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Re: MBSR/MBSP: Where do you hold them?

Posted: July 21st, 2020, 10:05 am
by GoSeigen
GoSeigen wrote:
Padders72 wrote:I have used ii for pretty much everything for the past few years since they list most of what I have wanted but I note they don’t list the Manchester PIBS. I fancy a small dabble, who would be a good choice of broker? I note HL and AJ Bell for instance list them. Supplementary question, other than yield, is there any reason to prefer one over the other (the PIBS I mean)?

Apologies in advance if this is off topic for this section, wasn’t sure where was most appropriate.


Have Fools managed to buy their MBSP/R? I picked up a few MBSR last week @27p.

GS


Added a few more MBSR which are available @26p today. Markets starting to look bullish again...


GS

Re: MBSR/MBSP: Where do you hold them?

Posted: September 18th, 2020, 4:59 pm
by jd1754
Have been taking a look at these. What is the incentive for them to tender for the PIBS(or restart interest payments), why not just keep cash on hand as they run the book down?

Presumably as they have done no new business for several years the UK book is made up of mortgage holders who haven’t been able to remortgage elsewhere. Spanish book not great and has long duration with average LTV 104% no point to repay. So in a scenario they steady the ship are allowed to do new business what gives confidence the board would act in the interest of PIBS holders?

Is this not a different case to B&B as the government wanted access to the profits?

Re: MBSR/MBSP: Where do you hold them?

Posted: September 19th, 2020, 8:19 am
by GoSeigen
Hello jd1754 and welcome to The Lemon Fool.

Good first post with some probing questions!

jd1754 wrote:Have been taking a look at these. What is the incentive for them to tender for the PIBS(or restart interest payments), why not just keep cash on hand as they run the book down?

I think you're right that it's hard to see incentive for the society to tender for the PIBS: both issues are pretty small so regulatory compliance and other costs of a tender would be a large factor. Also, with a call option available on the larger MBSP issue they would be able to call them at 6.5% yield in 2030. That's a long way ahead but may be good enough for them; they are also able to purchase them in the market if they feel the urge. Finally, any repurchase is far off unless regulatory capital requirements are significantly loosened.

As for restarting interest payments, the Society is still resolved to make interest payments and have sufficient equity to do so: the only thing preventing payment is a regulatory prohibition because their mix of capital is not correct (as I understand it -- their capital does not meet the "qualitative" requirements). With further run-down of liabilities and if MBS continue to generate profits I expect this problem to fix itself and that interest payments on both issues will resume thereafter. The upcoming Supreme Court case could also have a bearing of course.


Presumably as they have done no new business for several years the UK book is made up of mortgage holders who haven’t been able to remortgage elsewhere. Spanish book not great and has long duration with average LTV 104% no point to repay. So in a scenario they steady the ship are allowed to do new business what gives confidence the board would act in the interest of PIBS holders?

You are right, the interests of the PIBS holders is not the board's primary concern: they are working for the members of the society. However, the interests of the members and the PIBS holders are fairly well aligned as both benefit from a well-run society generating profits: the profits accrue to the members in a winding up, PIBS holders receiving the principal value of their investments. The Spanish book is not great but only 20% of the business and already well provisioned (about £9.35m).


Is this not a different case to B&B as the government wanted access to the profits?


Do you mean no-one is interested in the profits in this business? See my comment above...

GS

Re: MBSR/MBSP: Where do you hold them?

Posted: September 28th, 2020, 10:58 am
by GoSeigen
MBSR available around 23.5p today.


GS

Re: MBSR/MBSP: Where do you hold them?

Posted: October 1st, 2020, 10:03 am
by 88V8
GoSeigen wrote:MBSR available around 23.5p today.

And 23.3 today.

Which will look pretty clever if they ever decide to pay us.

V8

Re: MBSR/MBSP: Where do you hold them?

Posted: October 20th, 2020, 2:40 pm
by GoSeigen
88V8 wrote:
GoSeigen wrote:MBSR available around 23.5p today.

And 23.3 today.

Which will look pretty clever if they ever decide to pay us.

V8


Hmm, I wonder if someone is nosing around these. Today they're bid at 23.5 in size.

I recently had a good look at the capital problems and really could not quite understand what qualitative standards for capital they are not meeting. What is clear though is that their CT1 is growing at a decent clip, so barring yet another disaster I don't see that they can be prevented for very much longer from making interest payments, and one would think the PPDS holders are on their backs too to get some payout going.

