Get a guaranteed 11% for life with Barclays Bank Corporate bond

Aegis

gozomark wrote: »

eeja wrote: »

Barclays in the UK (and now the States having taken over much of Lehman Bros) is surely too big to go bust.

I disagree - Barclays is too big to disappear, yes, but not too big to go bankrupt, and see all shareholders wiped out, incl holders of the bonds mentioned here

will it happen, unlikely, but not 0% chance

Which is presumably why the current trade value is so far below par and with a large buy/sell spread.

GiusCo

Consider that it is still unclear how the Middle East funding progresses (and if it does at all)... if not, a run is not a 0% event and then who knows?

gozomark

a large buy/sell spread is a measure of lack of liquidity, not a measure of probability of going bankrupt

a bond trading below par is not necessarily an indication of going bankrupt, but can also mean interest rates are higher than when bond issues - see the price of UK govt war loans

sabretoothtigger

So why would these bonds be illiquid, if the price has dropped then people are selling?
Do you mean that people arent buying due to lack of funds, that makes them more of a bargain to anyone with the money to risk doesnt it


What is strange is that barclays get 6bn of funding, another 2bn next spring from giving no dividend and yet this bond is seen as more likely to default then a few months ago ?

miserable_ol_so_n_so

sabretoothtigger wrote: »

So why would these bonds be illiquid, if the price has dropped then people are selling?
Do you mean that people arent buying due to lack of funds, that makes them more of a bargain to anyone with the money to risk doesnt it


What is strange is that barclays get 6bn of funding, another 2bn next spring from giving no dividend and yet this bond is seen as more likely to default then a few months ago ?

My question is, can they just stop paying interest on bonds, and continue trading as if nothing had happened?

gozomark

So why would these bonds be illiquid, if the price has dropped then people are selling?

can just mean there were sellers, market makers bougt, and are now trying to find a price to sell them at


can they just stop paying interest on bonds, and continue trading as if nothing had happened?

thats moving into areas of bankruptcy law - can continue trading, but not quite as if nothing has happened

sabretoothtigger

I dont think they can just decide not to pay, its not like a dividend. Its a liability they owe till the bond is bought back, I guess barclays would buy this debt back if it had the money


Their last declared profits were 2.7 bn. I think they will report a profit in the spring also though some must think far worse

Cozworth806

Someone like Next yields 6.3% until 2013 with capital uplift to 100p on redemption making a total of 9.7%, M&S is slightly lower to 2014, BT to 2020 can get 8.5% but watch for inflation if you leave it there for 12 years, unless the price rises and you trade.

http://www.selftrade.co.uk/market-data/gilts-bonds/bonds.php

Am very tempted for my wife when her fixed rates expire.

sabretoothtigger

Strange that bank of scotland looks to be more highly valued. Dont really understand that, they have a bond that will mature in only one month, yield of 6.53%.

Short term bonds of only a year or so are less risky I guess but surely thats the main time of danger now