Yorkshire Building Society Bond

GrooveMelody

I have invested money in a number of global index tracking funds and would now like start investing in bonds. I came across a bond issued by the Yorkshire Building Society. It appears to offer 

Structure:	Fixed Income/Fixed Rate Bond
Coupon (%):	13.5000%
Coupon type:	Fixed Coupon
Coupon frequency:	Bi-annually
Redemption date:	1 April 2025

To me this looks like a pretty good investment? 

So my question is...... What if anything am I missing?

PS
Been a new member I could not post a link to HL where I saw the bond listed

Hoenir

What's the market price of the bond? 

wmb194

GrooveMelody said:

I have invested money in a number of global index tracking funds and would now like start investing in bonds. I came across a bond issued by the Yorkshire Building Society. It appears to offer 

Structure:	Fixed Income/Fixed Rate Bond
Coupon (%):	13.5000%
Coupon type:	Fixed Coupon
Coupon frequency:	Bi-annually
Redemption date:	1 April 2025

To me this looks like a pretty good investment? 

So my question is...... What if anything am I missing?

PS
Been a new member I could not post a link to HL where I saw the bond listed

These are the convertible hybrid capital notes i.e. not conventional bonds. Looks like they trade at c.£150 (par £100). Retail investors have a hard time trading these as the FCA thinks we cannot understand their risks. HL will probably refuse to let you trade them or it'll ask you to take a test.

https://www.hl.co.uk/shares/shares-search-results/y/yorkshire-building-society-13.5-nts-2025

https://www.londonstockexchange.com/market-stock/YBSC/yorkshire-building-society/overview

https://www.ybs.co.uk/documents/100493/1003648/convertible-capital-note-listing.pdf/bd80f88d-500e-4aa8-21e9-294fd304f467?t=1655147380297&download=true

Eyeful

You are a newbie and have asked "what am I missing?"
I have no idea of your knowledge so make these points which you may or may not know.

1. SAVINGS: Money is in a safe place & not at risk. You expect to at least take out what you put in.

2. INVESTING: Putting your money at risk where there is the potential loss of all your money.
    You hope to take out more than you put in, but this is not guaranteed.

3. Money need within 5 years should be kept in a savings account.

4. Low Risk SAVINGS Bonds: These are regulated & you only get them from
(a) NS&I (a loan to the UK government)
(b) Bank/Building Society covered by the FSCS protection (at present up to £85K).

5. OTHER BONDS: are unregulated investments, where there is the potential loss of all your money.
  They are INVESTMENTS (not savings). So your money is at risk & the price will go up & down.

You are asking about an investment bond from YBS.

Holding an investment bond from only ONE company is a much higher risk than holding a bond fund.

If you do want to branch out into investment bond then do so through "bond funds"

Bond Scams:- Occur in unregulated investments.

poseidon1

wmb194 said:

GrooveMelody said:

I have invested money in a number of global index tracking funds and would now like start investing in bonds. I came across a bond issued by the Yorkshire Building Society. It appears to offer 

Structure:	Fixed Income/Fixed Rate Bond
Coupon (%):	13.5000%
Coupon type:	Fixed Coupon
Coupon frequency:	Bi-annually
Redemption date:	1 April 2025

To me this looks like a pretty good investment? 

So my question is...... What if anything am I missing?

PS
Been a new member I could not post a link to HL where I saw the bond listed

These are the convertible hybrid capital notes i.e. not conventional bonds. Looks like they trade at c.£150 (par £100). Retail investors have a hard time trading these as the FCA thinks we cannot understand their risks. HL will probably refuse to let you trade them or it'll ask you to take a test.

https://www.hl.co.uk/shares/shares-search-results/y/yorkshire-building-society-13.5-nts-2025

https://www.londonstockexchange.com/market-stock/YBSC/yorkshire-building-society/overview

https://www.ybs.co.uk/documents/100493/1003648/convertible-capital-note-listing.pdf/bd80f88d-500e-4aa8-21e9-294fd304f467?t=1655147380297&download=true

I concur with wmb194, this is a sophiscated and rarefied stock market entity which bears no resemblance at all to fixed interest building society accounts which most savers are familiar with.

