| QPR Bond - thoughts from those with expertise? 11:06 - Sep 30 with 29336 views | saxbend |
I have some money sitting in a savings account that does very little except act as a place for my other savings account to empty into annually. I would like to invest it into something a bit more interesting and I am very tempted to believe that the Bond for the new training ground could be it.
So for those of you who've done this sort of thing before (or do it often), what do you think? |  | | |  |
| QPR Bond - thoughts from those with expertise? on 11:15 - Sep 30 with 9069 views | ozexile |
Taking any emotion out of it. But if I was to look at it as an outsider my first question would be where is the 5% p.a. coming from without promotion? |  | | |
| QPR Bond - thoughts from those with expertise? on 11:22 - Sep 30 with 9043 views | loftboy |
When would the money have to be paid by? |  |
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| QPR Bond - thoughts from those with expertise? on 11:27 - Sep 30 with 9020 views | saxbend |
| QPR Bond - thoughts from those with expertise? on 11:22 - Sep 30 by loftboy |
When would the money have to be paid by? |
It's not explicitly stated yet, but given the timescale of opening the training ground in 2023 I imagine very soon. The pre-registration window closes on Wednesday so I suspect they take payments from investors by November. Just speculation on my part though.
Another thing has occurred to me though. This does look like a very good deal from an investor's point of view, but that means the club is taking on debt at a very high interest rate. Asking the experts again, should we worry on the club's behalf? I suppose they can always just terminate early and pay back the capital if things get bad. Or can they? | | | |
| QPR Bond - thoughts from those with expertise? on 11:37 - Sep 30 with 8969 views | SydneyRs |
Credit risk is the thing to be aware of, the risk of the other party not being able to pay the interest or return your investment at the end of the term. They aren't paying up to 8% for the fun of it, its because they need to offer that much to attract funds. If you believe QPR are good for this (and I've no reason to think they won't be), its a much better return than you will get at the bank. To get the extra 3% on top of the base 5% you essentially have to invest it back into the club anyway. [Post edited 30 Sep 2021 11:40]
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| QPR Bond - thoughts from those with expertise? on 11:47 - Sep 30 with 8903 views | saxbend |
Yes. I'm looking at that 3% and thinking cheap season ticket (or some free away tickets) for the next five years. But even the 5% annual interest on the £2m they say they're setting as their minimum investment threshold to get the bonds going could be quite the millstone. | | | |
| QPR Bond - thoughts from those with expertise? on 11:47 - Sep 30 with 8902 views | TomS |
| QPR Bond - thoughts from those with expertise? on 11:37 - Sep 30 by SydneyRs |
Credit risk is the thing to be aware of, the risk of the other party not being able to pay the interest or return your investment at the end of the term. They aren't paying up to 8% for the fun of it, its because they need to offer that much to attract funds. If you believe QPR are good for this (and I've no reason to think they won't be), its a much better return than you will get at the bank. To get the extra 3% on top of the base 5% you essentially have to invest it back into the club anyway. [Post edited 30 Sep 2021 11:40]
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Investing in a private company carries significant credit and liquidity risk. Hence the generous interest rate reflects that risk. If you are a more cautious investor, you'd be more concerned about the Return of Investment rather than the Return on Investment.
In other words, how significant is the risk that you won't get your money back, whatever about the interest?
Is there a chance you might need it back before the loan period expires, what happens then? It's not as easy to get your money returned from this as it is to make a withdrawal from a bank. |  | | |
| QPR Bond - thoughts from those with expertise? on 11:51 - Sep 30 with 8868 views | saxbend |
| QPR Bond - thoughts from those with expertise? on 11:47 - Sep 30 by TomS |
Investing in a private company carries significant credit and liquidity risk. Hence the generous interest rate reflects that risk. If you are a more cautious investor, you'd be more concerned about the Return of Investment rather than the Return on Investment.
In other words, how significant is the risk that you won't get your money back, whatever about the interest?
Is there a chance you might need it back before the loan period expires, what happens then? It's not as easy to get your money returned from this as it is to make a withdrawal from a bank. |
Indeed, but it looks to me as though the two are related. The return of investment really becomes less likely if the club gets in big financial trouble, but the chances of the club getting into that kind of trouble goes up with high interest rates like that. | | | |
| QPR Bond - thoughts from those with expertise? on 11:58 - Sep 30 with 8831 views | londonscottish |
| QPR Bond - thoughts from those with expertise? on 11:51 - Sep 30 by saxbend |
Indeed, but it looks to me as though the two are related. The return of investment really becomes less likely if the club gets in big financial trouble, but the chances of the club getting into that kind of trouble goes up with high interest rates like that. |
I guess it also rests on the legal entity against which the loan is secured.
