Project

kellyj7

Hi all,
I am currently beginning a project today in college. We are given 50k and have to invest it in bonds. We must go by the bid price at the end of today (wed 18th feb)and the end prices are the end of march. Does anyone have any tips on the sort of bonds to invest in (min 5 max 10) or a good site for such information. Thanks

pocketdooz

more info please . . .

corporates ? government ? investment-grade or junk ?

which countries ? regions ?

What are the restrictions / rules ?

What's the goal ?

Thanks

.

Time Magazine

kellyj7 wrote: »

I am currently beginning a project today in college. We are given 50k and have to invest it in bonds.

Generous college :pac:

Pocketdooz, the goal is usually to have the highest portfolio value after a month. Kelly, I suggest you have a look through the forum for threads like these.

pocketdooz

So yields don't matter on the bonds ?

Time Magazine

pocketdooz wrote: »

So yields don't matter on the bonds ?

Sorry, I mis-read the post. Didn't realise the emphasis on bonds.

m5ex9oqjawdg2i

What college are you in? We had this exact task in our final year of my course... The lecture always wins, just to let you know.

Try buying shares in a company that has been taken over, normally works. About all the advice I can give you at the moment. You probably don't have that long for the shares to mature, otherwise I would say invest in any financial company. They will bounce back and their shares are cheap at the moment.

*EDIT*

Misread it too, I know nothing about bonds, no idea if they have any relation to shares. Sorry

kellyj7

Sorry about the delay in replying.


You have €50,000 to invest in bonds either government or corporate.
You must purchases the assets at the market closing prices on Wednesday 18th February.
You may choose as many assets you wish to invest in but you must choose at least 5 and not more than 10.
Your task is to select and manage this portfolio of bonds over a 3 week period
Wed 25th March is the last day of trading for your portfolio and you must value your final portfolio at the market closing prices on this day.
No short-selling is permitted, thus you must have the ‘cash’ to buy any asset

They're the details

Idu

So what did you pick?

kellyj7

still not sure whether to go for safe options or risky ones or which country to look at...its only a 3 week period so hard to tell wot prices will go up in that period

Idu

If you have to have to take the assets at the market close on Feb 18th whats to stop people waiting till the day before it closes and then picking whatever bonds have performed best? Or am I missing something?

kellyj7

we go by prices on the 18th feb and have to pick the, we then have to report them to lecturer tomorro which ones we picked. Then in 3 weeks we see how they done. In the project we have to outline which bonds we picked and why

kellyj7

so anyone any ideas what type of bonds to go for for such a short space of time?

kellyj7

anyone any suggestions?? thanks

pocketdooz

You never answered the questions I asked you.

more info please . . .

corporates ? government ? investment-grade or junk ?

which countries ? regions ?

What are the restrictions / rules ?

Obviously makes a big difference.

Thanks

.

ixus

http://www.bloomberg.com/markets/rates/germany.html

The German bonds are the safest in the euro. Use these to limit your fx exposure. Buy longer term as they're giving a better return at present.
There will be a lot of movement as the ECB rate metting comes about. Check the website for that date. It will be a case of buy the rumour sell the news. Meaning, the prices will rise up to the day before the rate cuts announcement and fall just before or after. This is depending on there being a rate cut and what Trichet says in statement and Q&A.

Bund 10 yr German

http://futuresource.quote.com/charts/charts.jsp?s=GB%20H9-DT

Bobl 5 yr German

http://futuresource.quote.com/charts/charts.jsp?s=BL%20H9-DT&o=&a=D&z=610x300&d=medium&b=bar&st=

Schatz 2 yr german

http://futuresource.quote.com/charts/charts.jsp?s=BZ%20H9-DT&o=&a=D&z=610x300&d=medium&b=bar&st=

Use http://acrossthecurve.com/ for more info.


You could also look at playnf the FX market and buying US treasuries.

Look for the FED to be buying the long end of the curve ( 10 yr + bonds). Check out Quantative Easing and comment on it.

If the euro continues to fall against the dollar, you could get the profit from both a rise in US treasuries and the fall in fx rate. ( the euro may fall due to rate cuts). i.e. the dollars purchasing power becomes stronger against the euro.

Euro
http://futuresource.quote.com/charts/charts.jsp?s=QEC%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

US 10 Yr
http://futuresource.quote.com/charts/charts.jsp?s=QTY%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

US 30 Yr

http://futuresource.quote.com/charts/charts.jsp?s=QUS%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

You could play the FX by doing this with Japanese govt bills or UK Gilts. It depends on whether you think the euro will be stronger or not during the time of the project.

I have no info on corporate debt for you.

i wouldn't say achieveing the best return is the be all of the project. Understanding what you're doing and why would be a major part of this. What risk exposure do you want; FX, default etc.

