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Santander for Aviva refugees

Gilts, bonds, and interest-bearing shares
Swanmore22
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Re: Santander for Aviva refugees

#283740

Postby Swanmore22 » February 12th, 2020, 9:17 am

Tks Paul,


Have been quiet in sub since the Aviva debacle, but still pick up the odd alert and MBS is one.

I have not had much time to go digging and wanted to keep investment close to home..no Argentine or Turkey .

I did find a collective which has performed quite well .. Invesco AT1 ETF , US listed, as an alternative to buying single name AT 1"s.

And i was looking at HSBC $ prefs last week but am yet to pull the trigger.

Will take a look over the MBS pibs..a decent parking space for non essential cash for a few years.

Regards,

Swan

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Re: Santander for Aviva refugees

#288682

Postby GoSeigen » March 5th, 2020, 12:22 pm

Any thoughts on MBS results?

As expected there is a small reported profit, also slight improvement in regulatory position but otherwise nothing remarkable as far as I can see.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/MBSR/14448583.html

GS

hiriskpaul
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Re: Santander for Aviva refugees

#289444

Postby hiriskpaul » March 9th, 2020, 4:55 pm

Agreed, nothing remarkable here. A little disappointed to see the increase in provisions.

One other thing to keep an eye on are the LTVs. Overall LTV is good at 46%, up from 45% last year, but LTV on the Spanish portfolio is now 104%.

Lifetime mortgages up to 21.4% of the portfolio as well, from 20.1% in 2018. Maybe C19 will help reduce that figure this year ;)

bruncher
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Re: Santander for Aviva refugees

#291553

Postby bruncher » March 17th, 2020, 11:08 am

GoSeigen wrote:Great investment idea here for stung Aviva investors: Santander CoCos. Santander today failed to call their CoCos as expected -- the opposite to what Aviva did thereby elevating them to darling status for hurting pref investors.

Santander's failure to call turns these from short-dated bonds into quasi-perpetuals.

You can safely invest your money here and have a very good chance of not seeing your capital again -- a perfect substitute for those pesky irredeemable shares.

https://www.bloomberg.com/news/articles ... -investors


;-)

GS


Perhaps the Aviva "refugees" will soon return to the homeland, as it appears the prefs may soon be available at par.

Swanmore22
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Re: Santander for Aviva refugees

#291629

Postby Swanmore22 » March 17th, 2020, 1:58 pm

AV.A is now 120 offerred.
Am tempted to have a nibble ..
Any thoughts ?

Swan

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Re: Santander for Aviva refugees

#291679

Postby 88V8 » March 17th, 2020, 4:23 pm

Swanmore22 wrote:AV.A is now 120 offered.


I have 123 to buy.
LLPC at 122.
So much finance debt so cheap.
Given the current levels of panic, probably cheaper tomorrow.

Quite a contrast with the BP.A (8%) at 144 and BP.B (9%) at 164. But then, BP is not in existential danger.

V8

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Re: Santander for Aviva refugees

#291685

Postby GoSeigen » March 17th, 2020, 4:27 pm

Swanmore22 wrote:AV.A is now 120 offerred.
Am tempted to have a nibble ..
Any thoughts ?

Swan


WBS at 30p today, bought a few more but you may get them even cheaper if you go through a dealer to an MM...


GS

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Re: Santander for Aviva refugees

#291692

Postby bruncher » March 17th, 2020, 4:37 pm

BP is not in existential danger


I'm not sure about that, if the market is flooded with cheap oil, and demand heads lower.

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Re: Santander for Aviva refugees

#291698

Postby Gan020 » March 17th, 2020, 4:44 pm

Swanmore22 wrote:AV.A is now 120 offerred.
Am tempted to have a nibble ..
Any thoughts ?

Swan


the question is how safe is Aviva now. How many insurance claims will they have to pay out? Will they have to stop the dividend on the ordinaries and then the Prefs are next in line.

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Re: Santander for Aviva refugees

#291762

Postby 88V8 » March 17th, 2020, 8:00 pm

Gan020 wrote:How many insurance claims will they have to pay out? Will they have to stop the dividend ...


Legal commentary on potential insurance arisings.https://www.clydeco.com/insight/article ... iderations

It is always possible that companies will choose to conserve cash whether or not immediately necessary, and ords divis are of course always discretionary. Would be quite a step for Aviva in particular to stop the Prefs divis after all the recent fuss.

V8

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Re: Santander for Aviva refugees

#291768

Postby scrumpyjack » March 17th, 2020, 8:13 pm

The liability of insurers re CV19 will take a long time to establish but usually insurers like Aviva will have laid off liabilities over a certain amount to the reinsurance market (Lloyd's, Munich Re, Berkshire Hathaway etc etc) so it will all be very widely spread over the insurance market globally.