For example, it might be Tune Group. Which is or was co-owned but Tony F & Ruben plus some others (I think).
Which may of may not then link back to Air Asia which has been struggling or Ruben's dad's shipping & ports businesses which have been doing well. |  |
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| QPR Bond - thoughts from those with expertise? on 12:00 - Sep 30 with 8813 views | Northernr |
| QPR Bond - thoughts from those with expertise? on 11:58 - Sep 30 by londonscottish |
I guess it also rests on the legal entity against which the loan is secured.
For example, it might be Tune Group. Which is or was co-owned but Tony F & Ruben plus some others (I think).
Which may of may not then link back to Air Asia which has been struggling or Ruben's dad's shipping & ports businesses which have been doing well. |
Say what you like about our owners but to this point they've been more than 'good for it'.
They've picked up the bill for their mistakes, they're paying that FFP fine themselves, the fact they're funding a new training ground in a time of global pandemic and uncertainty doesn't suggest they're struggling, nor going to bail any time soon. |  | | |
| QPR Bond - thoughts from those with expertise? on 12:08 - Sep 30 with 8749 views | HanwellHoopster |
I'm very tempted by this, but the one red flag I have, and feel I should share with others, is that the investment will be very illiquid. I can't see a buoyant market out there for QPR bonds should you need to sell yours. So if you're going to do this, as I probably will, only invest money you're certain you won't need in the next five years. That does rather put a cap on how much I'm willing to stick in. | | | |
| QPR Bond - thoughts from those with expertise? on 12:09 - Sep 30 with 8744 views | BostonR |
| QPR Bond - thoughts from those with expertise? on 12:00 - Sep 30 by Northernr |
Say what you like about our owners but to this point they've been more than 'good for it'.
They've picked up the bill for their mistakes, they're paying that FFP fine themselves, the fact they're funding a new training ground in a time of global pandemic and uncertainty doesn't suggest they're struggling, nor going to bail any time soon. |
Spot-on.
This bond will be over-subscribed. I fully expect a big take-up from the institutions, so my only question is how much will be on offer to individual investors. The Board clearly want the fans to be involved, hence some of the questions when you register, so some of us may get lucky.
For me it's more than an investment decision - I am a fan of a club that is closely associated with my family and where I grew up. I am in and given some of my money is doing nothing I will invest. |  | | |
| QPR Bond - thoughts from those with expertise? on 12:48 - Sep 30 with 8602 views | sevenhoop |
i cant get the link to work |  | | |
| QPR Bond - thoughts from those with expertise? on 12:54 - Sep 30 with 8579 views | soops |
Maybe I'm being thick (not ideal as a potential investor!) but where do you pre-register your interest - can't see anything on the QPR or Tifosy websites?
EDIT - Found it now - there was another article on pre-registering linked to the video on the QPR site [Post edited 30 Sep 2021 12:55]
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| QPR Bond - thoughts from those with expertise? on 12:56 - Sep 30 with 8560 views | soops |
| QPR Bond - thoughts from those with expertise? on 12:48 - Sep 30 by sevenhoop |
i cant get the link to work |
Have you registered an account with Tifosy? | | | |
| QPR Bond - thoughts from those with expertise? on 13:19 - Sep 30 with 8449 views | swisscottage |
Not to mention that you can do this in an ISA ( if you've not already put money into another ISA in the tax year) meaning you don't have to pay tax on the interest.
I'm not sure if I could invest in this on a current ISA though. Does anyone know who understand this ? | | | |
| QPR Bond - thoughts from those with expertise? on 13:21 - Sep 30 with 8442 views | Benny_the_Ball |
| QPR Bond - thoughts from those with expertise? on 11:58 - Sep 30 by londonscottish |
I guess it also rests on the legal entity against which the loan is secured.
For example, it might be Tune Group. Which is or was co-owned but Tony F & Ruben plus some others (I think).
Which may of may not then link back to Air Asia which has been struggling or Ruben's dad's shipping & ports businesses which have been doing well. |
This is key for me as any investment will be tied up for 5 years. The structure that the football club sits within is quite complicated so I'd like to know which legal entity I'm loaning money to. Only then I can make an informed decision as to whether that entity is 'good for it' for the next 5 years. [Post edited 30 Sep 2021 15:26]
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| QPR Bond - thoughts from those with expertise? on 14:33 - Sep 30 with 8193 views | Toast_R |
My Grandfather once told me
"Let your eyes be the judge and your money the last thing you part with". |  | | |
| QPR Bond - thoughts from those with expertise? on 14:44 - Sep 30 with 8160 views | W12Mikey |
I spent about 20 years in corporate banking including a brief period in the bond market, so I guess I can claim some expertise in this area. However, what follows is observations and definitely not advice. Anyone who is seriously contemplating investing in this and who feels they need advice should take advice tailored to their own situation from a suitably qualified and regulated Independent Financial Adviser.
