mogish
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Post by mogish on Nov 2, 2022 16:38:58 GMT
10% looks tasty. I'm very happy that cash isa are around 4.5% now. Let's see what tomorrow brings with Boe rate rise. Will keep an eye on them Pibs.
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registerme
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Post by registerme on Nov 2, 2022 17:17:25 GMT
Now that interest rates are poking up and will do for a few more years (I'm guessing 3 to 5) some interesting old style PIBs will start becoming more interesting. Don't buy them now as Tescos at 4.95% looks pretty good but the likes of SBSA, SAN, HALP will start to see their prices fall to nearer to £1 as the recession bites. Since they offer 8.5%, 10.5% and 9.4% on their face value this becomes very good income as the markets stabilise. Of course if you don't like that sort of income you can just take the capital gains. Buying opportunties only come around on these things during recessions so start reading now and monitor over the next few months
Not advice, just 20 years of experience of these things.
OK, my googlef-fu failed me. What's a "PIB"?
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michaelc
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Post by michaelc on Nov 2, 2022 17:21:19 GMT
Now that interest rates are poking up and will do for a few more years (I'm guessing 3 to 5) some interesting old style PIBs will start becoming more interesting. Don't buy them now as Tescos at 4.95% looks pretty good but the likes of SBSA, SAN, HALP will start to see their prices fall to nearer to £1 as the recession bites. Since they offer 8.5%, 10.5% and 9.4% on their face value this becomes very good income as the markets stabilise. Of course if you don't like that sort of income you can just take the capital gains. Buying opportunties only come around on these things during recessions so start reading now and monitor over the next few months
Not advice, just 20 years of experience of these things.
OK, my googlef-fu failed me. What's a "PIB"? Search "building society pibs"
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Post by Deleted on Nov 2, 2022 17:31:43 GMT
Permanent Interest Bearing Shares (PIBS)
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pikestaff
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Post by pikestaff on Nov 2, 2022 18:07:13 GMT
Now that interest rates are poking up and will do for a few more years (I'm guessing 3 to 5) some interesting old style PIBs will start becoming more interesting. Don't buy them now as Tescos at 4.95% looks pretty good but the likes of SBSA, SAN, HALP will start to see their prices fall to nearer to £1 as the recession bites. Since they offer 8.5%, 10.5% and 9.4% on their face value this becomes very good income as the markets stabilise. Of course if you don't like that sort of income you can just take the capital gains. Buying opportunties only come around on these things during recessions so start reading now and monitor over the next few months
Not advice, just 20 years of experience of these things.
Don't have any PIBs but do hold irredeemable prefs RSAB and AV.B both currently yielding about 7.5%. Bought in a previous dip when yields were higher. I know I should have traded in and out, but happy to hold.
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mogish
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Post by mogish on Nov 3, 2022 13:22:34 GMT
Hopefully see another rate war next week with Banks /BS wanting to reel in more savers. Wifes gutted locking in with Coventry last week at 4.35%. Hopefully a nice juicy 5% soon. P2P? whats was that?
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pikestaff
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Post by pikestaff on Nov 3, 2022 17:02:37 GMT
Hopefully see another rate war next week with Banks /BS wanting to reel in more savers. Wifes gutted locking in with Coventry last week at 4.35%. Hopefully a nice juicy 5% soon. P2P? whats was that? I don't think she should be gutted. The BoE raised its rate to 3% today, as expected. But it also signalled that it expected future rate rises to be lower than the markets had been expecting. Fixed rates reflect what the market is expecting to happen in the future. The BoE announcement may have the effect of bringing medium term fixed rates down, to provide some relief to the housing market. I'm pretty sure that's the intention. Edit: But only if the markets are convinced. At the moment they are not.
