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Model Portfolio: 8 April 2010

Model portfolio continues to tick up on higher mark-to-market and income roll-up............

    

No changes in the Model Portfolio’s holding this month, but the continuing demand for corporate bonds has seen the value of the portfolio tick up, even though the underlying trend for gilts has been negative.

A helpful boost to the bottom line has been provided by the bombed-out position in our Bradford & Bingley PIBS. Whilst this security has had its coupon payment frozen, speculators are betting on at least a partial return of the cash (at some distant point in the future) and are picking up stock in the market, nearly doubling the price from last month in the process. We will continue to hold.

We also note that the recently purchased holding in the GKN 6.75% 2019 is performing strongly. We bought this bond hoping to see an upgrade from its current sub-investment grade status over the next year. For the moment, the rating is stable at BB+ ( Fitch) but we note that credit outlook has been moved from "negative" to "stable". It looks like things are going our way and the bond remains a buy.

We still have cash to play with. We also have £10,000 redemption in the late summer from our Merrill Lynch holding, thus as is often the case with for 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

 91

7 Mar 2007

Segro 5.5% 20 June 2018

5,000

  97.35

 101

 5,050

 223

18 April 2007

Merrill Lynch 5.125% 24 Sept 2010

10,000

  97.66

 101

 10,100

 282

9th Jan 2008

Marks & Spencer 5.625% March 2014

10,000

  95.82

 104.75

 10,475

 30

10th April 2008

Bradford and Bingley 11.625 PIBS

10,000

 112.00

 19

 1,900

 /

20 Aug 2008

Next 5.25% Sept 2013

5,000

 86.5

 105

 5,250

 140

18 Feb 2009

Tesco 5.5% Dec 2019

5,000

 103.64

 105

 5,250

 91

26 Feb 2009

Roche 5.5% March 2015

10,000

 99.37

 107

 10,700

 60

26 March 2009

John Lewis 6.375 Jan 2012

5,000

 101.76

 106

 5,300  64
22 May 2009 UK Gilt War Loan 3.5% undated 7,000  73.6  70  4,900  86
09 Aug 2009 Rabobank 4% Sept 2015 10,000  99.75  102  10,200  235
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  100  10,000  309

 

Category Sum            Notes
Securities

£99,835

Valuation of current holdings
Accrued

£1,611

Interest accrual on above 
Cash

£10,217

Including interest & coupons received. 
     
Total

£111,663