The Fund's investment activities are intended for high net worth individuals who are considered to be sophisticated investors that are looking for a fund that aims to protect the capital invested whilst at the same time generating above average returns.
Attention! This investment falls outside AFM supervision. No license and no prospectus required for this activity.
This will be achieved through investments in public and corporate stocks and bonds, financial instruments, including futures and options, and certain types of real estate, although this type of investment will not represent anything other than a small percentage of the total investment fund. The nature of this alternative investment fund is that it is able to react swiftly to ever changing possibilities and risks in the markets and as such it
is assumed that other asset classes will be traded in the future if this is seen as being beneficial to the investors by the Fund managers. In addition, new sister Funds may be established in the future that will have a more specific investment focus if this is required by investors.
FULL DETAILS OF THE INVESTMENT POLICY CAN BE VIEWED DIRECTLY
Whilst the Fund aims to generate above average returns for Investors, the main priority of the Fund is primarily the safety of the funds that have been entrusted to us by our clients. It is for this reason that one of the main targets for investment is in Europe's largest firms. In addition, the priority given to debt instruments and, where appropriate, real estate is also considered to be an important element of the investment portfolio. At the same time we do not forget that in addition to minimizing the risk for our investors, we need to maximise the value of the investments made by our clients, and repay the trust demonstrated in us to manage these conflicting forces on their behalf.
For the purpose of maximising returns made by the Fund our managers and analysts constantly monitor the market situation in all the markets in which the Fund operates and any possible new markets. With the constant flow of informed market intelligence, decisions are made and assets traded between all the markets in order to ensure the best investment profile to maximise return and minimise risk. This technique ensures the maximum possible growth of the value of the assets but also makes it possible to hedge the possible risks of changes in market prices.
Our team consists of professionals with extensive experience in the Russian and global stock and commodity markets. Most have worked in large investment houses and our analysts are included in the TOP10 according to Bloomberg. With this extensive experience the team at Capital Pi aim to surpass your expectations and achieve good but safe returns on your investments through us.
The strategy is based on operation in debt markets of the G20 countries. Funds are invested in highly liquid, supranational, sovereign, municipal and corporate debt securities with an investment grade credit rating (at least BBB-) according to the key credit rating agencies (Moody’s, Standard &Poor’s, Fitch).
The investment instrument in this strategy is eurobonds from a limited range of issuers. In the selection of issuers to be included in the portfolio, the key factors are its balance across economic sectors and across the credit quality of issuers. The share of one investment instrument can be up to 25% of the overall portfolio. The key factor enhancing the expected return of this investment product is the opportunity to raise funds against securities in the portfolio at market rates. Thus, the expected return at portfolio maturity can be higher if borrowed funds are used.
This strategy is based on expectations of the Russian government bond curve. Normally, the yield curve is a monotone increasing upward-convex curve. It means that, first of all, the yield grows with time (positive slope) and, second, the rate of yield change decreases in time (tends to zero).
Today we will look at two corporate debt securities as investment ideas for this week: Kinross Gold Corporation and Vnesheconombank
In the segment of foreign editions with higher profit margins pay attention to Eurobonds of Canadian gold miner Kinross Gold Corporation maturing in 2041 g. the Issuer is engaged in the exploration and gold mining all over the world: USA, Brazil, Chile, Mauritania, Ghana and Russia. Proven and probable reserves include 34.4 million ounces of gold, 44.0 million ounces of silver and 1.4 billion pounds of copper. The headquarters is located in Toronto (Canada). The company's branches employ about 7 thousand people. The Issuer's shares are traded on the Toronto stock exchange with a current market capitalization of $ 6.4 billion. USA.
Senior unsecured issue of $ 250 million USA posted in May 2012, the Market for emissions — the world. Six months before maturity, the paper provides for a call option at par (100%). Options for the revision of the coupon is not provided. The minimum lot on paper is 2 thousand dollars. USA. The paper is being serviced by NSD.
