High Yield Bond Investments

[socrates28]

I suppose my question was peoples opinion on my spread considering I am

looking at a return in 15 years time and intend to invest a further £15-20k every year

my opinion: you are nicely diversified but don't expect huge returns.

I have other investments that produce the money to invest and as I said my plan is over the next 15 years - so steady is what I want

[Naam]

Never traded bonds only stocks & options. I do have a question.

Are there any ETFs which consist of a selection of high-yield bonds?

years ago there used to be. not sure about today.

Thanks for replying.

I've answered my own question (good old Google) from this web site:

http://etfdb.com/etfdb-category/high-yield-bonds/

what a desolation!

i took a look at some 5Y charts and concluded "amateurs at work".

[Misty]

Has anyone used deVere as their advisors? I hear they are good.

Any experience?

Sent from my GT-N7100 using Thaivisa Connect Thailand mobile app

No personal experience but if you go to The Motley Fool web site and go to Boards, Investors round table, International Expat Investing there are a number of posts about them - one of which was about them recently losing their Belgian licence. My feeling, with no substantiation, is caveat emptor.

If you would like to read more about deVere, also try googling deVere comments posted to the US consumer website "Pissed Consumer" , for example read the thread "Devere Group scam I went on the rip off course PissedConsumer.com"

(Note that deVere in July 2011 brought a libel case against New York-based Opinion Corp, which does business online as PissedConsumer.com, but that in July 2012 a judge in US District Court in Brooklyn, NY ruled that the trademark of deVere Group had not been infringed upon, as the company alleged, by its use on the PissedConsumer.com “gripe” website; nor, he said, had any other related claims been substantiated. )

[fletchsmile]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

[manarak]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

would have to read the prospect to give an opinion... but 14%? there is no free lunch... Edited June 10, 2013 by manarak

[fletchsmile]

Has anyone used deVere as their advisors? I hear they are good.

Any experience?

Sent from my GT-N7100 using Thaivisa Connect Thailand mobile app

Personal experience: abysmal. Wouldn't touch them again with a barge pole. They f****d up just about everything you could think of on a Royal Skandia policy they sold me, inlcuding setting up in the wrong currency. So fees were fixed in USD instead of GBP, when the rate was around 2:1.

I took it out to dip my toes in the water - less than 5% of my portfolio. I later took them off the policy and now manage it myself.

The final p**s take was a couple of years later when the salesperson moved on, and someone ese was looking for the trailer commission - they finally got around to contacting me, and promising the "same level of service" would continue. I said yes it would as I'd taken them off the policy a few years back .

Bottom line no-one cared less once the policy was sold, until it came time to reallocate their commision again. Complete cowboys

No idea why you've posted in this thread either as nothing to do with High Yield bonds.

Fletch

Edited June 10, 2013 by fletchsmile

[Naam]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

would have to read the prospect to give an opinion... but 14%? there is no free lunch...

a GBP T1 of a financial institution yielding 10% is nothing special. watch out for potential calls!

[Naam]

interesting development since some months. Brazil lifted last week as expected the domestic transaction tax on BRL denominated instruments. offshore BRL/USD bonds nosedived too and yields are back to >9% again. will wait a few days before hitting.

ISIN US105756BN96

ISIN US105756BT66

ISIN US105756BL31

Edited June 10, 2013 by Naam

[Naam]

advisors

[jacnl2000]

advisors

smart advisors always win

[Naam]

advisors

smart advisors always win

...the commissions they receive from what they sell and the fees they take from their clients.

[samran]

interesting development since some months. Brazil lifted last week as expected the domestic transaction tax on BRL denominated instruments. offshore BRL/USD bonds nosedived too and yields are back to >9% again. will wait a few days before hitting.

ISIN US105756BN96

ISIN US105756BT66

ISIN US105756BL31

so you've got a view that the Brazillian currency will not tank anytime soon a la the AUD?

[Naam]

interesting development since some months. Brazil lifted last week as expected the domestic transaction tax on BRL denominated instruments. offshore BRL/USD bonds nosedived too and yields are back to >9% again. will wait a few days before hitting.