If you can incorporate all of the above and have decent reporting skills I'd say a good grade is probable.

kellyj7

pocketdooz wrote: »

You never answered the questions I asked you.

more info please . . .

corporates ? government ? investment-grade or junk ?

which countries ? regions ?

What are the restrictions / rules ?

Obviously makes a big difference.

Thanks

.

Any form of bond allowed including junk
any country just have to take note of exchange rate changes
no major restrictions

kellyj7

ixus wrote: »

http://www.bloomberg.com/markets/rates/germany.html

The German bonds are the safest in the euro. Use these to limit your fx exposure. Buy longer term as they're giving a better return at present.
There will be a lot of movement as the ECB rate metting comes about. Check the website for that date. It will be a case of buy the rumour sell the news. Meaning, the prices will rise up to the day before the rate cuts announcement and fall just before or after. This is depending on there being a rate cut and what Trichet says in statement and Q&A.

Bund 10 yr German

http://futuresource.quote.com/charts/charts.jsp?s=GB%20H9-DT

Bobl 5 yr German

http://futuresource.quote.com/charts/charts.jsp?s=BL%20H9-DT&o=&a=D&z=610x300&d=medium&b=bar&st=

Schatz 2 yr german

http://futuresource.quote.com/charts/charts.jsp?s=BZ%20H9-DT&o=&a=D&z=610x300&d=medium&b=bar&st=

Use http://acrossthecurve.com/ for more info.


You could also look at playnf the FX market and buying US treasuries.

Look for the FED to be buying the long end of the curve ( 10 yr + bonds). Check out Quantative Easing and comment on it.

If the euro continues to fall against the dollar, you could get the profit from both a rise in US treasuries and the fall in fx rate. ( the euro may fall due to rate cuts). i.e. the dollars purchasing power becomes stronger against the euro.

Euro
http://futuresource.quote.com/charts/charts.jsp?s=QEC%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

US 10 Yr
http://futuresource.quote.com/charts/charts.jsp?s=QTY%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

US 30 Yr

http://futuresource.quote.com/charts/charts.jsp?s=QUS%20H9&o=&a=D&z=610x300&d=medium&b=bar&st=

You could play the FX by doing this with Japanese govt bills or UK Gilts. It depends on whether you think the euro will be stronger or not during the time of the project.

I have no info on corporate debt for you.

i wouldn't say achieveing the best return is the be all of the project. Understanding what you're doing and why would be a major part of this. What risk exposure do you want; FX, default etc.

If you can incorporate all of the above and have decent reporting skills I'd say a good grade is probable.

Thanks for that... yeah the leturer doesn't mind how much your portfolio earns or loses (although some company has sponsored a prize for the winner) we just have to explain why we would pick. As you stated, just show simple intuition.

pocketdooz

Hi,

here's a few corporate bond ideas.

KGF (Kingfisher Plc) - buy the nearest-dated bonds as they are likely to rise or get taken out soon due to the company just getting a cash infusion of over €500mm from the completion of the sale of their Italian unit. They stated on their last call they would use it to pay down debt. The nearest term bond is most liley to get taken out.

Fresenius Medical Care or Fresenius SE - Both companies issued excellent Q408 and full year 2008 results - solid bonds for any portfolio. Take your choice - they have a ton of ficed income outstanding. Best risk/return profilt are the 10/12% bonds.

UPC (they own NTL Ireland and same in 13 other markets around Europe and in Chile) - just posted exccellent results yesterday and 2009 will be a strong year for them. Excellent revenue and EBITDA growth and free cash flow. Bonds trading pretty low now.

Telenet - Belgian cable operator - just posted v.v. strong results for 2008 - 2009 will see further growth as digital TV and related products etc continue becoming more popular in the future. They have a monopoly on most of the Belgian market - EBITDA margins of 50%. Loads of liquidity and cash


These are all public - you can get a ton of info from their websites - put together something based on these and you'll be streets ahead of the rest of your class.

Best of luck

kellyj7

where can i get prices for corporate bonds?

kellyj7

I have been following my portfolio however i have just noticed that three of the companies i bought corporate bonds of no longer have their priced listed on http://markets.ft.com/ft/markets/researchArchive.asp?report=GIG&cat=BR
These bonds are
Bank America 2 year bond
Teliasonera
General Motors Corporate Bond

What does this mean?
I tries to ask my lecturer but she is away at the moment.

Doe this mean i have lost the money invested in these bonds? Thanks for any assistance.

kellyj7

and also Deutsche Fin Corpoate Bond

kellyj7

All four aforementioned bonds are listed until friday 13th march then from monday the 16th they are not listed. Anyone know why this is or where i will get their prices now?

kellyj7

Has anyone any assistance on the above query please?