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  • FIRST POST
    • Mike Smyth
    • By Mike Smyth 21st Oct 19, 5:18 PM
    • 10Posts
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    Mike Smyth
    Fixed bonds.
    • #1
    • 21st Oct 19, 5:18 PM
    Fixed bonds. 21st Oct 19 at 5:18 PM
    Looking around the web interest rates appear to be around 2% and declining.

    I have though noticed Fixed bonds where it appears they guarantee you a rate of 4% and upwards.

    Is there a catch?

    Those I have looked at are FSCS regulated, what am I missing?

    Thank you Mike.
Page 1
    • cloud_dog
    • By cloud_dog 21st Oct 19, 5:33 PM
    • 4,618 Posts
    • 2,893 Thanks
    cloud_dog
    • #2
    • 21st Oct 19, 5:33 PM
    • #2
    • 21st Oct 19, 5:33 PM
    Looking around the web interest rates appear to be around 2% and declining.

    I have though noticed Fixed bonds where it appears they guarantee you a rate of 4% and upwards.

    Is there a catch?

    Those I have looked at are FSCS regulated, what am I missing?

    Thank you Mike.
    Originally posted by Mike Smyth
    Actual, appropriate FSCS regulation.

    FSCS regulation is not black and white, it covers many, many aspects of financial conduct. What you might (will) find if you dig deeper is that the organisation will be regulated for one aspect but it will not safeguard you as a private investor.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • SonOf
    • By SonOf 21st Oct 19, 5:37 PM
    • 1,774 Posts
    • 2,033 Thanks
    SonOf
    • #3
    • 21st Oct 19, 5:37 PM
    • #3
    • 21st Oct 19, 5:37 PM
    Bond is a term that covers a range of different investment types.

    Some fixed-term deposits refer themselves as bonds but so do some risk-based investments. Including unregulated investments.

    Some of those unregulated investments claim they have FSCS protection when they do not. Or they word it to be as vague as possible.

    Maybe tell us what the high rate ones are.
    • eskbanker
    • By eskbanker 21st Oct 19, 5:44 PM
    • 11,667 Posts
    • 14,464 Thanks
    eskbanker
    • #4
    • 21st Oct 19, 5:44 PM
    • #4
    • 21st Oct 19, 5:44 PM
    Those I have looked at are FSCS regulated, what am I missing?
    Originally posted by Mike Smyth
    Actual, appropriate FSCS regulation.

    FSCS regulation is not black and white, it covers many, many aspects of financial conduct. What you might (will) find if you dig deeper is that the organisation will be regulated for one aspect but it will not safeguard you as a private investor.
    Originally posted by cloud_dog
    To be a tad pedantic, nothing is regulated by FSCS - the regulator is the FCA, while FSCS is a compensation scheme offering protection under certain circumstances.

    However, the above point remains, and FCA regulation applies by product range rather than by company. FSCS protection is likewise different between that offered for genuine deposits (e.g. in capital-protected savings accounts) versus the lesser protection for investments, and many carefully-worded sites attempt to blur that distinction.

    OP, probably best to name the company concerned, just to allow confirmation of suspicions....
    • Mike Smyth
    • By Mike Smyth 21st Oct 19, 9:57 PM
    • 10 Posts
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    Mike Smyth
    • #5
    • 21st Oct 19, 9:57 PM
    Thank you!
    • #5
    • 21st Oct 19, 9:57 PM
    Thank you for reply

    International bonds: Tesco, 5% 21nov2020, GBP
    Company name: Quilter cheviot
    Issue information
    Borrower Tesco
    Bond type Coupon bonds
    Placement method Open subscription
    Par amount, integral multiple 100 GBP
    Nominal of international bonds 100 GBP
    Minimum settlement amount 100 GBP
    Outstanding principal amount 100 GBP
    Amount 200,000,000 GBP
    Outstanding face value amount 200,000,000 GBP
    Placement date **/**/****
    Maturity date **/**/****
    Floating rate No
    Coupon Rate *%
    Current coupon rate 5%
    Day count fraction ***
    ACI *** (10/21/2019)
    Coupon frequency 2 time(s) per year
    Interest accrual date **/**/****
    Listing

    That was one of them, 5% with Tesco!

