Nuffield 6% Bond

annie42

Although there is no safety net ie the FSA this five year bond seems a good idea. Surely the risk of The Nuffield going into administration must be very remote? Am very tempted as, even paying tax on the income, the return is better than a cash isa and in five years time when it matures interest rates might be on the rise again and I can invest in an isa then. Be interested to know what others think.

grey_gym_sock

i can't say i've looked at nuffield's finances, but you ought to do that, rather than rely on their being a sound organization in respects other than financially.

this bond can't be put in an S&S ISA. it won't be tradeable i.e. the only option will be to hold it until the end. (not that planning to hold a bond is necessarily a bad idea, but it can be nice to have choices.)

there have been a few retail bonds issued in the last year or so paying around 6%, and which have been tradeable and ISA-able. some issued by property companies, which to my mind can give better security.

i'd rather wait for something more like that. a similar return, but more secure. (though i probably won't go in for that either.)

or buy a high-yield bond fund, which might yield a bit less, but would spread the risk across a lot more borrowers. also ISA-able.

Jegersmart

SJP International Corporate Bond

derrick

annie42 wrote: »

Although there is no safety net ie the FSA this five year bond seems a good idea. Surely the risk of The Nuffield going into administration must be very remote? Am very tempted as, even paying tax on the income, the return is better than a cash isa and in five years time when it matures interest rates might be on the rise again and I can invest in an isa then. Be interested to know what others think.

Am I correct in assuming this bond @ 6% only means an annual rate of 1.2%over the 5 years?

If so it is very dismal in this market to tie up for 5 years as better rates are available on fixed rate bonds with the FSA safety net.

.

jimjames

It is 6% per year not for the term. Some comments on the bond here:

http://www.guardian.co.uk/money/2013/may/18/nuffield-bond-launches-health

A few quotes from that article:

He describes Nuffield's balance sheet as "not the best in the world", and says that although it had a turnover last year of £645m and fixed assets of £523m, it only managed to achieve a pre-tax profit of £4m.

They should also consider whether they want to tie their money up for five years at that yield."

The price of one Co-op bond fell from around 150p to 90p, leaving holders with losses of around 40% of their capital.

You are taking a lot of risk with a bond; often you are buying into a business you don't know, and where you have no idea where you stand if it goes bust. There's no safety net, and when one of these bonds goes bust, it will reflect badly on the entire financial services industry

Porcupine

Just like to point out the previous darling of certain small cap funds, top of the industry, good growth prospects, etc etc.
Southern Cross.
Nuff said.