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macq
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Post by macq on Nov 3, 2022 18:28:25 GMT
Now that interest rates are poking up and will do for a few more years (I'm guessing 3 to 5) some interesting old style PIBs will start becoming more interesting. Don't buy them now as Tescos at 4.95% looks pretty good but the likes of SBSA, SAN, HALP will start to see their prices fall to nearer to £1 as the recession bites. Since they offer 8.5%, 10.5% and 9.4% on their face value this becomes very good income as the markets stabilise. Of course if you don't like that sort of income you can just take the capital gains. Buying opportunties only come around on these things during recessions so start reading now and monitor over the next few months
Not advice, just 20 years of experience of these things.
You have mentioned PIBs before and you have obviously done well with them - but i seem to remember some bad publicity about them a few years back and could be mistaken but thought there were problems From the likes of Nationwide,Bradford & Bingley & Co-op at one point? (a quick search using " drawbacks of BS PIBs" brings up articles from about 10 years back) Genuine question from 10 minutes on google so will need to dig deeper- but what do you think has changed to make them more attractive and are they not more risky then shares or even normal corporate bonds?
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Post by Deleted on Nov 4, 2022 11:29:38 GMT
Good question, general answer
There were some dodgy ones around the great crash of 2009 a few banks got close to the edge and bailed on the deal. The ones that crashed, from memory, were Coop and Irish Bank. The Irish bank was paying something like 13% and at the time the Irish economy was in free-fall and Iceland was devestated etc etc. I remember John Hastings get upset about it in the House.
Because their very nature is more risky than Building Societies and they are subordinated debt (I think that is the term), they will get jetisoned come a major crisis.
To those who like losing money in P2P this, of course, is hardly risky territory. Getting information on them is a bit trickier and most of the BSocs would like to close them down, but as long as we keep owning them they either pay the asking price or slip them out of the market as they go sub face value.
So, my view is, if I could buy the ones I mentioned at 95p I would. The remaining ones are with major banks and they would have to pay £1 to get their asset back, in the mean time the interest keeps rolling in. Is it risk free? No, but life is not risk free
what do you think has changed to make them more attractive and are they not more risky then shares or even normal corporate bonds?
finally inflation has got out of the bag so their price is going to come down. (I last paid 90p for one of these 12 years ago earning 10% a year for 12 years and its sellable for 125p+ today), I'd like to do that again. Shares, I have a lot of shares, diversification is the name of the game here and, for me, these are not for trading these are for day to day income Corporate bonds, I have a few and yes if you are skilled at buying them then fine, I admit I'd rather have these sort of things from Banks/building societies rather than say General Electric.
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Post by mostlywrong on Nov 4, 2022 12:05:45 GMT
Good question: rummaging around in a time damaged brain....
Did not Aviva get into trouble a few years ago when it tried to redeem (buy back) its irredeemable preference shares?
They did not offer a good price either. I think the "offer" was at par...
The market for preference shares bombed on the chance that, if AV. got away with it, so could other companies.
If my memory is faulty then my username is accurate...
MW
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adrianc
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Post by adrianc on Nov 4, 2022 12:12:01 GMT
(I last paid 90p for one of these 12 years ago earning 10% a year for 12 years and its sellable for 125p+ today), I'd like to do that again. So you bought £1 worth of debt for 90p, paying 10p interest per year for 12 years - £1.20 of total income plus the £1 back, £2.20 total in from your 90p investment. Yep, absolute bargain. And that was 12 years ago, so it's due this year... why would somebody pay £1.25 for that now, to get nothing but their £1 back, maybe 10p interest depending on payment dates? Where would one go to buy these things, anyway?
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macq
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Post by macq on Nov 4, 2022 12:30:02 GMT
Good question, general answer
There were some dodgy ones around the great crash of 2009 a few banks got close to the edge and bailed on the deal. The ones that crashed, from memory, were Coop and Irish Bank. The Irish bank was paying something like 13% and at the time the Irish economy was in free-fall and Iceland was devestated etc etc. I remember John Hastings get upset about it in the House.
Because their very nature is more risky than Building Societies and they are subordinated debt (I think that is the term), they will get jetisoned come a major crisis.
To those who like losing money in P2P this, of course, is hardly risky territory. Getting information on them is a bit trickier and most of the BSocs would like to close them down, but as long as we keep owning them they either pay the asking price or slip them out of the market as they go sub face value.
