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Permanent Interest Bearing Shares (PIBS)
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D Bergman
Posted: 15 May 2024 12:21:20(UTC)
#1

Joined: 22/03/2018(UTC)
Posts: 1,308
I've looked at them, and HL sell a few. One from Nationwide has a yield of 6.25%, but I really don't know anything about them other than that they effectively seem to be a cross between shares and bonds.
Like bonds, the capital value is in inverse ratio to market interest rates, so it seems to be a reasonable time to buy them. The purchase/sell spread is about 2%.

I understand that in the case of Nationwide going bust, the owners would be last in the queue to get their money back.

Does anybody have information about these?
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Jed Mires
Posted: 15 May 2024 19:30:20(UTC)
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I looked at these years ago and just saw too many negatives. The main negative was no redemption date, its a bit like buying a fund with only one bond in the fund. You dont have the advantage of buying a single bond with a redemption date or the advantage of buying a fund with a lot of bonds. The yield is too low to outweigh the negatives. Only my opinion of course.
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D Bergman on 15/05/2024(UTC)
jonathan rowe
Posted: 16 May 2024 07:27:27(UTC)
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Joined: 30/03/2018(UTC)
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I would avoid totally, they've got poor liquidity and as largely held by small investors you can get haircutted more easily (since no corporate holders with legal resources as in Aviva PIBS debacle):

https://www.lovemoney.co...eplacement-is-very-risky
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Jay P on 16/05/2024(UTC), D Bergman on 16/05/2024(UTC)
Busy doing nothing
Posted: 16 May 2024 08:57:43(UTC)
#4

Joined: 01/03/2021(UTC)
Posts: 372
I looked into these a number of years ago, back then they were quite an illiquid asset, probably better to go for a high yield corporate bond fund instead.
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John Bran
Posted: 16 May 2024 11:08:52(UTC)
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Joined: 01/09/2017(UTC)
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In the past they were an excellent investment as they were exceeding low risk, while actually being high risk.
They (the building society) could refuse payments for multitude of reasons but never did because the effect it would have on there ability to issue new debt in the future. Then we had the financial crisis and lots refused to pay out. One reason was lots particularly of the smaller society's were basically bankrupt.
They became basically zombie company. Only continuing to run mortgages of those who couldn't switch to better deals IE mortgage prisoners.
Manchester building society for instance. Oddly it's PIBs suddenly recovered when they won litigation against a company that gave them advice. This resulting in them merging with Newcastle building society.
Well that was what was supposed to happen! I never followed to the end.

As an aside PIBs are not always permanent as some are called PIBs but turns out the building society has right to buy back on certain dates.
I looked at one (I think it was nationwide) during the crash couldn't understand why it hadn't risen with fall in interest rates. Turns out it had a right to buy back coming up yet it was called a pib?
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D Bergman on 16/05/2024(UTC)
John Bran
Posted: 16 May 2024 11:10:51(UTC)
#6

Joined: 01/09/2017(UTC)
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PS ipf 2027 is a 12% bond.
International personal finance is the issuer and the company is doing well.
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