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Hi Nobull, yeah it's more often called Yield To Maturity, but yes I think you could call it redemtion yield:
coupon, running yield and yield to maturity are the most commom terms.
You are right it's around 75% of par, there's isn't a market in them as such, but my last purchase was round that. I don't expect to use the warrants any time soon, but I'm sure we all live in hope LOL
You are correct again, there hasn't been any on WiseAlpha for ages. No one wants to sell, you might find some available elsewhere, but it might come along with trade size of c£100k. But, I doubt it.
I've been increasing my holdings of short dated and high debt/BBB on a selective basis. In addition to adding to discounted IT's in selective areas. I appreciate their diversified holding at times like these.
The debt for equity swap probably make it less likely any preference div will be covered by profits attributable to the controlling shareholders, all other things being equal, which they never are. Fingers crossed for CPO to storm ahead: it is our only hope.
Devonplay, many thanks for all that helpful information. I think that yield to maturity is just another name for redemption yield. I couldn't find a clean price for GB00B8MM32, but your current (flat?) yield implies a price of about £75 per £100 nominal. Anyway, assuming clean price tomorrow of £74.82p, I make tomorrow's YTM or redemption yield 17.8%. I have assumed two interest payments per year, except in the final year when there will be three different payments: 30 06 25 (regular 6 months' interest payment), 31 08 25 (2 months' interest), 31 08 25 (payment of £104 per £100 nominal). Anyone buying the bond tomorrow wouldn't get the free warrants, so I didn't include any value for them even though they must have some value even though they are far out of the money (they have time value?). Sorry, I didn't use your bond calculator: I wanted to do it the hard way in Excel and see the present value of each of the 13 payments on the bond and just type in different redemption yields until the sum of the present values came to £74.82p. It is probably impossible to buy any your bond at £74.82p tomorrow, as anybody holding it will probably want to keep it until redemption, and why wouldn't they with 17.8%!
I get it now what our directors are up to: for a given palm oil price and cpo production volume, the EBITDA stays the same (EBITDA doesn't care who supplies the equity to generate the earnings, whether it comes from controlling shareholder or non-controlling shareholder) while the finance charges fall due to the lower amount of debt due to DSN exchanging its debt for equity, which is good for you (better interest cover?), good for Bank Mandiri, but bad for me except I should be grateful for the debt for equity swap if the alternative was going bust. Sorry I have been a bit slow on the significance of Friday's results. All the best.
I should say of course I've got a higher YTM as I bought them at a lower price, the present YTM is just below 16%
I've just checked the current yield it's 11.7%
And they appear to be trading at 75% of the issue price (par) that's 75 per 100 quid issued.
ISIN GB00BYY8MM32 unsecured, but I seem to remember there are parent guarantees, those are of course not worth anything if the company get's into the mire in any practical sense, but we are more senior than shareholders in the cap. table.
The bonds are unrated with any credit agency, but I seem to remember https://www.guybutler.co.uk/ Guy Butler has a desk note on them.
How does this yield to maturity calculator work?
Annual coupon/ interest payment (ACP) in absolute value (NOT as a rate).
Bond’s face value (BFV) which is the nominal value.
Bond's current clean price (CCP).
Years to maturity (N).
Yield To Maturity (YTM) = (ACP + (BFV - CCP) / N) / ((BFV + CCP) / 2)
You want the current yield? 11% ( or there abouts) YTM is 17%. The revised coupon, with the extended maturity, is 8.75%
So you can see they are trading at a discount to issue price, the YTM takes into consideration the current yield and the capital gain you get at maturity/redemption. In this case, REA also offered bond holders warrants at a fixed price over the next 5 years to buy ord. shares. and a small payment for revising the terms of the prospectus.
On a broad basis my high yield junk portfolio has a running yield 20% and a YTM of over 60%....if everything goes me way LOL .... and it wont. Over the last 9 months I've still had most of them pay me, one default so far, I should be getting a payment from Intu over the weekend! but some of them have suffered very steep capital declines, but the portfolio overall, income re-invested, hasn't lost any capital. Most have appreciated in value. I've just taken bets on some very obvious distressed companies and that's skewed performance. But I've attempted to do that with a view to replacing very high risk bets from the portfolio's cash flow very quickly. That's not a very common strategy.
How to calculate YTM can be done using online calcualtors https://www.thecalculator.co/finance/Yield-to-Maturity-Calculator-496.html
And if you want to know more about retail bonds you can find info here:
https://www.fixedincomeinvestor.co.uk/x/analysis.html
And institutional bonds here:
https://learn.wisealpha.com/ they are offer a free accredited coarse.
And this is a good source for all things fixed interest https://www.bondvigilantes.com/ - it's from M&G.
I hold my REA bonds via WiseAlpha, buying them via a broker might require you to talk in very large sums indeed. That goes for most bonds not available from your execution only broker and on ORB or available from WiseAlpha.
I combine a mix of direct, charity, LSE ORB, WiseAlpha, IT's and funds in this part of my portfolio.
Hope that helps.
If 17% yield to maturity is the redemption yield, then that's better than investing in a basket of US big cap growth stocks e.g. Microsoft, Amazon, Facebook, Alphabet, etc. The Threadneedle American Select Growth fund that invests in these stocks recently had a 10 year annualised return of about 14%, I believe. There has to be some catch: ytm perhaps is not the same as the annualised figure required to discount all the cash flows on the bond you have to the current price of it.
Hi John, I'm content as long as they can keep paying the coupon on the debt and reduce the debt pile.
I'm not so sure about the equity performance or the pref. stock. At the end of the day "notes" are gurantee and there's the asset of land that offer some security. It's not a perfect solution, but with an 11% yield, 17% yield to maturity it's worth a punt.
I'd prefer they'd keep paying us, obviously, and reducig debt before they pay the preference holders, but when they do it would be shot in the arm for all of us - as long as they've got the cash. Unitil then, happy to sit back and keep taking any cash that comes my way until 2025.
Hi devonplay, good idea to add to your pref holdings the outlook is improving and the virus might have run its course by Q3 2021. As long as cpo hangs around $750- $800 year ends will look much better.