Analysis & Comment  > Model Portfolio

Share |
Back to 2009

Model Portfolio: 25 September 2009
Valuation of portfolio creeps higher, but some loss of momentum evident as the recovery from oversold matures....................
    
Sentiment remains firm in the corporate bond markets, although the trend of across-the-board price rises that we have seen in investment grade bonds since the beginning the year is starting to slow.
 
In some cases we note that momentum has turned around. We note the valuations of the Marks & Spencer 2014, the Next 5.25% 2013 and the Roche bond giving back a few pips from recent price highs.
 
In high yield and particularly subordinated debt, investor appetite is continuing to move back in. Many of these assets were priced for bankruptcy back at the tail end of last year, and the re-habilitation process is taking some time. The best performer in the portfolio this month is the Segro 5.5% 2018, which is now almost back to pre-crash levels (see chart, right).
 
This month’s purchase of the Rabobank bond takes the portfolio to a fully invested stance. Going forward, I am tempted to take a couple of cheeky profits - perhaps in the Roche or Anheuser Bush bonds, which stand well over par. Re-investment, however,  will be tricky given the fairly low yields available in the market.
 

Date of Purchase

Issue

Nominal

Purchase Price

Current Price

Value  

Accrued

30 Jan 2007

Kingfisher 5.625% 15 Dec 2014

10,000

  95.24

101

 10,100

 445

7 Mar 2007

Segro 5.5% 20 June 2018

5,000

  97.35

 92

 4,600

 76

18 April 2007

Merrill Lynch 5.125% 24 Sept 2010

10,000

  97.66

 101.5

10,150

 8

19 Aug 2007

Portman (Nationwide) 6.25% PIBS

 5,000

  97.50

 80

 4,000

 137

9th Jan 2008

Marks & Spencer 5.625% March 2014

10,000

  95.82

 102

 10,200

 292

10th April 2008

Bradford and Bingley 11.625 PIBS

10,000

 112.00

 10

 1,000

 /

20 Aug 2008

Next 5.25% Sept 2013

5,000

 86.5

 101

 5,050

 0

20 Oct 2008

GE Capital 4.75% 15 Jun 2011

5,000

 88.46

 103

 5,150

 69

18 Feb 2009

Tesco 5.5% Dec 2019

5,000

 103.64

 104.5

 5,225

 219

26 Feb 2009

Roche 5.5% March 2015

10,000

 99.37

 107

 10,700

 316

26 March 2009

John Lewis 6.375 Jan 2012

5,000

 101.76

 106.5

 5,325  212
22 May 2009 UK Gilt War Loan 3.5% undated 7,000  73.6  77  5,390  79
15 June 2009 Anheuser Busch 6.5% June 2017 10,000  99.625  107.5 10,750  176
16 Aug 2009 RBS "Royal Bond 5.3% 2015 50*  £100

 £100.1

 5,005  /
09 Aug 2009  Rabobank 4% Sept 2015 10,000  99.75

 99.70

 9,970  21

        

Category Sum            Notes
Securities

£102,615

Valuation of current holdings
Accrued

£2,050

Interest accrual on above 
Cash

£1,614

Including interest & coupons received. 
     
Total

£106,279

 

 * The Royal Bond is priced per £100 unit. 50 units = £5,000 invested