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Preference shares -- keeping it simple

Gilts, bonds, and interest-bearing shares
GoSeigen
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Re: Preference shares -- keeping it simple

#423812

Postby GoSeigen » June 30th, 2021, 7:19 pm

JohnEdwards wrote:
hiriskpaul wrote:
Padders72 wrote:
I think the majority would have been tendered and the tiny rump voted out of existence long before the £3 level was approached. I would have thought a £2 offer would have scooped up the vast majority of NWBD and as you say inflation is only going one way meaning a 175p offer may in hindsight look generous in a year or two. Just my 2p worth obv!

If they had offered 180 I would probably have tendered the lot.

I really can't see why you'd go for 180 and not 175. Even £2 would not attract me.
Could someone explain how the tiny rump could be voted out of existence after a successful higher tender? Surely all the remaining holders would vote against.


5% is not that exciting a yield. As stated earlier, I exited these on announcement of tender to invest elsewhere and have already more than doubled my money. Fluke? Perhaps, but tell me: how much chance there is of doubling your money in a few weeks with these? Halving your money maybe...

At current prices this is truly a risk tranche in most portfolios... 20-year duration... let's hope hodlers get lucky with Convexity and Greater Fools before something bad happens. What do people think of a likely 1% real yield by year end and possible yield curve inversion?

GS

88V8
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Re: Preference shares -- keeping it simple

#423835

Postby 88V8 » June 30th, 2021, 8:34 pm

GoSeigen wrote:I exited these on announcement of tender to invest elsewhere and have already more than doubled my money. Fluke? ....
What do people think of a likely 1% real yield by year end and possible yield curve inversion?

Fluke? You undersell yourself.
If ever there was a case of research and persistence being well rewarded....

1%... so you reckon they might have found a 'drafting infelicity' ?

Me, as things stand if NWBD drifts down far enough I shall probably rebuy them.

V8

GoSeigen
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Re: Preference shares -- keeping it simple

#423842

Postby GoSeigen » June 30th, 2021, 9:42 pm

88V8 wrote:
GoSeigen wrote:I exited these on announcement of tender to invest elsewhere and have already more than doubled my money. Fluke? ....
What do people think of a likely 1% real yield by year end and possible yield curve inversion?

Fluke? You undersell yourself.
If ever there was a case of research and persistence being well rewarded....

1%... so you reckon they might have found a 'drafting infelicity' ?

Me, as things stand if NWBD drifts down far enough I shall probably rebuy them.

V8


V8 it really was pure luck. MBS could've lost their case and the price dropped back to 20p. My point though is that there must be stuff around that has more life in it than these prefs. Chinese shares? Gilts eventually at the low-risk end.


1% real because inflation is forecast to reach 4%. Perhaps it'll have no effect on short rates but I don't want to bet on it.


I think yours is a sensible approach with NWBD, while noting that it may instead drift on up and up and up... markets are like that.


GS

hiriskpaul
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Re: Preference shares -- keeping it simple

#423884

Postby hiriskpaul » July 1st, 2021, 9:01 am

JohnEdwards wrote:
hiriskpaul wrote:
Padders72 wrote:
I think the majority would have been tendered and the tiny rump voted out of existence long before the £3 level was approached. I would have thought a £2 offer would have scooped up the vast majority of NWBD and as you say inflation is only going one way meaning a 175p offer may in hindsight look generous in a year or two. Just my 2p worth obv!

If they had offered 180 I would probably have tendered the lot.

I really can't see why you'd go for 180 and not 175. Even £2 would not attract me.
Could someone explain how the tiny rump could be voted out of existence after a successful higher tender? Surely all the remaining holders would vote against.

A limit is a limit. 5p is an extra 6m dividend, well worth having IMHO.

A future tender might be linked to a vote to alter the terms and conditions of the prefs, allowing holdouts to be swept up. You can only tender if you vote in favour of the change. A highly dubious practice and subject to legal challenge, but who is going to pay to challenge in the High Court? Past evidence suggests that the FCA will do nothing for shareholders or bondholders.

Laughton
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Re: Preference shares -- keeping it simple

#423900

Postby Laughton » July 1st, 2021, 9:59 am

In other spheres that might be classified as blackmail.

