Monthly Archives: July 2018

HM Government Borrowings: June 2018

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In June 2018 , the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury:-

26-Jun-2018 1¾% Treasury Gilt 2037 £2,587.4950 Million
20-Jun-2018 0 1/8% Index-linked Treasury Gilt 2028 3 months £1,381.4000 Million
06-Jun-2018 0¾%  Treasury Gilt 2023 £2,750.0000 Million

When you add the cash raised:-

(2,587.4950 Million + £1,381.4000 Million + £2,750.0000 Million) =  £6718.895 Million

£6718.895 Million = £6.718895 Billion

On another way of looking at it, is in the 30 days in June, HM Government borrowed:-

£223 million each day for the 30 days.

We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2023, 2028 and 2037. All long term borrowings, we are mortgaging our futures, but at least “We Are In It Together….”

The Weiss Korea Opportunity Fund

The Weiss Korea Opportunity Fund

The Weiss Korea Opportunity Fund is an investment company, that is  geographically focused on investing in South Korean companies.

http://www.weisskoreaopportunityfund.com/

Top 10 Holdings

Samsung Electronics Co. 23% of the fund
LG Electronics Inc. 8% of the fund
Samsung Electro-Mechanics Co. 6% of the fund
Samsung SDI Co., Ltd.  5% of the fund
CJ CheilJedang Corp.  5% of the fund
Hyundai Motor Company. 5% of the fund
Korea Investment Holdings Co. 4% of the fund
CJ Corporation. 3% of the fund
Hyundai Motor Company. 3% of the fund
LG Household & Health Care Ltd. 3% of the fund

Top 10 Holdings 66% of the fund

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=8703386&action=

The National Grid Debt

The UK’s National Grid is the power transmission company of the United Kingdom.

www.nationalgrid.com

It carries a lot of debt to fund its operations.

http://investors.nationalgrid.com/~/media/Files/N/National-Grid-IR-V2/results-centre/2018/full-year-results-statement-2017-18.pdf

The current outstanding debt is £23.0 billion (2017: £19.3 billion).

CopyofDebtMaturityProfile31Mar18

The interest payments on the debt (statutory net finance costs) were £745 million.
The effective interest rate on Treasury managed debt for the year was 4.6%

However, one has to note, that cash generated from continuing operations was £4,702 million, (£4.7 Billion)

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?csi=51261

A yield of 5%

The Debt of Thames Water

Thames Water is the London water Utility.

www.thameswater.co.uk

It is owned by a group of investors:-

“Ontario Municipal Employees Retirement System (“OMERS”), one of Canada’s largest pension plans, and Wren House, the global direct infrastructure investment arm of the Kuwait Investment Authority, acquired the 26.3% managed stake from Macquire an Australian bank. OMERS has since agreed to increase its investment by a further 5.530%. When our recent sales complete towards the end of 2017, Thames Water will be jointly owned by 14 institutional investors – made up mostly of pension funds and sovereign wealth funds. The three largest
investors will represent pension funds – one based in Canada and two in the UK. All of our investors take a long-term view of the company’s infrastructure, its customers and the natural environment”

It carries debt to fund its business:-

https://corporate.thameswater.co.uk/-/media/Site-Content/Thames-Water/Corporate/AboutUs/Investors/Debt-investors/Kemble/Thames-Water-Kemble-Finance-plc/Investor-reports-and-presentations/Thames-Water-Utilities-including-Kemble-Water-Finance-Investor-Report-31-March-2017.pdf

a total of debt of £10,749.4 Million. That is £10.749 Billion

 

