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Model Portfolio: 9 March 2010
A few changes in the portfolio, but we remain underinvested and on the hunt for new holdings........... 
    

February has seen mixed action in the bond markets. Again, the interest rate risk element has proved volatile and negative in terms of price action, notably in the longer end. Credit-wise, the general trend for corporate bonds remains one of tightening. Credits continue to pull in against the benchmark gilts. Demand remains strong for bonds with familiar names against a background of limited issuance, and this is particularly true in the sterling bond market which is limited in size and suffering from a dearth of retail-sized issues.

 We have made a couple of changes in the MP, as follows:

  • Taken a profit in the Anheuser Busch 6.5% 2017 bond, trousering over 10 points in profit. This is as good example of how new issues can offer value.
  • "Topped up" our holding in the RB53 Royal Bond - still good value with a YTM slightly north of 5%.  
  • Bought a new holding in the GKN 6.75% 2019. This bond, which offered us a 7% YTM on purchase is currently sub-investment grade, but we are hoping for an upgrade in due course.

The changes still leave us with more cash to play with. We also have 10,000 redemption in the late summer from our Merrill Lynch holding, thus like most bond investors, we will be better buyers than sellers over the next few months.

Date of Purchase

Issue

Nominal

Purchase Price

Current Price

Value  

Accrued

30 Jan 2007

Kingfisher 5.625% 15 Dec 2014

10,000

  95.24

 105

 10,500

 134

7 Mar 2007

Segro 5.5% 20 June 2018

5,000

  97.35

 100

 4,867.5

 199

18 April 2007

Merrill Lynch 5.125% 24 Sept 2010

10,000

  97.66

 101

 10,100

 237

9th Jan 2008

Marks & Spencer 5.625% March 2014

10,000

  95.82

 104.75

 10,475

 544

10th April 2008

Bradford and Bingley 11.625 PIBS

10,000

 112.00

 12

 1,200

 /

20 Aug 2008

Next 5.25% Sept 2013

5,000

 86.5

 105

 5,250

 117

18 Feb 2009

Tesco 5.5% Dec 2019

5,000

 103.64

 104.3

 5,215

 67

26 Feb 2009

Roche 5.5% March 2015

10,000

 99.37

 107

 10,700

 12

26 March 2009

John Lewis 6.375 Jan 2012

5,000

 101.76

 106.5

 5,325  37
22 May 2009 UK Gilt War Loan 3.5% undated 7,000  73.6  70  4,900  66
09 Aug 2009 Rabobank 4% Sept 2015 10,000  99.75  102  10,200  200
16 Aug 2009 RBS "Royal Bond 5.3% 2015 100  100

 102.6

 10,260    /
04 Feb 2010 GKN 6.75% 2019 10,000  97.56  98  9,800  251

 

Category Sum            Notes
Securities

98,793

Valuation of current holdings
Accrued

1,864

Interest accrual on above 
Cash

9,100

Including interest & coupons received. 
     
Total

109,757