New Ireland 2014 (4%pa) and 2016 (4.6pa) guaranteed Irish Government Bond

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burmo

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Hi,

Does anyone have an opinion on these?

[broken link removed]

[broken link removed]

I've been talking to my broker to clarify a few things and now I'm thinking of them... min 4 or 4.6% p.a. + the reinvested coupons could also make something as well. Taking management charge into account of course will reduce this a bit...
 
Basic bond question regarding coupons

Hi,

I have a question about bonds... Say for example this one which is a govenment capital guaranteed 4% pa bond.

[broken link removed]

If I understand correctly, every year new ireland will receive a 4% 'coupon' from the government. Is this based on the current price or the initial price?

Is there anywhere to buy this bond directly with minimal fees rather than as a unit fund with New Ireland to save the management charges?
 
Re: Basic bond question regarding coupons

burmo said:
Hi,

I have a question about bonds... Say for example this one which is a govenment capital guaranteed 4% pa bond.

[broken link removed]

If I understand correctly, every year new ireland will receive a 4% 'coupon' from the government. Is this based on the current price or the initial price?

Is there anywhere to buy this bond directly with minimal fees rather than as a unit fund with New Ireland to save the management charges?
Click to expand...

The coupon is fixed and has nothing to do with the price. The price effects your yield or return. For exmple the bond is currently trading at just over 103 yielding about 3.2% which is the return you will make if you hold the bond to maturity. I am not sure what charges New Ireland apply.
You can buy the bond directly from stockbrokers but there is a minimum size. Check the NTMA website for a list of brokers.
 
burmo said:
Hi,

Does anyone have an opinion on these?

[broken link removed]

[broken link removed]

I've been talking to my broker to clarify a few things and now I'm thinking of them... min 4 or 4.6% p.a. + the reinvested coupons could also make something as well. Taking management charge into account of course will reduce this a bit...
Click to expand...

Did the broker tell you that you could earn a min of 4 or 4.6%? I don't see how.
 
Ok, let me back up a bit and let me explain what I've been told.

I asked the broker to confirm and he contacted the guy who wrote the above documents. If you look at the bargraph on the second page it shows a coupon of €4 per year and then on the top right it shows 18% return assuming the reinvested coupons make 3.87%.

Is this true?
 
burmo said:
Ok, let me back up a bit and let me explain what I've been told.

I asked the broker to confirm and he contacted the guy who wrote the above documents. If you look at the bargraph on the second page it shows a coupon of €4 per year and then on the top right it shows 18% return assuming the reinvested coupons make 3.87%.

Is this true?
Click to expand...

The returns are based on the price that you pay for the bond on the date of your investment. The 18.5% returns quoted in that document is based on a purchase price of 102.56 back in July. Like I say, the bond is now trading at over 103. Also might be worth asking what that 102.56 is because the market price of that bond on the 17th July was nowhere near that. There might be charges included in the price.
Also what do they do with the coupons? Do they reinvest or just leave it in the fund as cash?
 
If the 18.5% is based on the purchase price in July then does that indicate that the final price is guaranteed?

They do not guarantee what will be done with the coupons as far as I know.
 
These are the details I just received today from the broker.

New Ireland Government Bond Funds Update 07/12/2009


Fund Gilt 2014
Maturity Date 15/01/2014
GRY1 (annualised) 3.245% p.a.
GRY (cumulative) 14.0%
Minimum Return2 (annualised) 2.9% p.a.
Minimum Return (cumulative) 12%


Fund Gilt 2016
Maturity Date 18/04/2016
GRY1 (annualised) 3.931% p.a
GRY (cumulative) 27.8%
Minimum Return2 (annualised) 3.4% p.a.
Minimum Return (cumulative) 24%
.
Notes

1. The GRY is the Gross Redemption Yield on the bond if held to maturity. This assumes any income payable on the bond is reinvested at the same rate.
2. The minimum return shown is the return that will be earned if the bond is held to maturity and all income payable is reinvested earning 0% p.a. In practice income payments will be reinvested in Government Bonds or held on deposit and so are likely to earn a positive return.
3. All values are quoted gross of taxation and policy charges and are as at 04/12/2009.
4. The Gilt 2014 and Gilt 2016 funds invest in bonds issued by the Irish Government.
 
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Let me tell you something I do not deal or invest with or in Bonds. But if you want to invest in New Ireland products, I suggest you thread very carefully. I invested a substantial sum with them in their Equity Funds 38 months ago (3years and 2 months) on the basis of a quote I received in writing. I've been to the Senior Management, the Ombudsman and The High Court, the latter two finding in my favour and they still won't settle the case.

So if you are basing your investment in New Ireland products on the basis of a written quote, be careful. You have been warned, it's not worth the paper its written on.
 
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