short term corporate bonds

[jdepp]

Hello there,
Any suggestions regarding reasonable quality corporate bonds with short maturities?

For example, one stand out to me is BRU2 which matures 25 Feb 25 and based on mid of 96.5 gave a yield of about 9%.
Of course on screen prices are wide, but HL could do better on this one.
I like it because of RNS from a month ago.

Another one is NBPS, zero coupon which matures 30/10/24 at 130.63
Seems very well backed, current yield on offer of 123.9 is 5.96%

Have looked at BUR3, 1/12/26 at abput 7.3% but do not understand accounts and too much financial engineering, although counter is market cap of ords and they have rebought shoertr bonds.

There do not seem too many out there from my searching, hence starting to look at pibs which might be tendered but never really traded these.
Thanks

[Alaric]

Have looked at BUR3, 1/12/26 at abput 7.3% but do not understand accounts and too much financial engineering, although counter is market cap of ords and they have rebought shoertr bonds.

If you search this site for Burford or Burford bonds, there's a some amount of discussion.

Burford is an organisation that finances ongoing legal actions in the hope of taking a cut of eventual settlements. Some years ago, it was under fire from an American analyst who thought it was all smoke and mirrors and to the extent the forum was able to investigate, it did seem that they were reporting accrued profits long before they actually got their hands on their share of settlement dosh. But they are stiill out there and have been able to repay their bond borrowings on or before time.

[kempiejon]

Another one is NBPS, zero coupon which matures 30/10/24 at 130.63
Seems very well backed, current yield on offer of 123.9 is 5.96%

I looked at the above zero. I think it was this thread piqued my interest. viewtopic.php?t=28720 there look to be some other suggestions in there.

[Laughton]

How short is short (as in "short maturities")?

Of course, PIBS are the very opposite.

[GoSeigen]

How short is short (as in "short maturities")?

Of course, PIBS are the very opposite.

I don't think anyone mentioned PIBS. The suggestion was redeemable zero-dividend preferences shares which are short if their redemption is imminent. However they certainly are not corporate bonds so one must beware all the pitfalls of buying shares...

I don't hold any short-dated corporate so can't really add much here.


GS

[Laughton]

Apologies if I mis-read. I thought the OP mentioned starting to look at PIBS (OK pedantically, "pibs").

[jdepp]

Thank you for replies.
By short dated I mean up to 3 years.
Sometimes in less liquid retail issues anomalies seem to exist, eg IPF2 from start of this year was below par and given they lend short and borrow longer, it seemed very likely that IPF2 would be repaid, refinanced.

Similarly currently BUR2 seems cheap given the RNS from a month ago, (which for some reason I do not understand I cannot post here).

But in most of these issues the spread is wide, even for reasonable size so yields can be misleading, but having said that illiquidity is not an issue for me as ok to hold to redemption , for example I bought CAF2 on issue and recently doubled down, super illiquid but there was a seller and from my calculations this is very good credit, ie about 2.5% over similar gilt is high, but of course given spreads this is not exact.

These are sort of things I look for, I mentioned BUR as I have held but accounting is too complicated to understand for me and if I look at it then I am reminded of ENRON, so why put a small piece into something I cannot understand.

I mentioned pibs because I have not followed this market, and have spent sometime looking at bank and insurance pibs and prefs which might be tendered by 2026 when reg capital changes come in.

But latter is a market I do not understand, FWIW I am long many short term gilts and looking to pick up extra yield so to go out along credit curve.

[GoSeigen]

Apologies if I mis-read. I thought the OP mentioned starting to look at PIBS (OK pedantically, "pibs").

I had to reread it three times before I spotted it! Yes they wrote pibs and not PIBS so my bad, I'll try to read more carefully in future.

EDIT: and your first post was right of course: even PIBS which might be tendered are far from corporate bonds which must be redeemed/repaid in three years or so.

However you get a much better return from some of the former if you are prepared to take the risk that a tender will not happen and you have to resell into the market.


GS

[Laughton]

You could look at 42TE.

It "matures" December 22 2025 so within your timeframe.

Bear in mind:

It only pays out once each year (around December 20th).
I don't know when the Ex date is so could be a lot of accrued in what you pay, but should be able to tell before pushing the BUY button.
Today is Sunday so can't see what the current price is but last time I looked YTM is north of 7% and IRR is north of 9% (if that's your chosen methodology).

I hold lots and fully intend to hold to the end, so could be said that I'm taking up my own book. Make sure you've got the figures correct and that you're happy with prospects for The Co-Operative Group (not the bank) before deciding.

[jdepp]

I guess 42TE it pays 22 dec, its maturity date dec 2025.
From the spreadsheet I have seems to be 8.3% so looks interesting, especially given recent rns, mentioned in a different thread.
Thanks!

[OldBoyReturns]

I mentioned pibs because I have not followed this market, and have spent sometime looking at bank and insurance pibs and prefs which might be tendered by 2026 when reg capital changes come in.

As far as I am aware 2026 has no relevance to bank and building society capital and so would not be a factor in tender offers for their PIBS, PSBs and prefs. I believe 2026 is the date for full implementation of Solvency 2 for insurance companies and so would only be relevant to their legacy capital instruments - eg Aviva and RSA preference shares.

I believe the capital standards relevant to the legacy instruments of banks and building societies were fully implemented in 2021 since when there has been a number of tenders for bank prefs and PSBs. I am slightly mystified over the lack of tenders by building societies for their PIBS though.

Happy to be corrected if I have this wrong.

[Laughton]

WARNING! Looks as though 42TE has gone ex div. for this year so YTM will be MUCH lower.

[GoSeigen]

WARNING! Looks as though 42TE has gone ex div. for this year so YTM will be MUCH lower.

That's not how YTM works.


GS

[Laughton]

Of course, I'm sorry.

Looking at 42TF and 42TE and using IRR at the same time ...... and my brain not coping.

[Eddiedcricket123]

For Burford, I wrote a piece on EHYO. European high yield online.
A complex structure, with challenging accounting practices.
The business has been around a long time, with many long term cases having been executed and won. Burford receive payment after the final judgement, and the monies have been disbursed. In their accounting treatment, they note, through capital provision income, likely future revenue, but I pay attention to receipts, cashflow and funding...
#XS1614096425

[thegr8Destructo]

Also - and full disclosure I am the admin for European High Yield Online we have community posts on Newday and Miller Homes which I think also have short dated - 3 years. Good Luck!

[Eddiedcricket123]

If you want to see Bond Prices, Yield to Maturity, and other assorted bond selections, even high yield then look up European High Yield Online. Subscription is free there...Any questions just ask...

[shaunm]

You could look at BRU2 - BRUNTWOOD BOND 6% GTD SNR 25/02/25 GBP100 (SEDOL:BL6THL7)

[jdepp]

Yes, BRU2 was my original suggestion, see starting post, esp given the recent RNS

[kempiejon]

Does this fit your criteria? REGIONAL REIT LTD (RGL1) 4.5% 2024 about 92p matures August 24.