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One Savings Bank 1SBB

Posted: March 11th, 2019, 11:31 am
by 88V8
With the 2019 ISA almost upon is, perhaps worth mentioning these less well-known PIBS, a legacy of the Kent Reliance BS.

Nominal coupon is 7.875% but there was a reset in 2014 and they currently yield a nice 6.3% or so.

I don't know if the planned merger of One Savings Bank and Charter poses a call risk, but trading around par, there Is no apparent capital downside.

A useful addition to one's ISA or other tax shelter.

A few words here
http://www.fixedincomeinvestor.co.uk/x/ ... 12&aid=750

The companion sub 1SBA has a substantially lower yield - around 4.8%. One reason I was seeking the old thread on Mark Taber's former site was to be reminded of the reason for the yield disparity. There's always a reason.

V8

Re: One Savings Bank 1SBB

Posted: March 13th, 2019, 10:15 pm
by shaunm
This has a possible call and a re-set of coupon OneSavings Bank 5.9884% Floating Rate Sub (reset/call 27/8/2019) 1SBB

Re: One Savings Bank 1SBB

Posted: March 14th, 2019, 7:16 am
by Wozzitworthit
To the best of my knowledge the current status of the two issues are:

1SBA - current coupon (from last reset) 4.5991% - next reset 7/3/2021 . Issued as 6.591% PIBs. Callable on any int date. Resets to 5yr Gilt+340 bp
1SBB - current coupon (from last reset) 5.9884% - next reset or call 27/8/2019 . Issued as 8.785% PIBs Callable on any reset date Resets to 5yr Gilt+400 bp

Note that 1SBA can be called on any interest date whereas 1SBB can be called on reset date, if I have understood what I have read correctly

Woz

Re: One Savings Bank 1SBB

Posted: March 15th, 2019, 9:44 am
by 88V8
Wozzitworthit wrote:To the best of my knowledge the current status of the two issues are:

1SBA - current coupon (from last reset) 4.5991% - next reset 7/3/2021 . Issued as 6.591% PIBs. Callable on any int date. Resets to 5yr Gilt+340 bp
1SBB - current coupon (from last reset) 5.9884% - next reset or call 27/8/2019 . Issued as 7.875% PIBs Callable on any reset date Resets to 5yr Gilt+400 bp

Note that 1SBA can be called on any interest date whereas 1SBB can be called on reset date, if I have understood what I have read correctly


Yes. The 6.3% that I referenced came from HL, should have checked it, seems to be the approx YTC. As you say, the running yield is 5.9884% and at current 5 yr gils, the August reset would be at 5.9%.

Nevertheless I like 1SBB as they are a change from the usual suspects. And, safe from the capital exposure that exists with much of our favourite Fixed Interest, from 'reorganisations' such as Aviva tried last year.

Here, the call potential is baked into the price.
So today, I can buy 1SBB for c98p.

Or 1SBA for 97p, with a YTC of 4.7% which seems bizarre. I haven't dug around in search of a reason.

There was a thread on Mark's vanished site where the usual suspects were analysed for their 'call' susceptibility, and iirc the most immune were BWRA and NWBD, with ELLA politically safe because Ecclesiastical have said they wouldn't, and BOI and AV.A/B perhaps safe because they got such a drubbing last time.

V8

Re: One Savings Bank 1SBB

Posted: March 15th, 2019, 11:51 am
by MaraMan
Thanks for this info, I am interested in adding some PIBs but need to understand them a bit more. Would I be correct in thinking that if held outside an ISA then the yield would be a part of my tax free dividend allowance?

MM

Re: One Savings Bank 1SBB

Posted: March 15th, 2019, 1:02 pm
by Alaric
MaraMan wrote:Would I be correct in thinking that if held outside an ISA then the yield would be a part of my tax free dividend allowance?


PIBS income is classified as interest, so it's the £ 500/ £ 1000 allowance.

Preference Shares on the other hand are treated as dividends, not that a Building Society can issue them.

Re: One Savings Bank 1SBB

Posted: March 17th, 2019, 9:39 pm
by shaunm
88V8 wrote:
Wozzitworthit wrote:To the best of my knowledge the current status of the two issues are:

1SBA - current coupon (from last reset) 4.5991% - next reset 7/3/2021 . Issued as 6.591% PIBs. Callable on any int date. Resets to 5yr Gilt+340 bp
1SBB - current coupon (from last reset) 5.9884% - next reset or call 27/8/2019 . Issued as 7.875% PIBs Callable on any reset date Resets to 5yr Gilt+400 bp

Note that 1SBA can be called on any interest date whereas 1SBB can be called on reset date, if I have understood what I have read correctly


Yes. The 6.3% that I referenced came from HL, should have checked it, seems to be the approx YTC. As you say, the running yield is 5.9884% and at current 5 yr gils, the August reset would be at 5.9%.



V8



Surely the reset Gilt 5 yrs plus 400bp = 4.9%, not 5.9%
5 year Gilt yield is .94% ??

Re: One Savings Bank 1SBB

Posted: March 18th, 2019, 10:49 pm
by 88V8
Yes, thankyou, oops fat finger.

I see the price is holding up, notwithstanding no more coupons until reset date. Perhaps there is expectation of redemption. Given the Charter merger and associated capital raising, that would seem questionable.

V8

Re: One Savings Bank 1SBB

Posted: April 4th, 2019, 1:32 pm
by Gan020
If it isn't called in July 2019, it will reset at around 4.85%-4.90% if LIBOR doesn't change by then which doesn't seem likely

Then it's locked in at 4.85-4.9% for the next 5 years so it depends where you think interest rates are going. If you think interest rates are going down then the purchase price looks good, if you think they are going up it's going to look a little expensive.

I'd say it's about fairly priced with 1SBA being overpriced compared with the rest of the market. Having said that I feel everything is overpriced at the moment and I'm not buying anything fixed income related until prices pull back a bit. This is because I perceive interest rates rising once Brexit is fixed and I don't want to be locked in for too long with fixed returns of around 4.5-5.5%

All a bit annoying as it's ISA season. I perceive prices get bid up at this time and the best time to buy fixed income won't be for another couple of months. Of course there's a cost to sitting on cash waiting for good prices...

Re: One Savings Bank 1SBB

Posted: October 11th, 2019, 10:05 am
by Stan
Up over 7% so far this morning, Barclay's probably have something to do with it.