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Possible new retail bond from IPF?

Gilts, bonds, and interest-bearing shares
stevensfo
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Possible new retail bond from IPF?

#220683

Postby stevensfo » May 10th, 2019, 3:07 pm


stevensfo
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Re: Possible new retail bond from IPF?

#222479

Postby stevensfo » May 17th, 2019, 2:19 pm

A bit more info:

7.75% min. 2000 pounds. Maturity 14 Dec 2023

https://www.ipfin.co.uk/en/media/news/2 ... rling.html

Seems a bit high to me.


Steve

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Re: Possible new retail bond from IPF?

#222494

Postby Laughton » May 17th, 2019, 3:49 pm

Well it does seem a bit high especially as they have one running for another year with a 6.125% coupon that's trading at a smidgen over par.

I'm a bit torn as to whether to sell out of the 2020 version and re-invest in this new one for the extra income but then concerned that they obviously had to offer this high a coupon to get the issue away. Their credi rating has just improved a little so maybe I'm being over cautious.

Also not sure that I should continue supporting one of those astronomical interest rate payday lenders (that's just my interpretation and I full accept that not everyone will see IPF in this way).

Bit of time to mull it over.

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Re: Possible new retail bond from IPF?

#225635

Postby 88V8 » May 30th, 2019, 8:14 pm

Deadline for ii clients is the 2nd, and given that they now say their site will be down on the 1st & 2nd, the deadline is tomorrow.

I exchanged.
Don't have a large position, about 2% of our assets.
There is a risk it could all go tits up in the next four years, so fingers crossed.

Wonder if they will refinance the 2021 the same way.

V8

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Re: Possible new retail bond from IPF?

#225692

Postby TheMotorcycleBoy » May 31st, 2019, 6:26 am

We have some IPF1 2020 bonds in our ISA, and have just received an offer to exchange to the 7.75 2023 notes.

INTERNATIONAL PERSONAL FINANCE PLC - Important Information

Exchange Offer.

1 New International Personal Finance Plc Sterling 7.75 per cent. Notes due 2023 and an exchange fee of 0.015 pence for each Existing International Personal Finance Plc 6.125 per cent. Notes due 2020 held.

You Have The Following Option:
1 Accept the Offer on your holding of 1000 INTERNATIONAL PERS 6.125 GTD SNR 08/05/20 GBP shares.


Can anyone confirm that the exchange fee of 0.015p per note is a charge which our platform provider (iWeb) will impose on us to perform the exchange on our behalf?

We are umming and ahhing as to what to do. The coupon rate does seem quite high, so on one hand I'm wondering whether it smacks of desperation, so we should decline, but on the other hand I'm wondering whether in the weekend we should review their last two ARs worth of financial statements and suss out how geared and well covered their interest is prior to making a decision.

Matt and Mel

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Re: Possible new retail bond from IPF?

#225693

Postby TheMotorcycleBoy » May 31st, 2019, 6:34 am

From https://www.investegate.co.uk/intnl-per ... 50283265Z/

The Notes are expected to be rated Ba3 by Moody's Investors Service Limited and BB by Fitch Ratings Ltd.

So in the high part of the junk bond section according to this.

EDIT And this: https://www.investorschronicle.co.uk/sh ... reholders/

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Re: Possible new retail bond from IPF?

#225721

Postby Laughton » May 31st, 2019, 9:48 am

Bear in mind that I'm not a lawyer or a financial advisor but my reading/understanding is that on exchange YOU will receive the £1.50 per £100 nominal as an "exchange fee" (a further inducement to exchange) plus you will receive the accrued interest on your existing bonds.

6. Exchange Fee
The Issuer will pay an exchange fee to each Holder of the Existing 2020 Notes in cash in the amount
of £1.50 per £100 in nominal amount of Existing 2020 Notes (i) validly offered and delivered by such
Holder; and (ii) accepted for exchange by the Issuer, in each case pursuant to the Exchange Offer
(the “Exchange Fee”). See “Delivery of Exchange New Notes and payment” below for further details
on timing and mechanics relating to the Exchange Fee.

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Re: Possible new retail bond from IPF?

#225734

Postby Alaric » May 31st, 2019, 10:28 am

Laughton wrote:
I'm a bit torn as to whether to sell out of the 2020 version and re-invest in this new one for the extra income but then concerned that they obviously had to offer this high a coupon to get the issue away. Their credi rating has just improved a little so maybe I'm being over cautious.


The implication is perhaps that they think they may struggle to find the capital in 2020 to pay off all the existing holders if they ask for their money back. Hence the offer of an early roll over. But perhaps this type of offer will become commonplace as the Retail Bond market develops.

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Re: Possible new retail bond from IPF?

#225786

Postby TheMotorcycleBoy » May 31st, 2019, 1:39 pm

Alaric wrote:
Laughton wrote:
I'm a bit torn as to whether to sell out of the 2020 version and re-invest in this new one for the extra income but then concerned that they obviously had to offer this high a coupon to get the issue away. Their credi rating has just improved a little so maybe I'm being over cautious.


The implication is perhaps that they think they may struggle to find the capital in 2020 to pay off all the existing holders if they ask for their money back. Hence the offer of an early roll over. But perhaps this type of offer will become commonplace as the Retail Bond market develops.

Yes that's how I see it.