Book Value Bonds including accretion Class A 7,101.5
Book Value Bonds including accretion Class B 850.0
Total Book Value Bonds including accretion 7,951.5
Class A USPP Notes 479.1
Class B USPP Notes 119.8
Class A RPI linked loans including accretion of £134.4m 1,264.4
Accretion on Index-linked Swaps 223.3
Class A Floating Rate Loans 492.0
Class A Cross-currency swaps (78.9)
Class B Cross-currency swaps (23.2)
Class B Loans 179.0
Less TWUL Cash Investments (57.5)
TWUL Net Debt as per Compliance Certificate 10,549.5
Fees and Discounts (75.2)
Intercompany Loans* 300.0
Derivative financial liabilities (208.4)
Interest payable on amounts owed to group undertakings 179.2
Interest payable on secured bank loans 4.3
TWUL Net Debt as per accounts at 31 March 2017 10,749.4

 

Issuer Currency Face Value

(currency m)

Coupon % Maturity Date Class Description Face Value and accretion at 31 Mar 17 (£m)
TWUCF GBP 550.0 5.375% 21/07/2017* B Fixed Rate Bond 550.0
TWUF GBP 200.0 5.050% 30/06/2020 A Fixed Rate Bond 200.0
TWUF GBP 225.0 6.590% 20/04/2021 A Fixed Rate Bond 225.0
TWUF GBP 175.0 3.375% 21/07/2021 A RPI Linked Bond 264.3
TWUCF EUR 113.0 2.300% 18/07/2022 A CPI Linked Bond 100.6
TWUCF GBP 300.0 5.750% 13/09/2030 B Fixed Rate Bond 300.0
TWUCF GBP 500.0 4.000% 19/06/2025 A Fixed Rate Bond 500.0
TWUCF GBP 45.0 0.721% 21/12/2027 A RPI Linked Bond 46.0
TWUCF GBP 300.0 3.5% 25/02/2028 A Fixed Rate Bond 300.0
TWUF GBP 330.0 6.750% 16/11/2028 A Fixed Rate Bond 330.0
TWUF GBP 200.0 6.500% 09/02/2032 A Fixed Rate Bond 200.0
TWUCF GBP 300.0 4.375% 03/07/2034 A Fixed Rate Bond 300.0
TWUCF GBP 40.0 0.75% 18/12/2034 A RPI Linked Bond 40.9
TWUF GBP 600.0 5.125% 28/09/2037 A Fixed Rate Bond 600.0
TWUCF JPY 20,000.0 3.280% 20/08/2038 A Fixed Rate Bond 143.3
TWUCF GBP 50.0 3.853% 15/12/2040 A LPI Linked Bond 60.9
TWUCF GBP 500.0 5.500% 11/02/2041 A Fixed Rate Bond 500.0
TWUCF GBP 50.0 1.980% 28/08/2042 A RPI Linked Bond 64.4
TWUCF GBP 55.0 2.091% 06/10/2042 A RPI Linked Bond 68.4
TWUCF GBP 40.0 1.974% 12/10/2045 A RPI Linked Bond 45.7
TWUCF GBP 300.0 4.625% 04/06/2046 A Fixed Rate Bond 300.0
TWUCF GBP 100.0 1.846% 28/08/2047 A RPI Linked Bond 128.9
TWUCF GBP 200.0 1.819% 28/08/2049 A RPI Linked Bond 257.8
TWUF GBP 300.0 1.680% 11/07/2053 A RPI Linked Bond 408.2
TWUF GBP 300.0 1.681% 11/07/2055 A RPI Linked Bond 408.2
TWUCF GBP 200.0 1.771% 28/08/2057 A RPI Linked Bond 257.8
TWUCF GBP 400.0 7.738% 09/04/2058 A Fixed Rate Bond 400.0
TWUCF GBP 350.0 1.760% 28/08/2062 A RPI Linked Bond 451.1
TWUCF GBP 250.0 1.875% 24/01/2024 A Fixed Rate Bond 250.0
TWUCF GBP 250.0 2.625% 24/01/2032 A Fixed Rate Bond 250.0
Total 7,951.5

 

The Value of the FTSE-100

Today the FTSE-100, the UK Flagship Index of the UK’s largest 100 companies is worth a lot of money.

£2,129,423.22 Million to be precise.

That is £2.129 TRILLION. That figure is larger than UK GDP.