ISIN US105756BN96

ISIN US105756BT66

ISIN US105756BL31

so you've got a view that the Brazillian currency will not tank anytime soon a la the AUD?

gauging risk is a matter of individual perspective and financial means. i have a choice between keeping $ or € cash at 0% and invest in BRL at (presently) 9.76%, i.e. as long as i am convinced that BRL does not fall 9.76% p.a. vs. $ or € the decision is pro BRL.

by the way, having been in/out BRL umpteen times i am well aware of the currency's fluctuations and i am considering Non Deliverable Forwards as an alternative. NDFs yield much less, but infinitely more than 0% and possess the advantage that one can get out in a few minutes.

[fletchsmile]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

would have to read the prospect to give an opinion... but 14%? there is no free lunch...

a GBP T1 of a financial institution yielding 10% is nothing special. watch out for potential calls!

Yes this one is callable Jun 2019.

There are not many UK banks I'm aware of with yields above 10%, hence raising this once.

With the exception on Co-op Bank, which as you know I've just dipped my toes into - Most of the other UK banks are in single digits. So if you've any suggestions, of 10% YTM+ for UK banks I'd be interested... I see the worst of the UK's banking sector crisis behind it.

Fletch

[fletchsmile]

At the complete opposite end of the high yield bond scale... any views on shorting JGB's? Looks interesting to me, and I found 2 ETNs/ETFs to do so, was considering dipping my toes into:

JGBS

http://www.bloomberg.com/quote/JGBS:US

JGBD (leveraged at 3 times)

http://www.bloomberg.com/quote/JGBD:US

I prefer them to futures, as would like to keep it safe on margins as I don't have time to watch margins on very liquid high volume exchanges... :

Cheers

Fletch

[Naam]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

would have to read the prospect to give an opinion... but 14%? there is no free lunch...

a GBP T1 of a financial institution yielding 10% is nothing special. watch out for potential calls!

Yes this one is callable Jun 2019.

There are not many UK banks I'm aware of with yields above 10%, hence raising this once.

With the exception on Co-op Bank, which as you know I've just dipped my toes into - Most of the other UK banks are in single digits. So if you've any suggestions, of 10% YTM+ for UK banks I'd be interested... I see the worst of the UK's banking sector crisis behind it.

Fletch

Fletch,

not only possible calls as per prospectus but potential regulatory calls should be taken into consideration. after making hay during the sunny years 2009-2011 i am staying clear of any Tier1 with a high nominal coupon and priced above par.

[Naam]

interesting development since some months. Brazil lifted last week as expected the domestic transaction tax on BRL denominated instruments. offshore BRL/USD bonds nosedived too and yields are back to >9% again. will wait a few days before hitting.

ISIN US105756BN96

ISIN US105756BT66

ISIN US105756BL31

so you've got a view that the Brazillian currency will not tank anytime soon a la the AUD?

gauging risk is a matter of individual perspective and financial means. i have a choice between keeping $ or € cash at 0% and invest in BRL at (presently) 9.76%, i.e. as long as i am convinced that BRL does not fall 9.76% p.a. vs. $ or € the decision is pro BRL.

by the way, having been in/out BRL umpteen times i am well aware of the currency's fluctuations and i am considering Non Deliverable Forwards as an alternative. NDFs yield much less, but infinitely more than 0% and possess the advantage that one can get out in a few minutes.

for the record: bought 2 batches US105756BN96 @ 1.0315, current yield 9.95% (USDBRL 2.1425). no risk, no reward!

[samran]

interesting development since some months. Brazil lifted last week as expected the domestic transaction tax on BRL denominated instruments. offshore BRL/USD bonds nosedived too and yields are back to >9% again. will wait a few days before hitting.

