Newcastle Building Society PIBS?

poseidon1

PIBS can be a pretty good 'growth' investment if able to purchase under par. 

In my case I bought Kent Reliance 6.591% Pibs in 2010  at a price which netted me a holding of 18,000 shares at a cost of £13,500 to be held in my Sipp. This gave me an intial yield of around 9%, with the interest payments reinvested in a variety of unit trust funds, equity shares and corporate bonds over the ensuing years.

In 2021 the society finally decided to redeem the Pib at par, so I received £18,000. All in all with income received over the 11 years this Pib generated an overall tax free return of £ 11,035 on the capital invested ( interest plus profit on redemption), not including the growth also achieved on the reinvested interest.

In the OP's case, despite the generous level of income currently generated, consideration could be given to selling at some point next year if B of E does commence interest rate cuts as anticipated by the markets. This should ( in theory ), give rise to further increases in the Newcastle pib market value which might be an opportune time to exit.  The danger of continuing to hold this pib, is Newcastle could at any time chose to redeem at par, returning to the OP's mother the £6,000 nominal face value.

wmb194

poseidon1 said:

The danger of continuing to hold this pib, is Newcastle could at any time chose to redeem at par, returning to the OP's mother the £6,000 nominal face value.

From my quick read these ones are perpetuals with no ability to redeem. See the link to the prospectus up thread.

threechoirs

So sorry for the VERY slow reply here - I only just saw I had notifications on this, as had created another thread. 

So what are 'perpetuals'? Do these just go on forever?! 

wmb194

threechoirs said:

So sorry for the VERY slow reply here - I only just saw I had notifications on this, as had created another thread. 

So what are 'perpetuals'? Do these just go on forever?! 

Yup, in theory, although usually at some point an offer is made by the issuer to buy them back at a premium to the market price but you cannot be forced to take it. 

You need to read the prospectus carefully though as there are sometimes clauses that might give rise to redemption in exceptional circumstances e.g., IIRC, Standard Chartered's irredeemable preference shares have a clause about being allowed to redeem them if their status is changed by the regulator in such a way that they no longer count towards loss absorbing capital. I don't remember that these Coventry PIBs have this type of clause but caveat emptor - see link to its prospectus upthread.

Shellbells510

threechoirs said:

Hello all,

I'm trying to sort out my elderly mother's financial affairs - sadly she has dementia. She has '6000 shares in NBS PIBS -  I don't really understand what these are or what they are worth!

This is the first time I've posted so I can't paste a link, but Hargreaves lists these as being sold @ £167 per share with a 'denomination size' of £1000, and an initial investment of £1000.

  I think the share price pertains to units of 100 or 1000 and not per single share obviously (I think we would know if she was a millionaire!  ) - but which is it?!

I know she's had this for a long time but if it's in units of a thousand, it would mean her whole investment is only worth £1,002 - which doesn't seem to quite add up!

Any ideas? Thanks so much. 

Did you get an answer onto value? I'm trying to sort out my dad's affairs and totally confused by these 'shares"

wmb194

Shellbells510 said:

threechoirs said:

Hello all,

I'm trying to sort out my elderly mother's financial affairs - sadly she has dementia. She has '6000 shares in NBS PIBS -  I don't really understand what these are or what they are worth!

This is the first time I've posted so I can't paste a link, but Hargreaves lists these as being sold @ £167 per share with a 'denomination size' of £1000, and an initial investment of £1000.

  I think the share price pertains to units of 100 or 1000 and not per single share obviously (I think we would know if she was a millionaire!  ) - but which is it?!

I know she's had this for a long time but if it's in units of a thousand, it would mean her whole investment is only worth £1,002 - which doesn't seem to quite add up!

Any ideas? Thanks so much. 

Did you get an answer onto value? I'm trying to sort out my dad's affairs and totally confused by these 'shares"

Which ones do you have?