I'm toying with a) just sticking with our 2020 bonds and letting them fully mature and get the principal back, since with the 2023 capital in IPF they will have enough to pay me....

or b) exchange to the 2023 bonds assuming that I'll be able to sell them at slightly more than par at roughly the same time the 2020 ones mature.

Hmm....

Does anyone know (i.e. have a link handy) what the Moodys/Fitch ratings for the current 2020 notes are?

Matt

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Re: Possible new retail bond from IPF?

#225787

Postby TheMotorcycleBoy » May 31st, 2019, 1:40 pm

Laughton wrote:Bear in mind that I'm not a lawyer or a financial advisor but my reading/understanding is that on exchange YOU will receive the £1.50 per £100 nominal as an "exchange fee" (a further inducement to exchange) plus you will receive the accrued interest on your existing bonds.

You're right - Mel reread all the words we could find and that was our conclusion. Thanks for seconding it.

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Re: Possible new retail bond from IPF?

#225839

Postby gbjbaanb » May 31st, 2019, 5:40 pm

The risk is perhaps that they won't get their bond accepted/not enough acceptances to fill the minumum required and thus in 2020 go bust meaning you lose it all. If you think that's not likely, then there's no reason why you'd not exchange for the new ones. You can always sell on the open market at any time.

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Re: Possible new retail bond from IPF?

#225931

Postby TheMotorcycleBoy » June 1st, 2019, 8:34 am

gbjbaanb wrote:The risk is perhaps that they won't get their bond accepted/not enough acceptances to fill the minumum required and thus in 2020 go bust meaning you lose it all. If you think that's not likely, then there's no reason why you'd not exchange for the new ones. You can always sell on the open market at any time.

Yes that's another perspective.

Pretty sure this practice isn't uncommon. IIRC when I've looked at other firms statements you can see that they've issued a collection of bonds over the years, and presumably some arise from exchanges. (Check out Note. 18 "Borrowings" of IMBs AR18 page 109 for instance.)

The announcement of the issue and exchange doesn't seem to have upset the market price of the 2020s just yet.

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Re: Possible new retail bond from IPF?

#225988

Postby hiriskpaul » June 1st, 2019, 1:51 pm

This type of exchange is not at all uncommon.

I am struggling to understand why they need to offer a coupon this high. The accounts seem robust, with plenty of equity and the company appears to be efficiently and prudently run. There are plenty of risks of course, as experienced by previous owners Provident (IPF were spun off in the 90s). The Provident bonds are an interesting comparison and currently yield less than the new IPF bond, but IPF looks to me to be in better shape. Why is this company so unloved?

Cannot say I like pure sub prime lenders much, but for the yield being offered i am considering buying a small amount and perhaps reducing my shorter dated Provident.

Some good comments on the fixed income investor forum.

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Re: Possible new retail bond from IPF?

#226109

Postby Gan020 » June 1st, 2019, 10:43 pm

hiriskpaul wrote:
Why is this company so unloved?

Some good comments on the fixed income investor forum.


I took a look at this and have decided to pass. Mostly because I'm risk adverse and I want to be certain (lol) I will get my capital returned on expiry. That's not to say I can't be tempted by a high interest rate if the risk looks ok but it's not really what I'm looking for.

As you suggest the fixed income investor forum covers most of it. However, this struck me from their accounts:
"Consistently well-managed credit quality - impairment to revenue ratio of 26.2%". That seemed worrying to me and that's just the average. Some regions are much higher. Having said that the impairment percentage would have to double to wipe out the profits and even then the bonds interest is going to get paid before the equity dividends.

Which leads me to the view that the coupon must be high due to the risk of countries capping interest rates. The depressed equity share price is telling us the market is getting more and more concerned, however I haven't done more than an hour and an half's research so happy to learn from others.

I'd say the coupon is fair and is designed to ensure the issue is successful. I suspect it will be and may well open at a premium.

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Re: Possible new retail bond from IPF?

#227248

Postby hiriskpaul » June 5th, 2019, 4:26 pm

I applied for a small number.

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Re: Possible new retail bond from IPF?

#227289

Postby 88V8 » June 5th, 2019, 6:56 pm

Today via my broker, offer to buy, as opposed to exchange. All a bit last minute, closes tomorrow.
So I guess insufficient exchange commitments.
As I said, I exchanged.
Enough.

V8

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Re: Possible new retail bond from IPF?

#229432

Postby 88V8 » June 14th, 2019, 10:49 am

IPF2 first trading day.
£1.003 / £1.0165

However, the IPF1 in my account haven't been swapped over yet.

V8

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Re: Possible new retail bond from IPF?

#229465

Postby Laughton » June 14th, 2019, 12:19 pm

You're luckY - my IPF1 have disappeared but no sign of IPF2 yet.
No IPF1 accrued or cash incentive for swapping either.

Will wait until Monday before I chase.

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Re: Possible new retail bond from IPF?

#229553

Postby TheMotorcycleBoy » June 14th, 2019, 5:04 pm

We have the IPF1 bonds. We decided not to exchange to new 2023 bonds, and hopefully walk away with our principal returned in 2020.

To need to pay 7.75% for the coupon in order to refinance seemed too much for my stomach. I did run 5 or so years of statements through my spreadsheet whilst making my decision. Their receivables account is typically twice the size of total equity.

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Re: Possible new retail bond from IPF?

#230159

Postby everhopeful » June 17th, 2019, 1:47 pm

Barclays are still showing my 2020 holding unchanged despite electing to exchange for the new ones. Has anybody received the 2023 bonds yet?


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