Corporate bonds with no specified maturity

Neil3030

Hi all, wonder if anyone has any thoughts on corporate bonds that don't have a maturity date specified.

One example - Barclay's Bank 14% Coupon (ISIN: XS0397801357) - issue price was 100.0p, currently trading at 122. This seems an incredibly low price for a bond paying this coupon (yield is 11.5%!). In contrast, Barclays are also selling a 10% fixed maturity bond (ISIN: XS0429325748) - issue price was 99.25, now selling at around 130. Yield here is 7.3% and it will mature in May 2021.

Is there any reason the market is pricing the bond with no maturity date so low? Same institution, so I guess this can't be explained by the market's confidence in the company going under.

I called my stockbroker and the agent said that when institutions wrap up these perpetual bonds, they'll usually give a decent notice period, in the order of years. So I guess the market suspects this will be wrapped up long enough before 2021 to explain the cheaper price, or is there something I'm missing?

Francie Barrett

Neil3030 wrote: »

Hi all, wonder if anyone has any thoughts on corporate bonds that don't have a maturity date specified.

One example - Barclay's Bank 14% Coupon (ISIN: XS0397801357) - issue price was 100.0p, currently trading at 122. This seems an incredibly low price for a bond paying this coupon (yield is 11.5%!). In contrast, Barclays are also selling a 10% fixed maturity bond (ISIN: XS0429325748) - issue price was 99.25, now selling at around 130. Yield here is 7.3% and it will mature in May 2021.

Is there any reason the market is pricing the bond with no maturity date so low? Same institution, so I guess this can't be explained by the market's confidence in the company going under.

I called my stockbroker and the agent said that when institutions wrap up these perpetual bonds, they'll usually give a decent notice period, in the order of years. So I guess the market suspects this will be wrapped up long enough before 2021 to explain the cheaper price, or is there something I'm missing?

Looking at the prospectus for XS0397801357, I believe this can be called in 2019. I would be absolutely shocked if Barclays didn't call this debt at that time given that this bond was originally issued at the height of the financial crisis, hence the 14% coupon. Assuming it does get called in two years time, then based at the current price, the yield to call rate is 2.57% annual return over the next 2 years.

http://www.investinganswers.com/calculators/yield/yield-call-ytc-calculator-2131

Neil3030

Francie Barrett wrote: »

Looking at the prospectus for XS0397801357, I believe this can be called in 2019. I would be absolutely shocked if Barclays didn't call this debt at that time given that this bond was originally issued at the height of the financial crisis, hence the 14% coupon. Assuming it does get called in two years time, then based at the current price, the yield to call rate is 2.57% annual return over the next 2 years.

http://www.investinganswers.com/calculators/yield/yield-call-ytc-calculator-2131

Excellent, thanks for this. Where do you get access to its prospectus?

Francie Barrett

https://www.home.barclays/prospectuses-and-documentation/capital-securities-documentation/tier1-securities.html

Neil3030

Thanks for the link. Do you recommend any service for sortable summary data on corporate bonds? I use H&L and they have very limited information on bonds. Ideally I'd want sortable (i.e., downloadable in xls or csv) data on corporate bonds, including current prices, coupons, face values, maturation date (if any), call dates (if any), and payments per year. I found this site through some googlage: https://www.exchange-data.com/reference-data/bond-prospectus.php#service

Amirani

Other point of that Barclays bond is that it's a tier 1 security, and hence is eligible for bail-in or coupon deferral in the event that Barclays' Common Equity Tier 1 ratio falls below a certain level.

Francie Barrett

Neil3030 wrote: »

Thanks for the link. Do you recommend any service for sortable summary data on corporate bonds? I use H&L and they have very limited information on bonds. Ideally I'd want sortable (i.e., downloadable in xls or csv) data on corporate bonds, including current prices, coupons, face values, maturation date (if any), call dates (if any), and payments per year. I found this site through some googlage: https://www.exchange-data.com/reference-data/bond-prospectus.php#service

Afraid I am not really a bonds guy.

You could try asking over at LemonFool.co.uk.