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CrashConnoisseur

Would You Invest In Social Housing?

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'Landlord plans £50m retail bond':

http://www.insidehousing.co.uk/news/landlord-plans-%C2%A350m-retail-bond/6515866.article

The bond is being touted to potential investors at a series of roadshows around the UK and is expected to be issued in the next fortnight. The association is hoping to offer investors a 5 per cent return. It will be secured solely on Places for People’s creditworthiness rather than on its assets.

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Why are they doing this? Is it because they can't borrow money from else where?

5%? About the same as NS&I....wouldn't touch it with a proverbial.

Inclined to agree. I can't see how that they have the kind of credit-worthiness to justify that rate.

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This sounds contradictory. By definition, "social" would indicate that profit would not be a core objective. But the whole idea of investing is that you are intending on turning a profit. Just sounds odd.

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Plus they're possibly in hock to the carry trade as a result of their Yen bond loan. "Will swap into sterling" is not the same as "has already swapped into sterling". Theses sort of guys often can't bear not to run the risk on currency relatives in the hope of an extra bit of margin. Lehmans ... Barings ... Morgan Stanley ... Giant Squid ... can anyone please explain to me the difference?

barge pole ... touch ... wouldn't

:ph34r:

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Considering housing associations have been effectively replacing local council housing, and are funded through the government, I think this is a pretty sick move. They should be run not for profit. In fact the government should get back in the business of directly providing shelter for people in genuine need themselves, and let this lot go private as they clearly want to.

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It's extremely secure so no risk of losing your money there.

However why would anybody buy a 5% bond at a time of 5%+ inflation? Answers on a £50 note.

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It's extremely secure so no risk of losing your money there.

I'm not quite sure if you're being ironic, Frank Hovis.

This association has been financing its business in yen bonds. Creative, certainly, but prudent? They claim to intend to swap the yen debt into sterling, but have they done so yet ? Recent financial history is littered with the corpses of casino bankers who didn't get their trades quite right. Bradford & Bingley messsed with things they didn't really understand (G.M. 'slice 'n dice' packages) and paid the price.

Is a housing association any more immune from this sort of fate ?

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I'm not quite sure if you're being ironic, Frank Hovis.

This association has been financing its business in yen bonds. Creative, certainly, but prudent? They claim to intend to swap the yen debt into sterling, but have they done so yet ? Recent financial history is littered with the corpses of casino bankers who didn't get their trades quite right. Bradford & Bingley messsed with things they didn't really understand (G.M. 'slice 'n dice' packages) and paid the price.

Is a housing association any more immune from this sort of fate ?

Not ironic at all. All of this debt is secured on the income stream but in the event of:

A minor problem: sell a few houses

A major problem (as Ujima): another HA will buy a whole swathe / all of the stock and entirely clear the debt

These are rated low risk because they are. Still wouldn't buy it though as I think bonds at current rates are shockingly poor investments, as per my other post about Citibank whining that people can still index-link their cash http://www.housepricecrash.co.uk/forum/index.php?showtopic=164714&pid=3012485&st=0entry3012485

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Not ironic at all. All of this debt is secured on the income stream but in the event of:

A minor problem: sell a few houses

Hello Frank.

So why does it say 'secured soley against credit worthiness, not a against assets' then?

Even if it was the case I still wouldn't touch it, the smell of samurai bonds is too strong.

Edited by council dweller

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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