You have just left the Barclays Stockbrokers environment.
Do not give out your Barclays Stockbrokers login and password.

Cookies
Barclays uses cookies on this website. They help us to know a little bit about you and how you use our website, which improves the browsing experience and marketing - both for you and for others. They are stored locally on your computer or mobile device. To accept cookies, continue to use the website. Alternatively, go to the cookies policy for more information on how to disable cookies.

Acknowledge and close this message.

Analysis & Comment:  

print:
    

We have been keeping ourselves busy with the www.fixedincomeinvestor.co.uk model portfolio. A couple of new issues have caught our eye and we have added a new holding in the high-yield Yorkshire Building Society "CoCo" bond, which is now ticking over at around 11%.

September sees the redemption of our Merrill Lynch 5.125% Sept 2010 (now a BankAmerica bond). So what? Some may say. However, bear in mind that just two years ago it was widely believed that the whole financial sector was going to the wall and the bond was trading at distressed levels. The moral behind this story is that most bonds do actually get redeemed, and one should not panic or over-react when bad news impacts the price.

Valuation-wise the average price of our holding is down by about 1%. This is in line with the pullback seen in the gilt market. Action for individual holdings varies, with GKN sharply lower on rumours of a takeover but some of our recent additions a few points higher. Meanwhile accrued and coupons paid have helped tick up the bottom line, and thatís the beauty of total-return investing in the bond market! 

Going forward, we face a scenario of ongoing low headline yields. With this in mind we have to avoid the temptation of drifting too far down the credit curve in order to pick up yield. I also note that the portfolio has become slightly overweight the Lloyds and RBS/Natwest credits and I will look to reduce our exposure here. The £10,000 nominal of the Lloyds five-year issue we hold is at a premium and is the obvious candidate for the chop. Howevere, this is not a priority and I may wait until I see a suitable replacment.    

   

Date of Purchase

Issue

Nominal

Purchase Price

Current Price

Value  

Accrued

30 Jan 2007

Kingfisher 5.625% 15 Dec 2014

10,000

  95.24

 108

 10,800

 446

7 Mar 2007

Segro 5.5% 20 June 2018

5,000

  97.35

 104.5

 5,225

 77

9th Jan 2008

Marks & Spencer 5.625% March 2014

10,000

  95.82

 106.5

 10,650

 294

10th April 2008

Bradford and Bingley 11.625 PIBS

10,000

 112.00

 35

 3,500

 /

20 Aug 2008

Next 5.25% Sept 2013

5,000

 86.5

 106.2

 5,310

 261

09 Aug 2009 Rabobank 4% Sept 2015 10,000  99.75  105.8  10,580  23
16 Aug 2009 RBS "Royal Bond 5.3% 2015 100  £100

 103

 10,300  /
04 Feb 2010 GKN 6.75% 2019 10,000  97.56  101  10,100  624
06 May 2010 Goldman Sachs 5.5% Oct 2021 6,000  87.5  95  5,700  320
20 May 2010 Nat West 9% prefs (undated) 5,000  1.03  1.14  5,700  /
21 June 2010 Lloyds 5.375 Sept 2015 10,000 100.9  105.2  10,520  35
28 July 2010 RBS Royal Bond  5.1% 2020 5,000  96.03  99  4,950 169
16 Aug 2010 Enterprise Inns 6.5% Dec 2018 6,000  83.5  84.5  5,070  124
16 Sept 2010 Lloyds 6.5% Sept 2040 5,000  98.41  99.85  4,992  24
20 Sept 2010 Yorkshire Building Society 13.5% 2025 CoCo 5,000  116  116  5,800  331

Category Sum            Notes
Securities

£109,197

Valuation of current holdings
Accrued

£2,728

Interest accrual on above 
Cash

£7,809

Including interest & coupons received. 
     
Total

£119,734