Following the improvement in Russia's rating, Fitch upgraded Vnesheconombank's rating from BBB to BBB (which corresponds to the sovereign rating). The Outlook is stable. It is noted that Fitch ratings the Bank at the same level with the sovereign ratings due to the very high readiness of the state to provide it with capital and funding support if necessary. Moody's and S&P agencies still maintain ratings one notch below Fitch. corresponds to the "investment" level.
Alexey Shternshis
Joint Managing Director
Capital Pi
Let us pay attention to the Eurobonds of one of the world's largest mining companies, Freeport-McMoRan with maturity in 2034. Freeport-McMoRan produces copper, molybdenum and gold. Proved or probable copper reserves are estimated at 120 billion pounds; gold - more than 30 million ounces and about 3.8 billion pounds of molybdenum reserves. The company’s mines are located in America and Indonesia. The company employs 27 thousand people. The headquarters are located in Phoenix (Arizona, USA). The issuer's shares are traded on the NYSE with a current market cap of $ 13 billion. Included in the S&P 500 index.
The senior unsecured issue in the amount of $ 800 million (securities remaining in circulation for $ 750 million) was placed in 2014. The issue market is global. One call option is provided on paper six months before maturity. Options for revising coupon level (5.4% per annum) are not provided. The face value and minimum lot on paper are respectively 1 thousand and 2 thousand dollars.
Last week, following an improvement in Sistema's ratings, S&P upgraded MTS from BB to BB +. The press release states that MTS’s own credit rating is at BBB-, that is, three steps higher than Sistema, thanks to the company's leading position in the Russian mobile communications market and strong credit indicators. In particular, the company's debt to EBITDA ratio is around 2.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Arconic Inc. and GTLKOA 25
Let us turn our attention to the Eurobonds of Arconic Inc. with maturity in 2037, the Issuer specializes in light metals: Arconic products are used in aerospace, automotive, oil and gas and defense industries around the world, as well as in the production of building structures and consumer electronics. The company was established in 2016 by splitting Alcoa Inc. into two publicly traded companies. The headquarters is located in Pittsburgh (Pennsylvania, USA), the company employs 43 thousand people. The issuer's shares are traded on the NYSE with a current market capitalization of $ 11 billion. Included in the S&P 500 index.
The senior unsecured issue with maturity in February 2037 in the amount of $ 625 million. Options for the revision of the coupon (5.95% per annum) are not provided. Minimum lot for the release is $ 1,000.
Following the improvement of Russia's sovereign rating, Fitch increased the ratings of domestic state-owned banks and corporations. In particular, the long-term rating of State Transport Leasing Company and its subsidiaries GTLK Europe DAC and GTLK Europe Capital DAC was upgraded from BB to BB +. Note that the Moody’s agency maintains a rating one level lower for the obligations of these companies than Fitch - Ba2.
The issuer's maturity in 2025 is one of the few senior Russian corporate securities for which a yield of about 5% can still be recorded. Note that GTLKOA 25 looks competitive and against the background of international securities of comparable credit quality.
Alexey Shternshis
Joint Managing Director
Capital Pi
We decided to analyze what the maximum level of profitability is now offered by securities with an "investment" rating issued by borrowers from developed countries. As it turned out, the Eurobond investors of one of the pillars of the American automobile industry Ford Motor Company offer investors the greatest profitability.
Ford Motor Company, one of the five largest global automakers in 2018, took eleventh place in the ranking of the largest US companies in terms of revenue ($ 160 billion). After a difficult period in 2006-2009 the company managed to return to sustainable positive profitability, earning $ 5.1 billion in net profit in 2018. The issuer's current market capitalization reaches $ 37 billion.
F 7.45 07/16/31 was placed in 1999, the current issue volume in circulation is $ 1.8 billion. An interesting level of paper coupon (7.45%) is noteworthy.
Against the background of the recent successful placement of ruble sovereign bonds of the Republic of Belarus on the Moscow Exchange, let us pay attention to the dollar obligations of this issuer. In particular, for the dollar Eurobonds of the Development Bank of the Republic of Belarus with maturity in May 2024.
Last month, S&P affirmed its issuer rating at B with a “stable” outlook. Since our recommendation on DBBYRB 6 ¾ 05/02/24 of May 6, 2019, the spread of its profitability to VEB-23 has decreased by 20 b.p. - up to 160 b.p.