ChrisNix
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Re: Preference shares -- keeping it simple

#424035

Postby ChrisNix » July 1st, 2021, 4:58 pm

GoSeigen wrote:
JohnEdwards wrote:
hiriskpaul wrote:If they had offered 180 I would probably have tendered the lot.

I really can't see why you'd go for 180 and not 175. Even £2 would not attract me.
Could someone explain how the tiny rump could be voted out of existence after a successful higher tender? Surely all the remaining holders would vote against.


5% is not that exciting a yield. As stated earlier, I exited these on announcement of tender to invest elsewhere and have already more than doubled my money. Fluke? Perhaps, but tell me: how much chance there is of doubling your money in a few weeks with these? Halving your money maybe...

At current prices this is truly a risk tranche in most portfolios... 20-year duration... let's hope hodlers get lucky with Convexity and Greater Fools before something bad happens. What do people think of a likely 1% real yield by year end and possible yield curve inversion?

GS


An alternative view is that the game's afoot, and that NatWest, having signalled it's desire to retire NWBD, will return before too much water passes under the bridge with a price (£2+) which is sufficient to convince 75% of the remaining holders.

In other words, a risk arbitrage!

richydicky
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Re: Preference shares -- keeping it simple

#427713

Postby richydicky » July 14th, 2021, 5:21 pm

I have finally received the accrued interest from Youinvest for the NATW I held (did very well over the last 9 years but welcomed the opportunity to get something more regular and tradeable) but they have screwed up the calculation. I have received about one third of the amount I calculated which I reckon is 196 days worth. Maybe they took the last payment date as NWBD in April and not December. Anyone else with experiences of this payment?

Richard

BobGe
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Re: Preference shares -- keeping it simple

#428658

Postby BobGe » July 19th, 2021, 5:26 am

NWBD pays a divi 2x p.a. so the accrued can't be more that circa 180days.

XD Date 04/03/2021
Record Date 05/03/2021
Pay Date 16/04/2021

GoSeigen
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Re: Preference shares -- keeping it simple

#428670

Postby GoSeigen » July 19th, 2021, 8:00 am

BobGe wrote:NWBD pays a divi 2x p.a. so the accrued can't be more that circa 180days.

XD Date 04/03/2021
Record Date 05/03/2021
Pay Date 16/04/2021


It can be if the tender ex-date is before the latest coupon was due but the tender payment date is after the coupon was due.

G

richydicky
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Re: Preference shares -- keeping it simple

#429463

Postby richydicky » July 21st, 2021, 10:41 pm

I am referring to NATW which pays interest annually Dec 15th. I was speculating that maybe they used the NWBD dates for the calculation. Sorry about the confusion.

As they got it so wrong I have worked out the amount due from the prospectus information on dates and interest period (360 days per year) which tallies with the rate I paid for accrued when I bought the shares and have sent this to Youinvest but still awaiting a response.

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Re: Preference shares -- keeping it simple

#429523

Postby GN100 » July 22nd, 2021, 9:07 am

I noticed a news item this morning that mentions ' UK government has entered a trading plan to sell off up to a 15% stake in lender NatWest'.

Could this be the reason for our recent offer for NWBD? As these disposals gather pace then possibly the new owners won't want to keep paying us 9%.

hiriskpaul
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Re: Preference shares -- keeping it simple

#429610

Postby hiriskpaul » July 22nd, 2021, 12:23 pm

GN100 wrote:I noticed a news item this morning that mentions ' UK government has entered a trading plan to sell off up to a 15% stake in lender NatWest'.

Could this be the reason for our recent offer for NWBD? As these disposals gather pace then possibly the new owners won't want to keep paying us 9%.

Wouldn't have thought so as NWBD/NATW are not big embarrasing issues. It makes commercial sense for NatWest to buy them in regardless of who holds the ords.

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Re: Preference shares -- keeping it simple

#431562

Postby Wizard » July 30th, 2021, 6:54 pm

hiriskpaul wrote:
GN100 wrote:I noticed a news item this morning that mentions ' UK government has entered a trading plan to sell off up to a 15% stake in lender NatWest'.

Could this be the reason for our recent offer for NWBD? As these disposals gather pace then possibly the new owners won't want to keep paying us 9%.

Wouldn't have thought so as NWBD/NATW are not big embarrasing issues. It makes commercial sense for NatWest to buy them in regardless of who holds the ords.

Pretty sure it will just be a matter of tidying up as small issues take a disproportionate amount of time and effort to manage.


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