hiriskpaul wrote:Just checked the price and could get 10k nominal for 78p. Could not get an online quote for a larger amount. Assuming payments continue, that is a running yield of about 15%. But how likely is it that payments will continue? They appear to be trading XD, but do they have sufficient hard currency cash outside Russia to make the payment? If the West succeeds in crippling Russia's economy, what level of rent defaults are likely?
This might be a great entry point, but too many imponderables for me.
If I held and could get 75p I would probably sell.
I sold my XD just below par. I have my fingers crossed I will get the dividend.
I will start by saying I have no interest in holding anything investment that might go to zero, or might go much much lower before it recovers. I appreciate RAVP is cumulative. So, regardless of the share price I'm not interested in buying RAVP at the moment. I would have to be assured RAVP will not be put on "buy only". i.e. if you own Russian investments you can keep them and sell them at your leisure but you are not allowed to buy any new ones. Also, I'm not really comfortable owning Russian assets now. This is a country who's leader has invaded Ukraine. Finally I do not trust Putin not to start ceasing Western assets or freeze them and the situation could deteriorate.
On to the numbers. At the half year the exchange rate was 103 rouble to the pound. Today is it 112. So, that's going to cause an adverse movement on the balance sheet in Sterling by quite a bit. Also, the servicing the Sterling denominated dividend becomes harder.
Also, at the half year, 38% of the debt was in Euro's. That becomes harder to service too.
Then we come to the property valuations. In the short term the sanctions will do nothing but in the long term it's going to hurt the Russian economy so property values may not rise as fast as expected. They may fall and fall significantly. Or they may not. Unless inflation takes over.
And then finally we have the Russian base rate which has risen from around 4.5% to 9.5%. Much of the Sterling and Euro debt has been converted to Roubles over the last couple of years so that's going to cost far more to service.