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Bond of the Week: 22 May 2017
Bond of the Week : 22 May 2017
Burford, the world's largest provider of arbitration and litigation finance, has just returned to the retail bond market for its third issue. Unfortunately, being away, I was unable to write up the bond before the books closed but it could be worth looking at in the secondary market – depending on where it trades. You can see what I previously wrote here and here.
Litigation investment income: $140 million
Conclusion: Burford is now a known quantity in the retail bond market so pricing is reasonably clear and this issue is unlikely to have a supercharged return. However, the coupon is attractive and the alternatives are few. For instance the last two retail bond issues had coupons of 4.25%. Although Burford's business is unusual you cannot fault their performance. Despite this in the secondary market their bonds are the cheapest on the ORB if you exclude the issues with “troubles”, Enquest and Premier (low oil troubles), IPF (regulation troubles) and Eros films (just troubled). There is an argument that all three Burford bonds should be re-priced. I have bought the new issue and used it to sweep up cash that was forlornly looking for a home. As the issue size is a handsome (for the retail market) £175 million, I expect institutions, some of whom previously were a little sniffy about the retail bond market, have thought likewise.
Oliver Butt is a Partner in City and Continental LLP, a leading independent broker in fixed income. The author and or the LLP may hold a position in or trade in any of the securities mentioned above.
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