So, my view is, if I could buy the ones I mentioned at 95p I would. The remaining ones are with major banks and they would have to pay £1 to get their asset back, in the mean time the interest keeps rolling in. Is it risk free? No, but life is not risk free
what do you think has changed to make them more attractive and are they not more risky then shares or even normal corporate bonds?
finally inflation has got out of the bag so their price is going to come down. (I last paid 90p for one of these 12 years ago earning 10% a year for 12 years and its sellable for 125p+ today), I'd like to do that again. Shares, I have a lot of shares, diversification is the name of the game here and, for me, these are not for trading these are for day to day income Corporate bonds, I have a few and yes if you are skilled at buying them then fine, I admit I'd rather have these sort of things from Banks/building societies rather than say General Electric.
Thanks for the comprehensive reply - out of interest i will dig deeper but on the quick search yesterday there did seem to be a strong comparison with p2p in someways when the first things i saw mentioned were things like ranks behind other debt in default,illiquid,payments can be withheld and also can be called (or even perhaps worse extended? ) with no notice hence - i guess the permanent part of the name.But unlike p2p you are dealing with household names even if that is no guarantee
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Post by Deleted on Nov 4, 2022 13:01:29 GMT
(I last paid 90p for one of these 12 years ago earning 10% a year for 12 years and its sellable for 125p+ today), I'd like to do that again. So you bought £1 worth of debt for 90p, paying 10p interest per year for 12 years - £1.20 of total income plus the £1 back, £2.20 total in from your 90p investment. Yep, absolute bargain. And that was 12 years ago, so it's due this year... why would somebody pay £1.25 for that now, to get nothing but their £1 back, maybe 10p interest depending on payment dates? Where would one go to buy these things, anyway? No, it's not "due" this year. Let me explain, in former times these things had date limitations which was the time that the supplier could buy back in at face value. But they've all (I think) passed so no more forced buy back. Within the concept that all things are grass these will just go on.
So you are paying the, say 125 p, becuase the interest rate is better than you can get at say Tescos. That means you pay a premium,,, at the moment. But as interest rates at the bank rise the cost of money goes up and the premium comes down. It may never get below £1, this is where you appetite for risk/reward comes into play.
Interest rates will continue to go up around the world as the USA exports inflation (you understand all this right?) so there will be a point when the bottom of the PIB price will be reached (good luck getting that right).
You buy them on the stock exchange. So any good portal like ii, halifax, etc etc should be able to trade easily in them or you may need to call the broker.
Given your equation suggestion I would actually sell at £1.25 on the stock market so my total return would be more like £2.45 for my 12 year 90p deal. Something like 8.6% per annum.
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adrianc
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Post by adrianc on Nov 4, 2022 13:07:20 GMT
So you bought £1 worth of debt for 90p, paying 10p interest per year for 12 years - £1.20 of total income plus the £1 back, £2.20 total in from your 90p investment. Yep, absolute bargain. And that was 12 years ago, so it's due this year... why would somebody pay £1.25 for that now, to get nothing but their £1 back, maybe 10p interest depending on payment dates? Where would one go to buy these things, anyway? No, it's not "due" this year. Let me explain, in former times these things had date limitations which was the time that the supplier could buy back in at face value. But they've all (I think) passed so no more forced buy back. Within the concept that all things are grass these will just go on. Ah, so they're open-ended? Although, obvs, at that premium there's no net return at all until year 3, with year 4 bringing the annualised return up to "meh". 5% annual after year 5, going up from there. So what would I search on ii for? "PIB" gives "no search results found".
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Post by Deleted on Nov 4, 2022 13:18:33 GMT
Because they are such a small group the old days of having magazines or broker letters referring to them has gone. HL has a "PIBS" searcheable zone but it covers only a few of what is available. I'm not even sure the three I've mentioned are in HL's list. So you are a bit on your own. I'm happy with my three, but I would start ringing my broker or my IFA. If he recommends something else, let us know.
yes PIB will not work, you need PIBS
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