fairly stable.

  • Gwm is correct. I was referring to 1SBA and 1SBB. Both give better yields with rate reviews at year 5.
  • Just to note OSB's as regulatory capital carry more far more risk than Golden Lane Housing imho. There's rarely a free lunch when it comes to bonds.
  • The brokers participating are:

    AJ Bell Securities Limited
    Arnold Stansby & Co. Limited
    Equiniti Financial Services Limited
    Hedley & Company Stockbrokers Limited
    iDealing.com Limited
    Interactive Investor Services Limited
    Redmayne Bentley LLP

    https://rcb-bonds.com/wp-content/uploads/2021/06/GLH_information_booklet_010721.pdf

  • @JammyDodger I agree, if a bond is part of a capital structure desgined to absorb losses then the yield is going to be a lot higher than a senior bond from the same issuer. @dandigirl thanks very much for this info. I think, and I could be wrong that Golden lane is a fairly rock solid credit, but then again it's bonds did trade in the low 80s after the 'covid shock', I often wonder who was actually selling these 'good quality' credits in the 'covid shock' period. Anyway I think RCB have missjudged the coupon on this one given that everyone knows inflation is rising, and could be a persisitent problem, in which case the problem can only be fixed with higher interest rates.
  • Bit wary about subsequent lack of liquidity and super wide spreads. Does anyone have a market bid price for MCP2, ie the price you can trade at, obv not the displayed market bid? I had an offer @107.15 earlier. Can't get a bid price as i dont own any.
  • I put an order in with YouInvest ( cashed in some MRW shares )
  • Agree with comments that this issue is probably safer than OSB bonds in terms of exposure to losses. Main risk here would be the inflation risk in view of the maturity length of 10-12 years. It’s always best to have a mix of different risks, maturities and sectors IMHO especially controlling exposure to financial service sector.

    Be aware that these RCBs are illiquid. If you use AJBell you’ll have to phone to deal. I’m never able to get online quotes from AJBell for my RCBs(Greensleeves).

  • The market makers need to be told to reduce the bid-offer on ORB bonds if they want a secondary market.
  • Bond closing at 2pm today, 10 days early

    It appears they've had no trouble getting this away at 3.25%.
  • Thanks JD and Paddy. Wow, who would ever have thought it-people ( institutions ? ) scrambling to get in so quickly. Maybe they know more than us and i'm starting to think the bonds could even start at a small premium now.
  • Totally unbelieavable, !!!
  • 3.25% for 10 years. Great for the charity of course.

    So, if you will bear with me, you've been coming up to retirement for the last 5 years and go and get a quote for an annuity. Today it's around 3.5% on a 50% joint life, flat rate at age 65. On £100k you get a pension of £3,500p.a. and you try to work out the maths.

    Er, so I've got £100k and if I spent £3,500 a year, my breakeven point is living to age 93 and that's assuming the annuity company does not invest my pot.

    But back to the point really. I guess some institutions are forced investors. The retiree doesn't like 3.5%, the annuity company doesn't like it either but the money has to flow somewhere.

    And so whilst I look at 3.25% and share my head in despair, because perhaps I would accept 3.25% for a 3 year bond, I cannot help but feel or hope or pray 3.25% for the last 7 years is going to look poor value when we get there.

    I sincerely hope the central banks are going to stop printing money soon, because things have gone way beyond ridiculous.

    All imho of course. Me hoping and praying things are going to improve isn't going to make them and who is to say in 3 years time 3.25% won't look like the best deal ever and I was a fool for not taking it.
Sign In or Register to comment.