6% Sainsbury's bank Fixed Rate bond Atlantic Capital Management

Reddogwoman

I'm thinking of investing in this bond through Atlantic Capital Management but have never used this kind of investment before. They tell me it's 100% safe, but they would say that wouldn't they? I checked them out on companies house and they appear legit, but this is a whole new thing for me. I'm trying to find a suitable investment for my Dad to put a £20,000 sum which is currently in an ISA and due to mature in the next couple of months. Has anyone had experience of this company or this bond? They say there are no management fees and just a £12 early withdrawal fee subject to 30 days notice. Seems a bit too good to be true so a little concerned about investing but it also seems like a good way to invest money he's happy to put away for 1-2 years. I'd be really grateful for any comments/ advice please. Thanks

Reddogwoman

The ISIN  is    ISIN: XS1721760624

Swipe

I think you mean 0.6%

colsten

Reddogwoman said:

 They tell me it's 100% safe, but they would say that wouldn't they? 

What is their definition of "safe", and what guarantees will they give you in writing?

How did you come to hear about this bond? What is your connection with Atlantic Capital Management? Why do you think they would offer something to you free of charge? Why would you invest through a US-based wealth management firm, or through a dormant UK firm that used to be called ATLANTIC FILM MANAGEMENT LIMITED, whose only Director is a 66 year-old who has a lot of interests in some other film management companies?

wiseonesomeofthetime

Swipe said:

I think you mean 0.6%

Yep, it is definitely 0.6% for the two-year Fixed Rate Saver

https://www.sainsburysbank.co.uk/savings/frsa/sav_frsa_sb_skip

No mention of Atlantic Capital Management within that information though.

Albermarle

You can get an  interest rate of 1.5% with a 3 year fixed rate savings account covered by FSCS compensation of £85K, which is 100% safe up to this amount.
Alternatively you can invest in shares and bonds , through a recognised broker/investment platform ,  with a hope of earning more than 1.5% , but with a possibility of losing money.

However somehow this company can magically offer you 6% and guarantee it  is 100% safe.
In fact the most likely outcome is that the company will disappear off the face of the earth in a few weeks time , taking your Dad's £20K with them . AVOID !

Malthusian

It's a scam and has nothing to do with either the company you looked up on Companies House or the ISIN code.

Don't use Google or social media to look for investments.

Change your phone number as you are now on a suckers list.

bowlhead99

Reddogwoman said:

I'm thinking of investing in this bond through Atlantic Capital Management but have never used this kind of investment before. They tell me it's 100% safe, but they would say that wouldn't they? I checked them out on companies house and they appear legit, but this is a whole new thing for me. I'm trying to find a suitable investment for my Dad to put a £20,000 sum which is currently in an ISA and due to mature in the next couple of months. Has anyone had experience of this company or this bond? They say there are no management fees and just a £12 early withdrawal fee subject to 30 days notice. Seems a bit too good to be true so a little concerned about investing but it also seems like a good way to invest money he's happy to put away for 1-2 years. I'd be really grateful for any comments/ advice please. Thanks

Atlantic Capital Management' are scamming you if they say they can get you a bond that pays you 6%.  XS1721760624 is a subordinated loan note (SEDOL: BDFD5G5) that was issued by Sainsbury three years ago as part of a £175m fundraising with a ten year maturity ending in November 2027.  Such bonds pay 6% of their face value a year (unless Sainsbury gets into financial difficulties, as the bond is subordinated to other creditors and other types of bondholders and they would have to pay those other people before paying you the money). If someone says it's 'safe', they are lying. It's not guaranteed like a deposit in a bank covered by the financial services compensation scheme. It's simply a loan to a big company that you hope will be repaid. 

However, the key thing is that you can't really get them for their face value and get 6% of what you pay, because you would need to pay a fair market price for the risk you are taking. Interest rates  in financial markets are very low at the moment and which means that unless Sainsbury are expected to go bust or reset the interest rate lower, you will pay more than £100 to buy the bond and your effective interest rate will be less than the 6%.

For example - if you paid £140 to buy a £100 bond, and received £6 for each of the next seven years and then it matured and paid you £100, that is only £2 of profit overall, even though you have received £42 of 'interest income' along the way. The interest rate is only high if you are taking a large risk. If Sainsbury are not considered to be high risk as borrowers than the market price will be high and your effective return is really low. Whereas if they *are* considered to be high risk, then the bond will be cheap and the potential returns high, but the potential risk of loss is also high.  There is no such thing as a free lunch and you're right to think it's too good to be true.

Either:
- the company is deliberately misleading you because they think your dad will be naive enough to pay them a commission to buy the bond at market price and not realise until it's too late that the £20,000 paid didn't buy anything like as much as £20,000 of face value of bonds and you've paid a high price for a low-returning, risky investment... or

- the company is deliberately misleading you because they think your dad will be naive enough to give them the money to buy the bond, and then they will simply run off with the money and not buy him the bond at all. 

Either could be a possibility. The fact that they have given you an ISIN that you could search for on google, and find out that Sainsbury does have a 6% bond maturing in 2027, and therefore think it might be legitimate, is all part of the 'trick'.

aroominyork

However, it does look like the bond is selling around par (100.31 when I posted this) https://markets.businessinsider.com/bonds/sainsburys_bank_plcls-flr_nts_201722-27-bond-2027-xs1721760624

dunstonh

 They tell me it's 100% safe

It will either be one of two things:

1 - They will place your money in the real corporate bond but that has no capital protection and your money is at risk of 100% loss.  They will make charges to do this.  If you are cold called on this then they are acting unlawfully.

2 - They are using a real corporate bond information to scam you into thinking you are paying into a savings account.  Once you pay them the money you will never see it again.  The money wont go into the bond and as its unregulated, you get no consumer protection.

 I checked them out on companies house and they appear legit

A listing on companies house does not imply any legitimacy.  Anyone can set a company up on companies house.

I'm trying to find a suitable investment for my Dad to put a £20,000 sum which is currently in an ISA and due to mature in the next couple of months.

Bloody hell.   You are close to losing your Dad his £20,000.

Stop what you are doing.  You are out of your depth and you are being targetted by scammers.

doe808

Can only repeat the above:

Change your phone number as you are now on a suckers list.