BBYB

Could someone kindly explain why BBYB price has fallen given the increase in the price of the shares please.

Comments

  • Has it? I thought it had been fairly stable and had actually gone up a bit over this week.
    If it has dropped a bit though - maybe it's the thought that time is running out to make conversion worthwile for holders.
  • It has been fairly steady over the last couple of months but did fall after going x divi at the end of December. This was to be expected as there is now one less divi payment to collect on call at 1/7/20
  • Hi - Not sure I agreed with your premise at the time of your post but certainly not now. Bought at 112.50 early December. To buy today would be around 114. That said, these "mature" in July 2020 and surely they would move towards par at the date gets closer.

  • Yes, agreed Dandigir.

    I bought more in November last year as a medium term "park" for cash now that bank deposits are so low.

    There are no YTMs in the usual suspects of Corporate Bonds that offer comparable returns for the same time to maturity apart from Eros, Premier Oil and Provident Financial 2021. These are all higher, although arguably more risky ( as of today) - although Premier shows signs of creeping above par in the near term

    BBYB also has advantage of having an assured capital loss (a feature not usually worthy of any praise !!) if anyone is likely to have any future gains to offset before or at "maturity" !

    Woz
  • Read yesterday after the Carillion debackle that BBY were expecting a hit of £450 million on shared projects. Already have some BBY and was thinking of topping up but now a little cautious till the dust settles
  • First post - novice question.
    Interesting isn't it that despite the Carillion connections that BBYB have ticked up a little again today. I'd been hoping for a fall as an opportunity to buy some more. It is difficult to separate out the reasons for the strength of BBYB despite the clock inevitably ticking towards par in two and a half years time. Aurelius and hiriskpaul in a previous thread flagged up the stub value of the conversion factor as one element and that the company is now perceived as a more solid bet and will be re-rated onto similar yields as the rest of the FI market as another element at play.
    With the price of the BBY ords nudging 300p I guess the conversion elment is still priced in as a possibility. But by how much? I don't pretend to understand Black-Scholes pricing models but wouldn't common sense suggest that this element will not move in a straight line. There must be a point in the the next year or so where, if if the ord price does not go up "on target" for 405p, that the stub value is discounted all in one go as the market decides it is not achievable.
    Is this how these convertables tend to work?
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