NATIONWIDE B/S 7.25% PIBS GBP1000 PERP

I have received a message from my broker stating these will redeem early on 05 December 2017. Those are the only details supplied.

As a novice to fixed income I am not sure what this means in terms of redemption rate, I can't find anything in the prospectus that suggests this would happen and have not received any option to accept a redemption offer.

Any wise words would be welcome to clarify the process.

Comments

  • If these are the ones with symbol POB I would go back and check. There is a call date of 5 Dec 2021 where Nationwide have the option to redeem and probably will do so. I own them as well and wasn't aware of any redemption this year. There was a tender a few years ago where Nationwide did buy a lot of their PIBs back but that was optional to participate.
  • Thanks,
    Your comments back up my assumptions.
    I have asked the broker for more details/terms of the redemption.

    I can find nothing online and POB still seems to being traded unaffected, without any news or stock market.
  • As an aside, if the PIBs are redeemed in 2021 it will be at 100p. So taking account of the capital loss over the next 4 years from the current selling price of around 115p you are effectively getting around 3% per annum for the next 4 years or so.
  • Update from broker.
    The issue will not be redeeming early.
  • I expect these will be called in December 2021, especially as the Nationwide did a tender offer a few years ago. Recently (18th Aug) sold my holding as the "Yield to Maturity" reduced to 3.4% (based on selling price of 1.153).
    Made a reasonable capital gain from original purchase on 31st May 2013 1.037
    Other Info
    http://www.fixedincomeinvestor.co.uk/x/analysis.html?type=bond-of-the-week&cat=analysis-comment&y=2013&aid=1047

    Re Tender
    http://www.fixedincomeinvestor.co.uk/x/analysis.html?type=bond-of-the-week&cat=analysis-comment&y=2013&aid=1092
  • Some advice required:-
    l bourght NATIONWIDE B/S 7.25% PIBS GBP1000 PERP at 90p 2010, held in my ISA.
    l require some advice for best action, do l sell now @115 or wait til December.
    Will l just get the £1 + interest?
  • Whilst it is not guaranteed it seems extremely likely that Nationwide will elect to redeem these at £1 in December 2021. So if you hold on, as per the posts above you are effectively getting around 3.4% per annum as calculated by shaunm (7.25p per year income and a capital loss averaging roughly 3.75p on a simple basis). You have to decide if that is good value allowing for the risk that the Nationwide defaults and compared to the alternative uses of the money.
  • Notaclue, Regarding when to sell, it makes no difference regarding interest when you sell. eg I sold on 18th Aug, and was paid "accrued" interest for 78 days.
    Key matter is the price and the "yield to maturity", which are likely to decrease as December 2021 gets closer. Unless you have alternative investments planned (or wish to spend the money), which would give a yield of 3.4% or more, then there is little incentive to sell now, but review the situation say in 6 or 12 months.
    3.4% effective interest rate for a fairly safe security is not bad for a "low risk" portfolio
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