PIs would be flying completely blind if they try to take a view on this.

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Re: Santander for Aviva refugees

#292233

Postby Swanmore22 » March 19th, 2020, 9:36 am

Tks for responses,
Have seen Aviva hold £2.4bn in a "centre cash" position.. i take this to be cash to meet normal claims, but as they say in statement below not Covid ?
Their solvencey cover is 175%..am no expert in this but think that means that they can cover all the liabilities they have underwritten and have margin , 75% ?, to spare.
They have taken out additional hedges to cover Covid 19..presume this is shorting indicies and interest rate swaps ?
" Aviva remains well capitalised, near the top of its working range. Based on the closing market position on 13 March 2020, our Solvency cover ratio is estimated at approximately 175%, after allowing for payment of our proposed final dividend (c.7 percentage points). The estimate does not allow for any increase in insurance claims or changes in experience or assumptions that may arise from Covid-19. We have expanded our hedging and ALM activity on equities, interest rates and credit spreads. As disclosed at our recent full year results, our centre cash position at the end of February was £2.4 billion."
So 2.4b is there as "cash" as of end of Feb.. assume regular claims are usually more than offset by premium income..that amount should still be there.
Claims from covid are guesswork and will take years to settle ,( perhaps aided by Govt intervention ? )by wish time asset prices should have rebounded.
Think the ords have limited upside , fear a rights issue, but the prefs hold some attraction. From the last debacle , i recall that In 2026 Aviva said they will explore redemption or conversion to a qualifying instrument.
These had been trading at a decent premium to LLPC, 9.25% ..now they trade flat in price and llpc is more liquid . So the question i now pose ; is LLpc a better trade over the next 12 months than Av.a ?
Am in no rush to part with cash , although i have bought small amounts in Flutter and RDSB today !, but the time to buy any sub debt is when its on its Pink marshmallows,

Swan

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Re: Santander for Aviva refugees

#292259

Postby 88V8 » March 19th, 2020, 10:55 am

AV.A cumulative, should be a premium over LLPC which not.
Currently even stevens so on the face of it AV.A preferable today.
Also think hit on Lloyds harder to predict than Aviva.

Can presently buy BBYB sub-par, as commented elsewhere good parking place until maturity July, will redeem not rollover, my opinion.

And 42TE at par.

And IPF2 at... crumbs what's going on there............

V8

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Re: Santander for Aviva refugees

#292372

Postby Swanmore22 » March 19th, 2020, 2:27 pm

Have left alone for time being.
Av.a heading for 100..LLPc around 114.

Swan

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Re: Santander for Aviva refugees

#292523

Postby 88V8 » March 19th, 2020, 11:24 pm

Swanmore22 wrote:Have left alone for time being.

Some tangential discussion. viewtopic.php?f=31&t=22248

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Re: Santander for Aviva refugees

#331162

Postby GoSeigen » August 5th, 2020, 4:05 pm

GoSeigen wrote:Any thoughts on MBS results?

As expected there is a small reported profit, also slight improvement in regulatory position but otherwise nothing remarkable as far as I can see.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/MBSR/14448583.html

GS


Half year results out for Manchester Building Society:

https://www.londonstockexchange.com/new ... s/14642426

The going concern language looks materially unchanged from last year. PIBS interest still unlikely to be paid next time round.

Results look similar to full year in March, but with additional Covid provisions which result in a small loss. I'm actually happy with these results, no major issues, the balance sheet continues to reduce, so risk is gradually decreasing while practically all the ratios are improving. On the going-concern basis there is a comfortable equity cushion for the PIBS, which are already accounted for in the liabilities, so to me this looks like the old Bradford and Bingley scenario, a steady wind-down as those mortgages are repaid.

Of course anything can happen and this is now a very small building society with pretty illiquid securities so buyer beware!

Anyone else thoughts? Anyone spotted rocks under the waves?


GS
Disclosure: Good size holding of both MBSR and MBSP

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Re: Santander for Aviva refugees

#332202

Postby hiriskpaul » August 10th, 2020, 4:54 pm

GoSeigen wrote:
GoSeigen wrote:Any thoughts on MBS results?

As expected there is a small reported profit, also slight improvement in regulatory position but otherwise nothing remarkable as far as I can see.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/MBSR/14448583.html

GS


Half year results out for Manchester Building Society:

https://www.londonstockexchange.com/new ... s/14642426

The going concern language looks materially unchanged from last year. PIBS interest still unlikely to be paid next time round.