    I cannot put up URL the forum does not allow newbies too!
    Last edited by Mike Smyth; 21-10-2019 at 10:09 PM.
    • Mike Smyth
    • By Mike Smyth 21st Oct 19, 10:02 PM
    • 10 Posts
    • 0 Thanks
    Mike Smyth
    • #6
    • 21st Oct 19, 10:02 PM
    • #6
    • 21st Oct 19, 10:02 PM
    Thank you all for replies, most informative!
    • Davy Jones II
    • By Davy Jones II 21st Oct 19, 11:04 PM
    • 411 Posts
    • 756 Thanks
    Davy Jones II
    • #7
    • 21st Oct 19, 11:04 PM
    • #7
    • 21st Oct 19, 11:04 PM
    What’s the Tesco bond yielding?
    • Thrugelmir
    • By Thrugelmir 21st Oct 19, 11:12 PM
    • 65,412 Posts
    • 57,549 Thanks
    Thrugelmir
    • #8
    • 21st Oct 19, 11:12 PM
    • #8
    • 21st Oct 19, 11:12 PM
    Running yield 4.879%. Mkt price £103.10p per £100 nominal.

    With only 13 months to run. Suspect that the market may well be very thin with little stock available.
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
    • SonOf
    • By SonOf 21st Oct 19, 11:37 PM
    • 1,774 Posts
    • 2,033 Thanks
    SonOf
    • #9
    • 21st Oct 19, 11:37 PM
    • #9
    • 21st Oct 19, 11:37 PM
    Thank you for reply

    International bonds: Tesco, 5% 21nov2020, GBP
    Company name: Quilter cheviot
    Issue information
    Borrower Tesco
    Bond type Coupon bonds
    Placement method Open subscription
    Par amount, integral multiple 100 GBP
    Nominal of international bonds 100 GBP
    Minimum settlement amount 100 GBP
    Outstanding principal amount 100 GBP
    Amount 200,000,000 GBP
    Outstanding face value amount 200,000,000 GBP
    Placement date **/**/****
    Maturity date **/**/****
    Floating rate No
    Coupon Rate *%
    Current coupon rate 5%
    Day count fraction ***
    ACI *** (10/21/2019)
    Coupon frequency 2 time(s) per year
    Interest accrual date **/**/****
    Listing

    That was one of them, 5% with Tesco!

    I cannot put up URL the forum does not allow newbies too!
    Originally posted by Mike Smyth
    That has no FSCS protection. It is not a retail financial product. It is a corporate bond and has 100% loss potential.
    • AnotherJoe
    • By AnotherJoe 22nd Oct 19, 8:13 AM
    • 16,257 Posts
    • 19,498 Thanks
    AnotherJoe
    Running yield 4.879%. Mkt price £103.10p per £100 nominal.

    With only 13 months to run. Suspect that the market may well be very thin with little stock available.
    Originally posted by Thrugelmir

    So, I dont do bonds but, putting it roughly, does that mean you buy it for £103, get 4.9% but when it redeems in a years time you'll get back £100, hence nominally you are really only getting 1.9% and at risk of Tesco not paying it back at all? Perhaps quite a low risk but OTOH look what happened to Tesco a few years ago.
    And, 1.9% is what you could get on a 2 year fixed account with FSCS protection.
    So, if my understanding is correct, turns out its not a free lunch after all.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • bowlhead99
    • By bowlhead99 22nd Oct 19, 9:06 AM
    • 9,502 Posts
    • 17,303 Thanks
    bowlhead99
    So, I dont do bonds but, putting it roughly, does that mean you buy it for £103, get 4.9% but when it redeems in a years time you'll get back £100, hence nominally you are really only getting 1.9% and at risk of Tesco not paying it back at all? Perhaps quite a low risk but OTOH look what happened to Tesco a few years ago.
    Originally posted by AnotherJoe
    Yes, that's basically correct, although I think that particular bond expiring on that date is the one from Tesco Personal Finance which actually has a price of 102.3 and so gross yield to maturity is 2.8%. As an aside 'what happened to Tesco a few years ago' was not an event in which they couldn't repay their short term debt obligations... but I take the point.

    And, 1.9% is what you could get on a 2 year fixed account with FSCS protection.
    So, if my understanding is correct, turns out its not a free lunch after all.
    If you were an institutional investor trying to deploy hundreds of millions, you wouldn't find an £85k FSCS protected bank account to be much use. All these institutions compete with each other to put money into the opportunities available, making the market, but not necessarily getting a very high return for the risk taken - because if people thought the return was too high for the risk, the prices would go up and yields down.

