8% Fixed rate bond from Skippy ?

steady__eddie

Had a cold call from Skipton this afternoon enquiring if a recent transaction that I had made had gone smoothly. After the initial banter, they enquired if I might be interested in another a/c. which has been/is about to be launched.
The basic details are as follows, M.O.B. £7200, Fixed rate 8% gross, Term 5 and a half years. Interest will be paid on a yearly basis and cannot be compounded. It is NOT tied to another product i.e. you have got to "invest" an equivalent amount in a Norwich Union Bond or something similar. I believe that they mentioned that monthly income was an option but I have just finished my daily toil and some of the finer points have disappeared as a few of my grey cells have succumbed to rigor-mortis. It is anticipated that this offer will remain open until June unless that old favourite "unprecedented demand" occurs.
The outcome is that a chat with a financial adviser is required, which I have agreed to next week but being a naturally defensive person I am thinking to myself, they are not going to offer a decent rate (now) for that period of time unless they think that it will be a mickey mouse rate in a few years time are they ?
Any comments from anyone with fully functioning crystal balls would as always, be appreciated.

Mikeyorks

Can't quite grasp the 'M.O.B' at this time of night ..... but the £7200 is too adjacent to the annual ISA max to be co-incidental?

ManAtHome

Yes, does sound like one of the dreadful "income equity bonds" where you get 8% pa but could end up getting a couple of grand back of the original £7.2k after 5 years.

I can only come up with Maximum Original Balance and Mugged Or B*ggered...

nicko33

Minimum Opening Balance seems most likely...

ManAtHome

Dunno - very few accounts have a minimum equal to the maximum S&S ISA contribs (and most funds have a minimum of £1k), suppose everything will become clear over the next week or two...

steady__eddie

nicko33 was the winner, min'm opening balance, sorry about that, I have been reading too many posts over on the Money Bag.
I queried this amount with them as besides being the number of seconds in 2 hours, the only other thing that it flagged up with me was the combined yearly ISA allowance. I was told that it was in no way connected with this, with hindsight I realise that I should have enquired what the max'm was but Monday was taking its toil on me at the time.
I'm due for a chat p.m. on Tuesday, so if no one else has found anything else relevant by then, I'll hopefully reveal more.

Mikeyorks

They do have a lot (strange - never seen them advertised!) of GEB / 'kick out' products ... which a lot of people would tend to take as ISAs (despite you should be able to take them under your annual CGT allowance). Hence I still feel the £7.2k has some relevance to that. sure it's not 'maximum opening balance'?

Update after the chat?

steady__eddie

ManAtHome sussed it out correctly as being, "one of the dreadful "income equity bonds" where you get 8% pa but could end up getting a couple of grand back of the original £7.2k after 5 years."
The Whole of Market Adviser gave the following details, min'm opening balance £7200, fixed int. rate 8% gross, (monthly option), issued by NDF ?. Now the downside, launching in mid June, (15th I think but it was rather warm yesterday and as soon as I was informed of the exact nature of the product my enthusiasm had already heading south) Footsie level at launch is the benchmark. If the Footsie level drops below 50% of the benchmark during the following 5 and a half years, then to guarantee the full return of capital it must be above the benchmark at maturity. Should this latter condition not be met, then the initial sum will not be repaid. I did not enquire as to what the "penalty" was has I had already deffed the product off at this stage.
If the Footsie level is below the benchmark at maturity, then provided that it has not gone below 50% of the benchmark during the life of the bond, then a full return of capital will be made.
I apologise if I raised anyones hopes. I understand that there are some decentish G.E.B.s around now and again and I have seen this issuer linked with these but my knowledge of this market is severely restricted so I consider myself unqualified to make a judgement.