My observations (sorry if a lot of it is in the "bleedin' obvious" category):
- we won't see the detailed terms until the Offer document is released, so at the moment although we know what the promised rewards are we can't fully assess the risks
- the maximum amount they can raise is stated on the Tifosy site to be £6.75m, and the minimum they want is £2m. This is a very small issue, which means institutions will not be interested (even if they fancied QPR credit risk which is doubtful - see below).
- it is unlikely anyone is going to be making a market in the bonds after they're issued (i.e. putting buyers and sellers together) and even if someone did this, the small size of the issue will make it very illiquid. So investors need to assume they are tying their money up for the full 5 years
- as others have said, it is pretty crucial to know who the actual issuer of the bond is. I would expect it will be a special purpose company set up just to issue the bond. It will then on-lend the money to whichever company in the QPR group actually owns the training ground. Repayment of the bonds is dependent on repayment of that loan. There may or may not be guarantees from other entities, but I would be amazed if any entity outside the football club group gives guarantees. So the financial strength of the shareholders in QPR is only relevant to the extent you think they would step in to bail out the club if it were on the brink of insolvency
- we don't know yet if the bond will be secured on the training ground itself (which would at least mean there'd be an asset to be realised if QPR fails to repay)
- the club appears to be in a better situation than for several years but no matter how much financial analysis you do, you are going to be left with a lot of unknowns about the risk that the club cannot repay the loan/bond after 5 years. Would you have said 5 years ago that Derby were heading for administration? It follows from that that you shouldn't invest money you can't afford to lose
- the rewards look attractive compared to what you can earn in a savings account. But you need to bear in mind that this is a 5 year fixed rate investment. If inflation continues to take off and interest rates go up, 5% may not seem such an exciting return in a couple of years' time. For comparison you could buy a unit trust investing in a portfolio of high yield bonds today and get a yield of 4-5%, possibly more (and the risk of capital loss is less because it's a portfolio). You could also sell the unit trust at any time if you needed the cash or just didn't fancy it as an investment any more
- the 3% "in kind" interest and the possible 25% promotion bonus are therefore what makes this look more interesting than just investing in a unit trust; you have to decide whether you think they're enough to justify the risk that you lose all your money
- there is also the intangible benefit of feeling you are helping the club, which I guess is why this route make sense for the club; funding from supporters will always be a bit cheaper/on less onerous terms than from a disinterested third party
- if Chelsea offered a bond on these terms you wouldn't dream of investing in it, would you? So you need to think carefully about your objectives/motivation and be sure this is right for you. If you actually have a spare few grand to invest would you actually be better off, say, putting it into a pension?
Personally, I'm quite interested and might invest, but only money I can afford to lose. And I'll be looking very carefully at the detailed terms in the Offer document before making any decisions. | | | |
| QPR Bond - thoughts from those with expertise? on 14:52 - Sep 30 with 8112 views | Sonofpugwash |
Don't.
Never let your heart rule your head.
I got burned to the tune of ten grand when I stupidly did that over the Chris Wright share issue.
Never so much as a "thanks for the cash Sucker,now F*ck Off"
Could have done with that poppy - needed a brand new second hand car... |  |
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| QPR Bond - thoughts from those with expertise? on 15:02 - Sep 30 with 8066 views | GloryHunter |
| QPR Bond - thoughts from those with expertise? on 13:19 - Sep 30 by swisscottage |
Not to mention that you can do this in an ISA ( if you've not already put money into another ISA in the tax year) meaning you don't have to pay tax on the interest.
I'm not sure if I could invest in this on a current ISA though. Does anyone know who understand this ? |
Unless you're thinking of putting in £20,000 or more, the ISA option is meaningless. Everyone has an annual tax allowance of £1,000 on savings interest anyway. |  | | |
| QPR Bond - thoughts from those with expertise? on 15:05 - Sep 30 with 8047 views | peejaybee |
As my Dad used to say : If in doubt: Dont |  |
| If at first you dont succeed, pack up and f**k off home. |
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| QPR Bond - thoughts from those with expertise? on 15:06 - Sep 30 with 8039 views | Boston |
I honestly opened this thread thinking Davman was joining the debate and suggesting a Rangers player for the role of James Bond!
