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  • Catocr, thanks for this info.

    I have a few of these held over several accounts. At the offer price of 113.5, YTM is only 1.81% and I had been intending to sell these. The fact that you cannot trade these online with ii or AJBell was the only thing stopping me. This will save me the trouble and cost. I am not sure whether I will go for the new bonds.

    I don't quite understand the logic of replacing the current bonds YTM 1.81% (@113.5) with new bonds with a 3.5% coupon, I presume it is down to the extra 5 years duration.
  • Between the jigs and the reels the borrower CAF is currently paying 5% until 2026 but hoping to replace this by paying 3.5% to 2031. I suspect they will get high takeup.
  • With inflation surging 3.5% is not enough for me !!
  • It is enough for me as I need a bigger proportion of bonds in my portfolio.
  • seems very cheap to me given credit
  • Has anyone managed to apply for these? Flagged as not yet open on Interactive Investor.
  • If I do apply for these, it will be through AJBell. As you probably will not be able to trade these online, AJBell will only charge you the online fee for telephone trades (unlike ii).
  • Thanks Euro17, wasn't aware that was the case with AJBell - really useful to know. I've. got a couple of other RCB bonds that can't be traded online.
  • I contacted Hargreaves Lansdown to see if they are participating in this IPO and received the following reply:-


    Thank you for your interest in the proposed Charities Aid Foundation 3.5% 2031 New Issue.

    Whilst Hargreaves Lansdown are not officially participating in the marketing or distribution of this new issue as an intermediary, we are able to accept orders on an ad-hoc basis for the Offer for Subscription from clients that approached us directly.

    Shares are being offered at a fixed price of £100 with a minimum investment of £500 followed by increments of £100. Hargreaves Lansdown expects to close applications at 12pm on 06 December. However, please note that the bookrunner may close applications early and without prior warning.

    Allocations are due to be announced on 07 December with admission at 8am on 09 December.

    If you would like to place an instruction, please contact our Stockbrokers on 0117 980 9800. You can submit an order for the New Issue within any HL product including an ISA, SIPP or Fund and Share Account.

    Woz
  • Still cant get a response out of Interactive Investor
  • II and AJBell are both listed as offerors. Still not appearing on AJBell but II have added it to their IPO page.
  • Interactive Investors appear to be open for this IPO

    https://www.ii.co.uk/ipos/caf2/documents

    Howver, I haven't followed all of the links to see if they are accepting requests
  • Thanks Wozzitworthit!. It is open and I have applied.
  • Yup...me too with Hargreaves Lansdown just now by 'phone.

    Suspect this one may close early.. we'll see
  • Could some kind soul help me to understand this? Maybe I'm missing something. I have a choice: Continue to receive 5% until 2026 or sell now for a profit of 11.5%, i.e. the equivalent of holding the bonds for another two years. Given the rate of inflation, the fact that interest rates are likely to rise and the difficulties of finding rates close to 5%, why should I choose to sell? It seems to me that it's much better to hold till 2026. Sorry if it's a silly question!
  • The profit is actually 13.5% and my feeling is that I know that the 13.5% would have gone by 2026 (repayable at par) so I would be losing about 2.5% per annum over the 5 years. The new bond pays 3.5% so l am actually 1% better off over the 5 years. Inflation, etc. may mean that better rates are available at the time that the original bond matures but thats an unknown at this point.
    It wasn't a silly question and I am quite prepared to concede that my view is a personal one but if we all thought alike there would never be a market to sell into!
  • Steven,

    What geoffp is alluding to is the Yield to Maturity (YTM) of the bond and there are specific calculations that can be used to get an exact figure for this. There is a Yield Calculator provided on this site that you can use (see the top of this page).

    From my spreadsheet the YTM is currently 1.8% at the offer price of 113.5p. So on the face of it, you would get a better rate of return if you sold your current bonds and bought the new ones. Of course, there are other factors that come into play such as the extra duration of the new bonds and also the fact that it looks like you will have to stump up the money for the new bonds, before you get the money for the old bonds. Also, your application for new bonds may also be scaled back if the offer is over subscribed.