ISIN US105756BN96

ISIN US105756BT66

ISIN US105756BL31

so you've got a view that the Brazillian currency will not tank anytime soon a la the AUD?

gauging risk is a matter of individual perspective and financial means. i have a choice between keeping $ or € cash at 0% and invest in BRL at (presently) 9.76%, i.e. as long as i am convinced that BRL does not fall 9.76% p.a. vs. $ or € the decision is pro BRL.

by the way, having been in/out BRL umpteen times i am well aware of the currency's fluctuations and i am considering Non Deliverable Forwards as an alternative. NDFs yield much less, but infinitely more than 0% and possess the advantage that one can get out in a few minutes.

for the record: bought 2 batches US105756BN96 @ 1.0315, current yield 9.95% (USDBRL 2.1425). no risk, no reward!

I'd wish you good luck, but suspect you've put alot of hard work into studying them....

But good luck anyway.

[Naam]

I'd wish you good luck, but suspect you've put alot of hard work into studying them....

But good luck anyway.

i haven't put too much hard work in it because i don't believe in voodoo such as chart- or tech analysis which are helpful for daytraders. i mentioned the basis for my decision, i.e. the choice between 0% and 9.95% and of course i follow daily (since many years) all developments in Brazil. as a hedge against a free falling BRL i will use NDFs, but only if and when i deem it necessary.

[craigt3365]

You're being modest, Naam. Your knowledge of this stuff is far superior to pretty much anybody else I've known. Brokers included!!!!

Thanks for your previous efforts to educate me. It just doesn't sink in! Oh...and I am a bit lazy...

[Naam]

You're being modest, Naam. Your knowledge of this stuff is far superior to pretty much anybody else I've known. Brokers included!!!!

Thanks for your previous efforts to educate me. It just doesn't sink in! Oh...and I am a bit lazy...

a gardener doing 35 years of gardening who likes his work, plants, trees and bushes acquires superior knowledge in his "trade". the same applies to a cook who likes good food. however, i reject the idea that superior knowledge and decades of experience is required to come to the conclusion we are referring to.

but wait! there is more... based on my "superior" knowledge i bought an asset may 21 which i sold two hours ago raking in a loss of 21% - my only excuse is that i knew from the beginning that it was a gamble, i.e. either a big plus or a big loss within a rather short period.

[samran]

I'd wish you good luck, but suspect you've put alot of hard work into studying them.... But good luck anyway.

i haven't put too much hard work in it because i don't believe in voodoo such as chart- or tech analysis which are helpful for daytraders. i mentioned the basis for my decision, i.e. the choice between 0% and 9.95% and of course i follow daily (since many years) all developments in Brazil. as a hedge against a free falling BRL i will use NDFs, but only if and when i deem it necessary.

I really don't get bonds but your post is giving me a reason to try and scratch the surface. So let me ask. You buy these bonds, what are the potential risks? My guesses include:

- the currency you buy them in heads south, wiping out the gains.

- the company issuing the bond defaults on the class of bond you have

- the price of the bond plummets

Is this about it?

What happens though if you hold onto the bond till maturity. Does that mean you get a regular 9% coupon till the day it expires? Surely you'd want to do that if the price of the bond heads south?

Why don't you just do that, or is there an opportunity cost of holding the bond if a new better opportunity presents itself?

It also sounds like you treat bonds a bit like equites. Buy low, sell high, get a coupon in the meantime?

Really curious as to what the key decision making variables are...

Thanks in advance.

Edited June 14, 2013 by samran

[Naam]

what are the potential risks?

- the currency you buy them in heads south, wiping out the gains.

- the company issuing the bond defaults on the class of bond you have

- the price of the bond plummets

referring to the specific bond which i bought and mentioned in my posting.

the currency has to head continously south at a percentage per annum which is greater than the difference i am getting for cash either in my perceived "home currency" or the currency i own and use to invest in another currency. in my case i use USD to buy BRL.

the bond i bought is not a corporate but sovereign bond issued by Brazil... a country which managed during the last decade to gain the status of a net creditor from being deeply indebted.

the price of the bond may plummet for various reasons. but it is book value that plummets and the income is not affected as long as the currency is stable.

[Naam]

1. What happens though if you hold onto the bond till maturity. Does that
mean you get a regular 9% coupon till the day it expires? Surely you'd
want to do that if the price of the bond heads south?

2. Why don't you just do that, or is there an opportunity cost of holding the bond if a new better opportunity presents itself?

