Co-Op 42TE return

[sackofspuds]

Can someone just cast an eye over my arithmetic in trying to work out the return on CO OPERATIVEGRP 11% NTS EXP 20/12/25 (42TE)?

I'm not trying to be very sophisticated here. Just after a ballpark percentage.

Current price is 120p
Buy 1,000 costing £1,200
At maturity on 20/12/25 I'll get back 100p per share so £1,000
Nominal interest rate is 11% so in December 2022, 2023, 2024 and 2025 I'll get £110, total £440.
My total return will be £1,440 on my £1,200 outlay.
So £240 profit = 240/1200 = 20%.
Very roughly about 20/4 = 5% pa.
Apparently Excel's POWER function can give me something more accurate and this gives me 4.66%:
=POWER(1440/1200,1/4)-1

To my mind, that is on the poor side considering LLPC, LLPD and NWBD each yield 5.9% on today's share price and BP.B yields 5%.

[GoSeigen]

There's less than four years to maturity so I make the YTM 5.01%. Given you get your money back in less than 4 years it's not too bad. The others you mentioned are all perpetual so carry higher duration risk.

GS

[Laughton]

If you can buy them at 120p then I make YTM 4.77% although that does exclude allowance for dealing costs which I feel you need to do if only buying a small amount.

Yes, it is lower than those you mention but bear in mind that LLPC, LLPD and NWBD are undated. As for BP - well that's a whole different story.

Edit - damn, beaten to the punch

[hiriskpaul]

The price of the Co-op bond will be precisely £1 on 20/12/25, assuming no default. What will the price of the undated prefs you mention be?

When comparing returns on different secutities like this I often find it helpful to consider what the future prices would be in order to match the return. So what would the price of NWBD need to be on 20/12/25 in order to match the return on the Co-op bond? Work that out and you can start to assess the relative risks and returns.

Personally I am happy to hold a big chunk of the Co-op bond even though it is now relatively low yield. From a portfolio point of view it helps to diversify away from financials and lowers duration.

[Wozzitworthit]

I have been slowly accumulating more of these over the past 2-3 months, and always at a YTM of over 7%

Maybe the price of 42TE will creep up a bit afterwards...or not

https://www.theguardian.com/business/20 ... forecourts

[air04]

Just bought 42TE, on HL, at 105.7 8.88% YTM as I calculate it...

Bid/offer at £105.00/£107.75 when I check website information

[hiriskpaul]

I picked up a big tranche of these a couple of weeks ago at 105.65, ytm 8.85%. They are now my biggest single FI position.

Still plenty of liquidity. I just had an online quote for 120k nominal at 105.799. 100k and below at 105.499.

[88V8]

Nearly 9% is attractive, but as the price falls the coupon more so dominates the tax position.
We hold a fair tranche in our ISAs where there is no more room.
Less attractive with tax exposure at higher rate.

V8

[Laughton]

Had some money doing nothing in my ISA so bought some more of these @ 106.48p which I make a YTM of close to 8.5% which, given it's only for three years, I am happy with.

[KrispyDuck]

I tried to buy these through AJ Bell only to be told they were a "complex" and "convertible" (COCO) bond not suitable for retail investors. Odd as I've held these (and 42TF) before with AJB without any problems. I'm pretty sure they're not convertible in any way but I could be wrong.

If they won't deal these then I wonder what else AJB won't deal for me going forward. Maybe time to move my SIPP.

Is anyone who has recently sucessfully traded these willing to share with me what platform/broker they are using? Thanks.

[bruncher]

I tried to buy these through AJ Bell only to be told they were a "complex" and "convertible" (COCO) bond not suitable for retail investors. Odd as I've held these (and 42TF) before with AJB without any problems. I'm pretty sure they're not convertible in any way but I could be wrong.

If they won't deal these then I wonder what else AJB won't deal for me going forward. Maybe time to move my SIPP.

Is anyone who has recently sucessfully traded these willing to share with me what platform/broker they are using? Thanks.

Did you try talking to different person there or ask for a manager?

[Laughton]

Is anyone who has recently sucessfully traded these willing to share with me what platform/broker they are using? Thanks.

I bought my 42TE through iDealing but I also got a quote from HL (but they don't deal in 42TF, online anyway).

[mc2fool]

I tried to buy these through AJ Bell only to be told they were a "complex" and "convertible" (COCO) bond not suitable for retail investors. Odd as I've held these (and 42TF) before with AJB without any problems. I'm pretty sure they're not convertible in any way but I could be wrong.