    For an average retail banking customer to look at using those risk opportunities instead of something with a compensation scheme, they should be getting a rate comfortably higher than what the banks offer. But you have to understand what you are getting because with such bonds, the effective yield you get can be a lot lower than the 'headline' 5%, and FSCS does not protect against the kind of risks you're taking. If someone says it is FSCS protected just because you bought it from a stockbroker, it is likely to be a scam.
    • SonOf
    • By SonOf 22nd Oct 19, 11:19 AM
    • 1,774 Posts
    • 2,033 Thanks
    SonOf
    There have been some scams where fake brokers have used the details of real corp bonds/loan notes and made them sound like fixed term deposits and got people to pay the scammer who has then disappeared with the money.
    • Mike Smyth
    • By Mike Smyth 22nd Oct 19, 1:09 PM
    • 10 Posts
    • 0 Thanks
    Mike Smyth
    Thank you all for the replies, after what I have seen/read here I will be looking elsewhere. It will not be the dodgy bank of Nigeria

    Thank You all once again!
    • Mike Smyth
    • By Mike Smyth 22nd Oct 19, 1:27 PM
    • 10 Posts
    • 0 Thanks
    Mike Smyth
    Thank you all for the replies. (Scams) This maybe part of what the gentleman above was talking about!

    As I cannot put in a URL I have copied pasted the article


    "Fraudsters target investors with cloned firms
    Fraudsters target investors with cloned firms
    By Rachel Mortimer



    Fraudsters have been impersonating Quilter Cheviot and St James's Place in an attempt to sell investments to potential victims.

    The Financial Conduct Authority warned fraudsters were attempting to dupe members of the public by operating under the name Quilter Cheviot Investment Management - a trading name of the authorised investment manager Quilter Cheviot Limited.

    In a statement on its website Quilter Cheviot Limited, which has no affiliation with the clone firm, warned it had noticed an increase in people impersonating its employees and urged clients to contact their investment manager if they had been approached by someone unfamiliar claiming to be from the company.

    According to the FCA the clone firm has been using the email address enquiries@quilterinvest.com in a tactic the regulator said was used by fraudsters when cold calling victims.

    A Quilter Cheviot spokesperson said: "We have recently been made aware of a case where an organisation is masquerading as Quilter Cheviot and attempting to sell fraudulent investments to members of the public.

    "This incident has been reported to the FCA who is in the process of taking steps to stop this organisation from operating. Our staff have been informed and we have placed a warning on our website.

    "We urge any customers who have received a suspicious call or email to either contact their investment manager or speak to the regulator."

    Quilter was not the only advice firm to be targeted by fraudsters, with St James's Place also falling victim to an attempted clone.

    A notice on the FCA register warns a clone firm has been operating under the name St Jame's Place in an attempt to convince potential victims they work for the genuine and authorised St. James's Place Wealth Management Plc.

    The regulator said the clone firm, which uses the email info@sjpwim.co.uk, is likely to be part of a scam.

    The FCA said: "It can be easy to fall for an investment scam - the people that run them are skilled at persuading their targets to part with money."

    rachel.mortimer@ft.com

    What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know."
    • Thrugelmir
    • By Thrugelmir 22nd Oct 19, 1:47 PM
    • 65,412 Posts
    • 57,549 Thanks
    Thrugelmir
    Yes, that's basically correct, although I think that particular bond expiring on that date is the one from Tesco Personal Finance which actually has a price of 102.3 and so gross yield to maturity is 2.8%.
    Originally posted by bowlhead99
    Current offer price in the markets to buy (LSE) is £103.10p - bid £101.50p. £102.30p is the notional mid market price.

    Interest is paid bi-annual. So there's £2.50 per £100 of nominal stock held due next month. Added to the £5 due for the following 12 months. That's £7.50 of income. Taking the yield over 4%. (No trading costs factored in).

    Last trade in the stock was July 2019.
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
    • AnotherJoe
    • By AnotherJoe 22nd Oct 19, 10:14 PM
    • 16,257 Posts
    • 19,498 Thanks
    AnotherJoe
    Thank you all for the replies. (Scams) This maybe part of what the gentleman above was talking about!

    As I cannot put in a URL I have copied pasted the article


    "Fraudsters target investors with cloned firms
    Fraudsters target investors with cloned firms
    By Rachel Mortimer



    Fraudsters have been impersonating Quilter Cheviot and St James's Place in an attempt to sell investments to potential victims. Isnt that SJP's modus operandii anyway


    A notice on the FCA register warns a clone firm has been operating under the name St Jame's Place in an attempt to convince potential victims they work for the genuine and authorised St. James's Place Wealth Management Plc.

    The regulator said the clone firm, which uses the email info@sjpwim.co.uk, is likely to be part of a scam.

    As are other email addresses with similar names


    The FCA said: "It can be easy to fall for an investment scam - the people that run them are skilled at persuading their targets to part with money."
    Well, indeed

    Originally posted by Mike Smyth

    sorry, couldnt resist
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
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