    For me, I will definitely sell the current bonds as I believe I can do better than the 1.8% return, but I have not decided whether I will put the funds back into the new bonds.
  • Geoff and Euro17, thanks so much. I really appreciate these explanations. I buy these sorts of bonds at IPO and hold till maturity, so all the YTM calculations pass me by. However, I realise that if I tender them now, I will be receiving approx 2.5 year's coupons immediately, which I can then put into other holdings. Since the inflation figures today reveal RPI at 6%, I reckon it may be best. I will not be going for the 3.5% bonds, since I'm already overweight in UK Fixed Interest and should add more to ex-UK FI.
    Thanks again!
  • I have now cancelled my application.

    I had made an oversight when I first had a look at the IPO, thinking that they might open at a reasonable premium and then I would sell the lot.

    Now having looked at similar issues for similar durations, I think they could well be just above or just under par and not worth risking that tactic

    Getting quite good at cancellations now - cancelled the AMR GP Finance one also , although they managed to do that themselves a few days later !!

  • Woz,

    I was pleasantly surprised when CAF1 shot up to over 110p shortly after launch and now have a YTM of about 1.8%. If the risk profile is the same for the new bond as the old (not withstanding inflation), isn't there a chance that these could head up towards the same YTM. For a 10 year duration a YTM of 1.8% would be priced about 114p. It will be interesting to see what happens !
  • Woz, funny that you cancel just when i put my application in, by my calculations GSHT 4.25% 30/3/26 is yielding 3.42%, CAF1 is about 1.8%, ie about -1.6%. Then GSHT2 5% 17/12/30 is yielding 4.2% so that would make CAF2 which is similar length about 2.6%. My understanding is that the bond can't close before the tender, think I read that in prospectus but dont remember exactly where! So not too sure how the bookrunners handle that.
  • pdepp

    Yes, GSHT2 of a similar length yields around 4.2% as you say

    If , CAF2 is perceived as being of similar stature, then its price would have to drop to give a similar YTM

    However, if it aligns more with Alnwick Garden Trust (bit shorter duration) then it would remain close to par (Alnwick GT is about 3.53% YTM)

    I have the feeling I may have gone wrong somewhere in my logic .......

    Woz
  • woz, CAF is better quality then GSHT, compare the difference in CAF1 to GSHT, so CAF2 should yield below 3
  • pdepp

    I had tabulated all of the RCBs but didn't spot that GSHT sits just a month away from CAF1 as far as maturity is concerned, and yes, it's now clear that CAF1 is superior just going on the YTM without delving deeper. So, as you say the new CAF2 will sitroughly next to GHT2 and hence its highly probable it would yield below 3.

    Thanks for that - I'll sleep on it

    Wozzzzzzzzzz
  • Issuer ................... Cpn...........Maturity..............Life..........Price.............Yield
    Hightown & Praetorian 4.40% 30/04/25 3 yrs 5 mths 105.6 2.69%
    Greensleeves Homes Trust 4.25% 30/03/26 4 yrs 4 mths 103.15 3.47%
    Charities Aid Foundation 5.00% 12/04/26 4 yrs 5 mths 113.25 1.85%
    Belong Ltd 4.50% 20/06/26 4 yrs 7 mths 103.1 3.76%
    Dolphin Square 4.25% 06/07/26 4 yrs 8 mths 106.685 2.71%
    Hightown 4.00% 31/10/27 5 yrs 11 mths 104.35 3.19%
    Golden Lane 3.90% 23/11/27 6 yrs 105.35 2.92%
    Alnwick Garden Trust 5.00% 27/03/30 8 yrs 4 mths 110.6 3.53%
    Greensleeves 5.00% 17/12/30 9 yrs 1 mth 106.075 4.19%
  • Above table is 2-3 days old now and sorry I couldn't format it better
  • edited November 19
    I would say that CAF is better than GSHT, but Golden Lane is better than CAF. Remember to look at traded prices since the bid-offer is very wide.
  • Also the longer that maturity the higher the yield, so a longer dated bond will have a higher yield than a longer dated bond, under normal market conditions.
  • Just announced -
    RCB Bonds PLC (the "Company") announces that the Offer Period for the Charities Aid Foundation 3.5% Bonds due 2031 (the "Bonds") will close at 11 a.m. (London time) on 26 November 2021 (the "End of Offer Date"), such time and date being earlier than the originally scheduled end to the Offer Period which was 12 noon (London time) on 2 December 2021.

    The Company will release an announcement constituting the Issue Size Announcement as referred to in the prospectus dated 11 November 2021 (the "Prospectus") at a time and date shortly after the End of Offer Date.
  • I put in for this, as usual, let's see how it does.
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