Results look similar to full year in March, but with additional Covid provisions which result in a small loss. I'm actually happy with these results, no major issues, the balance sheet continues to reduce, so risk is gradually decreasing while practically all the ratios are improving. On the going-concern basis there is a comfortable equity cushion for the PIBS, which are already accounted for in the liabilities, so to me this looks like the old Bradford and Bingley scenario, a steady wind-down as those mortgages are repaid.

Of course anything can happen and this is now a very small building society with pretty illiquid securities so buyer beware!

Anyone else thoughts? Anyone spotted rocks under the waves?


GS
Disclosure: Good size holding of both MBSR and MBSP

On the whole I was quite pleased and relieved by the results. Management continue to run things prudently and no sign (yet) of a significant rise in defaults, which is what the PRA will be looking out for. Not mentioned is the potentially impudent SC appeal. If that goes ahead and MBS lose again, that will likely push everything back another year.

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Re: Santander for Aviva refugees

#332215

Postby GoSeigen » August 10th, 2020, 5:59 pm

hiriskpaul wrote:
GoSeigen wrote:Anyone else thoughts? Anyone spotted rocks under the waves?


GS
Disclosure: Good size holding of both MBSR and MBSP

On the whole I was quite pleased and relieved by the results. Management continue to run things prudently and no sign (yet) of a significant rise in defaults, which is what the PRA will be looking out for. Not mentioned is the potentially impudent SC appeal. If that goes ahead and MBS lose again, that will likely push everything back another year.


Impudent or imprudent. I don't think the appeal is likely before the end of the year, and others have suggested that final stage of appeal is not that costly. Also it seems to me they have nothing to lose. The earlier cases had already gone entirely against them in terms of costs, so surely the possible outcomes in the Supreme Court are skewed to the upside?

Still, profits are skinny so I don't disagree that losing would further delay the slow recovery of this business.


GS

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Re: Santander for Aviva refugees

#332942

Postby Gan020 » August 13th, 2020, 3:40 pm

I took a look at the half time score. In summary for me Covid has unsurprisingly changed the risk/reward profile.

The headline profits are decent enough but overall a loss of £400k mostly due to more impairments on the Spanish lifetime mortages. If MBS didn't have these Spanish lifetime mortgages in it's portfolio things would surely look very different because the overall loss sure doesn't help the CET1 capital when one might have hoped for a £500k profit minimum for the half year, so its swings £900k away from my trajectory.

I'm guessing we will see a loss in second half as well due to homeowners struggling to make mortgage payments due to unemployment. Page 19 "No material provision requirement has been identified for significant increases in credit risk in relation to customers who have been granted payment deferral". I can't see this holding in the second half with high unemployment. First payment holiday which is where we were at as of 31 June counts as automatic forbearance and therefore no requirement to make additional credit losses. Second payment holiday requires an asessment.

20% of borrowers requested payment holiday. Other lenders suggest half will have now restarted payments at expiry of first holiday.

The reduction in mortgage book and it's impact on Tier1 capital is better than I expected. I would guess this rate of progress will slow down in the second half as borrowers are less able to transfer to new providers as building socities risk appetite has dropped off.

Management doing the right things. Just Covid getting in the way.

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Re: Santander for Aviva refugees

#353952

Postby GoSeigen » November 6th, 2020, 6:43 am

GoSeigen wrote:
hiriskpaul wrote:
GoSeigen wrote:Anyone else thoughts? Anyone spotted rocks under the waves?


GS
Disclosure: Good size holding of both MBSR and MBSP

On the whole I was quite pleased and relieved by the results. Management continue to run things prudently and no sign (yet) of a significant rise in defaults, which is what the PRA will be looking out for. Not mentioned is the potentially impudent SC appeal. If that goes ahead and MBS lose again, that will likely push everything back another year.


Impudent or imprudent. I don't think the appeal is likely before the end of the year, and others have suggested that final stage of appeal is not that costly. Also it seems to me they have nothing to lose. The earlier cases had already gone entirely against them in terms of costs, so surely the possible outcomes in the Supreme Court are skewed to the upside?

Still, profits are skinny so I don't disagree that losing would further delay the slow recovery of this business.


GS


The above Supreme Court appeal has been heard, judgment expected early 2021. There has been some discussion of MBSR/MBSP and the appeal on this thread:

viewtopic.php?f=52&t=23116&p=349790&hilit=mbsr#p349790


The supply situation for these PIBS has changed significantly AFAICS. Earlier this year I was able to buy as many as I needed without any difficulty. Yesterday though I tried to buy MBSR and supply seems to have completely dried up. This is good for holders but a problem if you want to buy. Anyone know where I can get some MBSR?

GS


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