Anyway…Lyndon Dykes, not a natural number 7 but trains hard. | |
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| QPR Bond - thoughts from those with expertise? on 15:06 - Sep 30 with 8033 views | Ranger_Things |
| QPR Bond - thoughts from those with expertise? on 12:00 - Sep 30 by Northernr |
Say what you like about our owners but to this point they've been more than 'good for it'.
They've picked up the bill for their mistakes, they're paying that FFP fine themselves, the fact they're funding a new training ground in a time of global pandemic and uncertainty doesn't suggest they're struggling, nor going to bail any time soon. |
I agree. I'd happily pitch in for a monorail if they asked. |  | | |
| QPR Bond - thoughts from those with expertise? on 15:10 - Sep 30 with 8025 views | Boston |
Never buy shares if you cannot afford to lose the money you’ve invested.
Oops, sorry W12Mikey, just read your far more detailed response. [Post edited 30 Sep 2021 15:14]
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| QPR Bond - thoughts from those with expertise? on 15:10 - Sep 30 with 8027 views | PinnerPaul |
| QPR Bond - thoughts from those with expertise? on 14:44 - Sep 30 by W12Mikey |
I spent about 20 years in corporate banking including a brief period in the bond market, so I guess I can claim some expertise in this area. However, what follows is observations and definitely not advice. Anyone who is seriously contemplating investing in this and who feels they need advice should take advice tailored to their own situation from a suitably qualified and regulated Independent Financial Adviser.
My observations (sorry if a lot of it is in the "bleedin' obvious" category):
- we won't see the detailed terms until the Offer document is released, so at the moment although we know what the promised rewards are we can't fully assess the risks
- the maximum amount they can raise is stated on the Tifosy site to be £6.75m, and the minimum they want is £2m. This is a very small issue, which means institutions will not be interested (even if they fancied QPR credit risk which is doubtful - see below).
- it is unlikely anyone is going to be making a market in the bonds after they're issued (i.e. putting buyers and sellers together) and even if someone did this, the small size of the issue will make it very illiquid. So investors need to assume they are tying their money up for the full 5 years
- as others have said, it is pretty crucial to know who the actual issuer of the bond is. I would expect it will be a special purpose company set up just to issue the bond. It will then on-lend the money to whichever company in the QPR group actually owns the training ground. Repayment of the bonds is dependent on repayment of that loan. There may or may not be guarantees from other entities, but I would be amazed if any entity outside the football club group gives guarantees. So the financial strength of the shareholders in QPR is only relevant to the extent you think they would step in to bail out the club if it were on the brink of insolvency
- we don't know yet if the bond will be secured on the training ground itself (which would at least mean there'd be an asset to be realised if QPR fails to repay)
- the club appears to be in a better situation than for several years but no matter how much financial analysis you do, you are going to be left with a lot of unknowns about the risk that the club cannot repay the loan/bond after 5 years. Would you have said 5 years ago that Derby were heading for administration? It follows from that that you shouldn't invest money you can't afford to lose
- the rewards look attractive compared to what you can earn in a savings account. But you need to bear in mind that this is a 5 year fixed rate investment. If inflation continues to take off and interest rates go up, 5% may not seem such an exciting return in a couple of years' time. For comparison you could buy a unit trust investing in a portfolio of high yield bonds today and get a yield of 4-5%, possibly more (and the risk of capital loss is less because it's a portfolio). You could also sell the unit trust at any time if you needed the cash or just didn't fancy it as an investment any more
- the 3% "in kind" interest and the possible 25% promotion bonus are therefore what makes this look more interesting than just investing in a unit trust; you have to decide whether you think they're enough to justify the risk that you lose all your money
- there is also the intangible benefit of feeling you are helping the club, which I guess is why this route make sense for the club; funding from supporters will always be a bit cheaper/on less onerous terms than from a disinterested third party
- if Chelsea offered a bond on these terms you wouldn't dream of investing in it, would you? So you need to think carefully about your objectives/motivation and be sure this is right for you. If you actually have a spare few grand to invest would you actually be better off, say, putting it into a pension?
Personally, I'm quite interested and might invest, but only money I can afford to lose. And I'll be looking very carefully at the detailed terms in the Offer document before making any decisions. |
Thanks, all good advice.
One minor point, they do say that the bonds will be able to be traded on something called the Tifosy Exchange.
Obviously, like shares, or anything really, you can only sell if there is a buyer! | | | |
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