Would be nice to see the price rise a bit to remove some of the sting if they felt the urge to tender...

GS
EDIT: And MBSP have a bid too, 21 this afternoon, highest in months.

Re: MBSR/MBSP: Where do you hold them?

Posted: October 20th, 2020, 3:05 pm
by 88V8
Must be a high risk of insider trading if the Soc has scheduled but not announced the resumption of payments.
Fingers crossed.

V8

Re: MBSR/MBSP: Where do you hold them?

Posted: October 20th, 2020, 3:24 pm
by GoSeigen
88V8 wrote:Must be a high risk of insider trading if the Soc has scheduled but not announced the resumption of payments.
Fingers crossed.

V8


I definitely was not suggesting any shenanigans of this sort. Insider trading is bang-on illegal and I would be a sad individual to suggest someone's doing it without some serious evidence.

Resumption of payments could be a while still, it's just that I think inevitably it will happen sooner or later looking at the way the accounts are moving...

GS

Re: MBSR/MBSP: Where do you hold them?

Posted: October 20th, 2020, 6:03 pm
by Gan020
GoSeigen wrote:
88V8 wrote:Must be a high risk of insider trading if the Soc has scheduled but not announced the resumption of payments.
Fingers crossed.

V8


I definitely was not suggesting any shenanigans of this sort. Insider trading is bang-on illegal and I would be a sad individual to suggest someone's doing it without some serious evidence.

Resumption of payments could be a while still, it's just that I think inevitably it will happen sooner or later looking at the way the accounts are moving...

GS



My guess is the share price movement is just noise. Anything fixed income has been bought the last week or so as the market becomes more convinced of negative rates. Unless something is going to be done about relaxing the capital rules, which of course Boris was muttering about 2 weeks ago. I suspect Boris is meandering around without actually understanding the impact of his words.


I've run the numbers in detail several times and it kind of comes down to the following:
1. The society needs to make some profits and unless it does that it's going to be a slow process before the capital position corrects. Whilst reducing the loan book does help the capital calculations a significant fall in the loan book has other detrimental impacts in that the ability to generate profits decreases. I find it hard to see how the society is going to make profits in the next few periods due to Covid. Indeed losses are possible.
2. If the society can't make profits then it won't be paying interest on this sort of capital.

Re: MBSR/MBSP: Where do you hold them?

Posted: October 22nd, 2020, 6:47 am
by GoSeigen
Gan020 wrote:
GoSeigen wrote:
88V8 wrote:Must be a high risk of insider trading if the Soc has scheduled but not announced the resumption of payments.
Fingers crossed.

V8


I definitely was not suggesting any shenanigans of this sort. Insider trading is bang-on illegal and I would be a sad individual to suggest someone's doing it without some serious evidence.

Resumption of payments could be a while still, it's just that I think inevitably it will happen sooner or later looking at the way the accounts are moving...

GS



My guess is the share price movement is just noise. Anything fixed income has been bought the last week or so as the market becomes more convinced of negative rates.



Okay, I have nosed around and note that MBS very quietly had their Supreme Court hearing last week. Here it is; to save wading through the entire arguments the appellant's reply starts around midway through the afternoon session on 15 October:

https://www.supremecourt.uk/cases/uksc-2019-0040.html

I've watched most of the submission and personally didn't find MBS's case that compelling, however the market seems to feel differently, perhaps calculating that MBS have nothing to lose here and everything to gain.

Judgments seem to be taking 3-4 months to be handed down so late Jan/Feb for this one?


GS

Re: MBSR/MBSP: Where do you hold them?

Posted: October 22nd, 2020, 11:13 am
by Gan020
Thanks. I've just listening to the first part of the afternoon session and the appelant reply from halfway.

I'm afraid it gave me no significant insight over and above where we were before because I couldn't really see the killer point the appellant was making to win the case. I find it hard to unravel as she made very many points some which seemed very valid to me and others which seemed so invalid it was just wasting the courts time.

What continues to surprise me most is that the society thought that hedging/swaps would all in circumstances be more or less neutral for the P&L and B/S over all time periods. Not that this is the legal principle the case rests on but it's interesting nonetheless.

I did find some of the comments quite contradictory. "problem was not of the swaps being out of the money but one of volatility" (because no loss should be incurred from swaps being out of money as cancelled by paying less to socities savers). Clearly there was mis-match in timing which imho it should have been reasonably easy to forsee (over a 50 year time period it's going to happen sooner or later due to laws of probabilty) regardless of whether interest rates going up or down.