3. It also sounds like you treat bonds a bit like equites. Buy low, sell high, get a coupon in the meantime?

1. yes and yes.

2. yes but i don't understand what i underlined in your posting.

3. you can't always buy low and sell high but that is of course the intention.

[Naam]

Really curious as to what the key decision making variables are...

numerous variables exist which keep changing. and because most of them are investor specific it is impossible to list them.

but in the case of buying a BRL denominated sovereign bond of Brazil i have listed the decisive variables already.

again:

-as a non risk-averse investor i hold substantial amounts of cash in various currencies to balance my high-yield / high-risk investments.

-one of these currencies is the US-Dollar for which the overnight interest rate is virtually zero.

-i used a part of this USD cash to buy said BRL bond which, based on my entry point yields 9.95% every year for the next 15 years if... Brazil does not default.

the key factors were to answer the questions below:

"make $242,124 work and earn (with certain risks attached) 9.95% or leave them "risk free" (assuming the bank does not go belly-up) to earn zero?" yes/no

"is it highly likely that the interest difference covers all potential risks?" yes/no

[cheeryble]

Hi Naam

is your Brazilian bond a government bond?

Although the funds came from $US, is the bond in BRL or $US?

[Naam]

Hi Naam

is your Brazilian bond a government bond?

Although the funds came from $US, is the bond in BRL or $US?

yes sovereign debtor is Brazil. because BRL is a restricted currency (you can't hold it offshore) BRL denominated offshore bonds are issued "dual currency" (either BRLUSD or BRL€UR). coupons are paid in BRL but converted on value date at prevailing rate into offshore currency.

more information:

http://em.cbonds.com/emissions/issue/11058

as a non-subscriber you don't have access to the prospectus. if you are interested i can download and send it to you.

Edited June 15, 2013 by Naam

[Naam]

Any thoughts on Barclays 14% step-up call perps. Price around 130, yielding just over 10%? GBP | XS0397801357

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary.html?fourWayKey=XS0397801357GBGBPSTBS

Fletch

Yes this one is callable Jun 2019.

There are not many UK banks I'm aware of with yields above 10%, hence raising this once.

With the exception on Co-op Bank, which as you know I've just dipped my toes into - Most of the other UK banks are in single digits. So if you've any suggestions, of 10% YTM+ for UK banks I'd be interested... I see the worst of the UK's banking sector crisis behind it.

Fletch

Fletch,

not only possible calls as per prospectus but potential regulatory calls should be taken into consideration. after making hay during the sunny years 2009-2011 i am staying clear of any Tier1 with a high nominal coupon and priced above par.

aargh!

LONDON | Mon Jun 17, 2013 5:22pm BST

(Reuters) - Britain's Co-operative Group will force bondholders to help plug a 1.5 billion pound capital hole, avoiding a repeat of unpopular taxpayer-funded bailouts made during the financial crisis.

Using a "bail-in" rescue model, bondholders will have to swap their debt for new bonds and equity in the bank, which will be listed on the London Stock Exchange.

http://uk.reuters.com/article/2013/06/17/uk-coop-capital-idUKBRE95G03Q20130617

[wordchild]

co op could be an interesting situation following this, but its very high risk and not really a bond play (there may not be any coupons!)

We wont really have any clear idea what the capital structure is going to be like till they publish more details in October. After that it could become more investable.There will be a fair bit of back and forth negotiation and also pr manipulation between now and then.

Having said all that, like Fletch, I have dipped a toe in (at what I hope will prove to be distressed prices) to join in the fun.

Edited June 18, 2013 by wordchild

[topt]

co op could be an interesting situation following this, but its very high risk and not really a bond play (there may not be any coupons!)

We wont really have any clear idea what the capital structure is going to be like till they publish more details in October. After that it could become more investable.There will be a fair bit of back and forth negotiation and also pr manipulation between now and then.

Having said all that, like Fletch, I have dipped a toe in (at what I hope will prove to be distressed prices) to join in the fun.

A braver man than me especially after having skimmed all the posts on TMF - did you go for CPBC or another?