101 companies because of the dual listing for Royal Dutch Shell, which trades as Royal Dutch Shell “A” and Royal Dutch Shell “B”

Position Symbol Company Market Capitalisation £m
1 HSBA HSBC Holdings £142,052.77
2 RDSA Royal Dutch Shell A £120,008.21
3 BP. BP £115,576.52
4 RDSB Royal Dutch Shell B £100,716.11
5 BATS British American Tobacco £87,849.26
6 GSK GlaxoSmithKline £75,870.76
7 DGE Diageo £66,984.00
8 AZN AstraZeneca £66,536.99
9 RIO Rio Tinto £55,246.45
10 GLEN Glencore £52,217.56
11 ULVR Unilever £50,680.14
12 VOD Vodafone £49,036.85
13 LLOY Lloyds Banking Group £45,474.30
14 PRU Prudential £44,955.83
15 RB. Reckitt Benckiser Group £44,052.37
16 SHP Shire £38,982.71
17 BLT BHP Billiton £36,030.68
18 BARC Barclays £32,335.08
19 RBS Royal Bank of Scotland Group £30,801.96
20 NG. National Grid £28,141.47
21 IMB Imperial Brands £26,914.46
22 CPG Compass Group £25,631.83
23 TSCO Tesco £25,261.01
24 SKY Sky £25,123.44
25 AAL Anglo American £23,808.03
26 STAN Standard Chartered £23,141.48
27 CRH CRH £22,394.66
28 ABF Associated British Foods £21,676.04
29 BT.A BT Group £21,609.90
30 BA. BAE Systems £20,652.56
31 AV. Aviva £20,351.60
32 RR. Rolls-Royce Holdings £18,475.16
33 EXPN Experian £17,198.38
34 REL RELX £16,988.15
35 LGEN Legal & General Group £15,850.56
36 LSE London Stock Exchange Group £15,558.49
37 WPP WPP £15,052.46
38 FERG Ferguson £14,255.63
39 SSE SSE £13,755.76
40 IAG International Consolidated Airlines £13,490.74
41 SN. Smith & Nephew £12,225.21
42 RRS Randgold Resources £11,425.01
43 AHT Ashtead Group £11,115.20
44 INF Informa £10,450.37
45 MRO Melrose Industries £10,179.66
46 TUI TUI AG £9,765.31
47 ANTO Antofagasta £9,759.98
48 SLA Standard Life Aberdeen £9,704.01
49 HL. Hargreaves Lansdown £9,351.19
50 CCH Coca Cola HBC AG £9,317.48
51 ITRK Intertek Group £9,225.23
52 BRBY Burberry Group £9,028.27
53 IHG InterContinental Hotels Group £8,999.62
54 CCL Carnival £8,933.55
55 CNA Centrica £8,894.88
56 III 3i Group £8,762.00
57 SDR Schroders £8,541.95
58 NXT Next £8,507.67
59 FRES Fresnillo £8,426.38
60 PSN Persimmon £7,885.55
61 BNZL Bunzl £7,716.97
62 SMT Scottish Mortgage Investment Trust £7,547.63
63 MNDI Mondi £7,532.11
64 NMC NMC Health £7,458.11
65 EVR Evraz £7,338.00
66 SKG Smurfit Kappa Group £7,272.91
67 WTB Whitbread £7,268.77
68 OCDO Ocado Group £7,166.75
69 RSA RSA Insurance Group £7,137.38
70 LAND Land Securities Group £7,095.03
71 SBRY Sainsbury (J) £7,065.51
72 ITV ITV £7,004.21
73 JMAT Johnson Matthey £7,003.97
74 PPB Paddy Power Betfair £6,953.87
75 PSON Pearson £6,908.93
76 SGE Sage Group £6,811.02
77 SGRO Segro £6,771.34
78 SMIN Smiths Group £6,720.00
79 EZJ Easyjet £6,645.29
80 BLND British Land £6,602.15
81 RTO Rentokil Initial £6,466.41
82 KGF Kingfisher £6,340.13
83 CRDA Croda International £6,321.50
84 DCC DCC £6,158.74
85 GVC GVC Holdings £6,074.96
86 STJ St. James’s Place £6,073.72
87 MRW Morrison (Wm) Supermarkets £5,936.99
88 TW. Taylor Wimpey £5,861.90
89 MCRO Micro Focus International £5,774.67
90 SMDS Smith (DS) £5,600.61
91 ADM Admiral Group £5,488.66
92 JE. Just Eat £5,302.28
93 BDEV Barratt Developments £5,218.67
94 UU. United Utilities Group £5,204.17
95 HLMA Halma £5,201.09
96 BKG Berkeley Group Holdings £5,077.83
97 RMG Royal Mail £5,054.00
98 RMV Rightmove £4,810.83
99 MKS Marks & Spencer Group £4,794.72
100 DLG Direct Line Insurance Group £4,714.88
101 SVT Severn Trent £4,687.63
£2,129,423.22