In summary I have no idea what the outcome will be so that's not enough to incentivise me to buy these PIBS.

Good luck to all holders.

Re: MBSR/MBSP: Where do you hold them?

Posted: January 8th, 2021, 8:51 am
by Padders72
Just thought I'd mention that these have quietly ticked up over the past month and this morning I received an indicative price to sell when I did a dummy sale on a 10K chunk of MBSR of 33p. That suggests a spread of circa 33-35p. I note talk above by GS of a court ruling in January/Feb that may have helped (or hindered) restarting of the divvies sooner rather than never. Anyone heard anything since then? I guess the day they jump or fall 33% will be the indication that the ruling is out, if indeed it is relevant to these

Re: MBSR/MBSP: Where do you hold them?

Posted: January 8th, 2021, 6:41 pm
by hiriskpaul
These have worked out very well so far. I don't think many are expecting the SC to rule in favour of MBS, but if they do it should be good for the PIBS. I would not expect to see much of a drop if MBS lose the appeal.

Appeal details are here by the way: https://www.supremecourt.uk/cases/uksc-2019-0040.html

Re: MBSR/MBSP: Where do you hold them?

Posted: January 11th, 2021, 4:32 pm
by Padders72
MBSR now up to 37/39p. Speculative buying or is something afoot I wonder.

Re: MBSR/MBSP: Where do you hold them?

Posted: January 11th, 2021, 6:35 pm
by GoSeigen
Padders72 wrote:MBSR now up to 37/39p. Speculative buying or is something afoot I wonder.


I think it's just recovery of banking/financial stocks along with absolutely no liquidity for buyers. I haven't been able to get an offer in any decent size for weeks.

Funny thing is WBS is not doing very much at all and I see them as similar to the MBS PIBS. If you still want MBSP/R at these prices then maybe consider WBS instead?


GS

Re: MBSR/MBSP: Where do you hold them?

Posted: January 11th, 2021, 6:39 pm
by hiriskpaul
Padders72 wrote:MBSR now up to 37/39p. Speculative buying or is something afoot I wonder.

They are very small issues and there is a shortage of stock. Nevertheless is does look odd and it will be very fishy if the SC announces in favour of MBS soon.

Re: MBSR/MBSP: Where do you hold them?

Posted: January 19th, 2021, 12:01 pm
by GoSeigen
To return to the topic of the OP, today I could trade MBSR online with II, but MBSP cannot be bought or sold. In an email exchange II said this was deliberate without giving any reason other than that other bonds are also marked Telephone Trade Only.

Anyone know what is going on with II?

GS

Re: MBSR/MBSP: Where do you hold them?

Posted: January 19th, 2021, 2:05 pm
by carnie
Hello GS,

I hold some of each with ii. I also hold some with AJ Bell in my SIPP. I used to be able to trade all online but in recent months I get the message "via telephone only". ii today does show a price for 1000 nominal of MBSR but anything bigger won't work.

I assume therefore it is a liquidity thing and suspect these are being bid up on tiny volumes in the hope that the court case throws up a surprise ruling.

I think its incredibly unlikely though longer term I do think there is value here.

I hold at an average price of c40p so I'm still a little underwater despite the recent gains.

All the best
C

Re: MBSR/MBSP: Where do you hold them?

Posted: January 19th, 2021, 3:14 pm
by hiriskpaul
At HL I could get online quotes today for both MBSR (41) and MBSP (33), but for each only for the minimum 1000. No problem getting online sell quotes for MBSR for up to 60k.

Re: MBSR/MBSP: Where do you hold them?

Posted: January 19th, 2021, 3:34 pm
by GoSeigen
carnie wrote:Hello GS,

I hold some of each with ii. I also hold some with AJ Bell in my SIPP. I used to be able to trade all online but in recent months I get the message "via telephone only". ii today does show a price for 1000 nominal of MBSR but anything bigger won't work.

I assume therefore it is a liquidity thing and suspect these are being bid up on tiny volumes in the hope that the court case throws up a surprise ruling.

I think its incredibly unlikely though longer term I do think there is value here.

I hold at an average price of c40p so I'm still a little underwater despite the recent gains.

All the best
C


Thanks for your experiences. As I wrote earlier II have said that they have deliberately set MBSP to telephone-only trading, so it is not a liquidity issue. Perhaps if we holders all raise the matter with II they may look into it and re-enable online trading? It's not a terrible hardship I must say but with spreads getting tighter this is a nice share for Fools to hold in sensible quantities.

GS