If they won't deal these then I wonder what else AJB won't deal for me going forward. Maybe time to move my SIPP.

Is anyone who has recently sucessfully traded these willing to share with me what platform/broker they are using? Thanks.

I can trade both 42TE and 42TF with Interactive Investor -- at least I can put in buy and it gives me a quote and 15 seconds to accept it ... which I let time out in both cases.

However, I have previously filled in their form for the "Appropriateness Assessment" which I passed (I suspect everyone does!) and enables my account "to trade complex instruments". Is there something similar with AJB?

[KrispyDuck]

Did you try talking to different person there or ask for a manager?

The dealer insisted he had spoken to his manager on my behalf. I guess I can try again tomorrow.

[KrispyDuck]

I have previously filled in their form for the "Appropriateness Assessment" which I passed (I suspect everyone does!) and enables my account "to trade complex instruments". Is there something similar with AJB?

Yes I filled that in some years ago and it enabled me to buy RAVP (or whatever it was called back then). Doesn't seem to do much for me now

[cosmokramer]

I can trade both 42TE and 42TF with Interactive Investor -- at least I can put in buy and it gives me a quote and 15 seconds to accept it ... which I let time out in both cases.

I manage to get the quote too with ii but bizarrely, I could not buy online and had to phone to complete the trade

[mc2fool]

I can trade both 42TE and 42TF with Interactive Investor -- at least I can put in buy and it gives me a quote and 15 seconds to accept it ... which I let time out in both cases.

However, I have previously filled in their form for the "Appropriateness Assessment" which I passed (I suspect everyone does!) and enables my account "to trade complex instruments". Is there something similar with AJB?

I've received a PM about my post above but I think it best to reply here so that everyone can share the information. The PM asked:

Noted your message re 42te and that you could get online quote to accept .

Presumably you have tried that in the last few days , I used to be able to get quotes for these and BOI online but both now give me the message ring to deal .

Could you confirm your experience with 42te as current as I wish to tackle interactive about this and need some ammunition, I completed complex instrument form when with self trade which should have transferred across , but you never know .

Yes, I tried 42TE and 42TF with Interactive Investor just before my post above, so yesterday just before market close, and I've just tried them again just now with the same result.

A point to note is that if you try to buy more than you have cash for in the account II will, very unhelpfully and misleadingly, say "Unfortunately we are unable to trade this stock on-line" *, so if you're just testing be aware of that.

For BOI I get that message regardless. Possibly due to a minimum order amount? I only have a few hundred quid in the account.

Regarding the Appropriateness Assessment (complex instrument form), you can check. Click on the person icon top right and select Personal details & preferences and then in the last panel on Appropriateness assessment form.

* If you try to buy more than you have cash for with a normal share it says "The order amount is above your available spend" and gives you the option to add cash. Dunno why it doesn't do the same with bonds....

[88V8]

A point to note is that if you try to buy more than you have cash for in the account II will, very unhelpfully and misleadingly, say "Unfortunately we are unable to trade this stock on-line" *, so if you're just testing be aware of that.
For BOI I get that message regardless. Possibly due to a minimum order amount? I only have a few hundred quid in the account.
Regarding the Appropriateness Assessment (complex instrument form), you can check. Click on the person icon top right and select Personal details & preferences and then in the last panel on Appropriateness assessment form.
* If you try to buy more than you have cash for with a normal share it says "The order amount is above your available spend" and gives you the option to add cash. Dunno why it doesn't do the same with bonds....

Haven't bought BOI for a long time, but OH was able to top-up 42TE in her ISA in the last couple of weeks, and she never phones and hasn't completed the form.

I've found even when I have six figures in cash, they will not trade some stock online, more so than used to be the case.
A recent example was IPF2.

If I don't have any cash in the a/c I can still buy stock.

Perhaps ii is a postcode lottery

V8

[Holts]

It would seem it is a lottery , I have the complex form filled and showing on file , it will not give me the opportunity to buy more 42TE , I have plenty but irritated I can’t get quotes online to buy or sell .

BOI is about trading multiples , their system allowed you to order say 1009 which wasn’t the lot size , they seemed not to want to bother to fix it so that you could only order correct size ,

Reply from them below

These bonds when they have a lot size is that a lot of customers previously tried to send invest orders instead of dealing in lot size. All the market makers that we deal with reject odd lot orders except for one and it causes a lot of work and poor experience for customers. Because of this a business decision was made to make these stocks phone only.

[Holts]

I am wondering if it’s connected to whether you were migrated from Selftrade or were always with Interactive .