Legal & General Global Infrastructure Index Fund

The Legal & General Global Infrastructure Index Fund targets companies that own, operate, manage or maintain essential infrastructure across a range of sectors, including utilities,  industrials, and oil and gas.

a £250m fund

http://www.lgim.com/files/_document-library/adviser/global-infrastructure-index-fund-profile.pdf

Top 10 Holdings %

Union Pacific Corp 5.95% of the fund
Nextera Energy Inc 4.30% of the fund
American Tower Corp 3.45% of the fund
Canadian National Railway 3.09% of the fund
Duke Energy Corp 3.06% of the fund
Enbridge 2.92% of the fund
CSX Corp 2.67% of the fund
Southern Co 2.50% of the fund
Crown Castle Intl Corp 2.48% of the fund
Dominion Energy 2.43% of the fund

Total 32.85% of the fund are the top 10 holdings.

http://www.londonstockexchange.com/exchange/prices-and-markets/funds/company-summary/UK/25096902.html

JPMorgan Global Growth & Income plc

The JPMorgan Global Growth & Income plc is a London listed investment trust.

https://am.jpmorgan.com/gb/en/asset-management/gim/per/products/d/jpmorgan-global-growth-income-plc-ordinary-shares-gb00bymky695

The objective of the fund is to deliver total returns and outperform the MSCI All Country World Index over the long-term by investing in companies based around the world. The Company makes quarterly dividends.
10 Largest Holdings are:

Alphabet  4.4%  of the fund
Microsoft  Technology 2.8%  of the fund
United Health Group  2.8%  of the fund
Prudential 2.0%  of the fund
Pioneer Natural Resources 1.9%  of the fund
Union Pacific  1.7%  of the fund
Visa  1.6%  of the fund
Standard Chartered  1.6%  of the fund
Citigroup  1.6%  of the fund
O Reilly Auto Parts  1.5%  of the fund

http://www.shareshop.hsbc.co.uk/shareshop/security.cgi?username=&ac=&csi=10191&record_search=1&search_phrase=jpg

2% yield.

The Debt of Vodafone 2017

Vodafone.

www.vodafone.com

Carries a lot of debt.

http://www.vodafone.com/content/index/investors/debt_investors.html#

Reading the annual report you see it has revenues of £41,649.80 Million = £41.6Bn.

http://www.vodafone.com/content/annualreport/annual_report17/index.html?utm_source=vodafone&utm_medium=promotion&utm_term=investorARpanel&utm_campaign=annual_report_2017.html

The level of debt is very interesting:-

The Debt of Vodafone 2017:-                   €m                         €m                      €m
Short-Term           Long-Term          Total
Bank loans:                                               867                       2,741                   3,608
Bonds:                                                       660                       19,345                20,005
Other liabilities:                                          4,632                    305                     4,937
Bonds in designated hedge relationships  2,244                    12,132                14,37
Total:                                                         12,051                   34,523                46,574

That is €m 46,574  = £40,725.5 = £40.725 Bn