However, any discussion about this entity maybe wholly academic, since there is no evidence of any active trading of this bond on the LSE for a number of years now.  The fact that OP missed this strongly suggests he should not be dabbling in Cocos, Pibs, Convertible loans or any of the host of sophisticated Fixed interest corporate securities traded on the LSE until he has educated himself in this area.

As wmb194 pointed out, there will be a HL sophiscated investor test to overcome 1st, and then some of these estoric securities have minimum dealing sizes of £30k + to reflect their suitability for the more professional or institutional investor.

DrSyn

This is not a YBS savings bond but a YBS investment bond.
With an investment bond your money is at risk, the price of it will go up & down.
Do not think you will get the coupon yield of 13.5% if you buy this now.
The yield you get will be determined by the price you pay to get the bond. 
As I write this the running yield is 9%.
If you are going into investment bonds, suggest you do so using bond funds.
Before you buy bond funds do some research into them.
The following might be of help & interest to you:
https://www.youtube.com/watch?v=DiEiQhHYzI8&t=79s

poseidon1

DrSyn said:

This is not a YBS savings bond but a YBS investment bond.
With an investment bond your money is at risk, the price of it will go up & down.
Do not think you will get the coupon yield of 13.5% if you buy this now.
The yield you get will be determined by the price you pay to get the bond. 
As I write this the running yield is 9%.
If you are going into investment bonds, suggest you do so using bond funds.
Before you buy bond funds do some research into them.
The following might be of help & interest to you:
https://www.youtube.com/watch?v=DiEiQhHYzI8&t=79s

A bit confusing calling it an investment bond.

This is the generic name for insurance company single premium life assurance products which are specifically targeted at retail investors. Investment bonds ( from insurance companies ) can invest in a mix of equities, government gilts, commercial property, corporate bonds, etc.

The OP is already somewhat misadvised in looking at the YBS convertible hybrid capital note ( as identified by wmb194) , but no problem in him looking at life company investment bonds if the peculiar tax structure  of those products and ability to be used in iht mitigation,  appeal. 

DrSyn

poseidon1
                  If I understand your post correctly, you do not think this is a YBS investment bond issued by YBS.
You believe that it is an insurance company single premium life assurance product which is targeted at the retail market.

Then please answer the following questions.
 Which Insurance company is selling this particular bond on the open market?
Why did the person who bought the product, not surrender it back to the insurance company that sold them this product to begin with? 

To me if it is not a safe Low Risk Bond, then it is an Investment Bond (& risk is involved).

 I think that my explanation is clear to a newbie & not the least bit confusing.

poseidon1

DrSyn said:

poseidon1
                  If I understand your post correctly, you do not think this is a YBS investment bond issued by YBS.
You believe that it is an insurance company single premium life assurance product which is targeted at the retail market.

Then please answer the following questions.
 Which Insurance company is selling this particular bond on the open market?
Why did the person who bought the product, not surrender it back to the insurance company that sold them this product to begin with? 

To me if it is not a safe Low Risk Bond, then it is an Investment Bond (& risk is involved).

 I think that my explanation is clear to a newbie & not the least bit confusing.

Please note, wmb194 ( above ) explained precisely what the YBS stockmarket security is.

I was merely pointing out to you that term ' Investment Bond ' specifically applies to life assurance products (Google it ), which the YBS security is not. The term is widely used by IFAs and FAs.

As I said in my comment to wmb194's post, the YBS security if it were available to purchase ( which it is not ), is wholly unsuitable for the OP to purchase given its very complex structure, and  what it was designed to do as part of YBS debt structuring.

So yes, it's purchase price did oscillate, and to that extent we are in agreement as to its unsuitability.

GrooveMelody

Hi All,

Thanks so much for all the advice, comments and help.


The fact that OP missed this strongly suggests he should not be dabbling in Cocos, Pibs, Convertible loans or any of the host of sophisticated Fixed interest corporate securities traded on the LSE until he has educated himself in this area


As I don't fully understand this 'Financial instrument' I am going to give it a miss. 

Once again thanks for your help.

Steve