However, the current yield to maturity of this issue (5.6%) looks, in our opinion, still interesting.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Petroleos Mexicanos and Credit Bank of Moscow
Against the background of the "pigeon" signals from the ECB, the rates in euro are also dynamically falling. For example, the yield of the Russian sovereign Eurobond with redemption in September 2020 steadily fell into the area of negative values. Note that among the securities with an "investment" rating, the Eurobonds curve of Petroleos Mexicanos, whose ten-year issues offer a yield above 5%, looks very interesting.
Founded in 1938, Petroleos Mexicanos is a non-public government company producing oil and gas in Mexico. Petroleos Mexicanos exports both petroleum and main petrochemical products. Pay one third of all taxes collected by the Mexican government. The company employs 128 thousand people.
The senior issue in the amount of 1.25 billion euros maturing in February 2029 was placed in May last year. The minimum lot for the release is 100 thousand euros.
In just one month, the curve of senior issues of the Credit Bank of Moscow shifted in terms of profitability by 1 pp down, responding to the overall growth of the market and investors' search for high-yield Eurobonds. At the same time, all papers rose in price, and the premiums in the yield of Credit Bank of Moscow issues to their international peers remain extended. The farthest senior issue of the issuer (with maturity in 2024) now offers a return of just above 6%, which looks, in our opinion, interesting.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Volkswagen AG and Borets International Limited.
In the downward trend, not only dollar, but also rates in euros against the background of "dove" signals from the ECB. Traditionally, the highest levels of profitability offer "eternal" paper. Note that such Eurobonds are issued not only by banks, but also by companies in the real sector of the economy. For example, one of the world's largest automakers - the Volkswagen AG concern has a whole line of "perpetual" issues, among which we highlight the Eurobond, placed in June last year with a coupon of 4.625% (the issuer has another "perpetual" issue with the same coupon placed in 2014).
The closest call option on this paper is provided for June 27, 2028 at face value, then calls will follow each year. In the event of a first call failure, the coupon rate will be recalculated using the formula = 10-year interest rate swap in euro + 3.982%. Please note that the minimum lot for the release is 100 thousand euros.
Since our recommendation for paper in early April, its yield to the nearest call has decreased from 4.6% to 3.5%. Meanwhile, the current yield of the issue (the ratio of coupon to receipt in the next 12 months to the current price) is 4.3%, which looks interesting.
In the face of a frontal drop in yields, we decided to analyze the positioning of some Russian papers relative to their international peers. Our focus was the only Eurobond of Borets International Limited, one of the largest manufacturers of submersible electric pump systems for the oil and gas industry.
Last September, the issuer redeemed the dollar Eurobond, and at the current moment, the schedule for paying off its debt looks quite balanced. The financial stability of the company is marked by rating agencies: all three agencies of the “Big Three” hold a “stable” outlook on the change of Borets ratings.
Issuer issuance with maturity in April 2022 offers a 6% yield and looks very competitive against the background of securities of comparable credit quality.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Volkswagen AG and Borets International Limited.
In the downward trend, not only dollar, but also rates in euros against the background of "dove" signals from the ECB. Traditionally, the highest levels of profitability offer "eternal" paper. Note that such Eurobonds are issued not only by banks, but also by companies in the real sector of the economy. For example, one of the world's largest automakers - the Volkswagen AG concern has a whole line of "perpetual" issues, among which we highlight the Eurobond, placed in June last year with a coupon of 4.625% (the issuer has another "perpetual" issue with the same coupon placed in 2014).
The closest call option on this paper is provided for June 27, 2028 at face value, then calls will follow each year. In the event of a first call failure, the coupon rate will be recalculated using the formula = 10-year interest rate swap in euro + 3.982%. Please note that the minimum lot for the release is 100 thousand euros.
Since our recommendation for paper in early April, its yield to the nearest call has decreased from 4.6% to 3.5%. Meanwhile, the current yield of the issue (the ratio of coupon to receipt in the next 12 months to the current price) is 4.3%, which looks interesting.
In the face of a frontal drop in yields, we decided to analyze the positioning of some Russian papers relative to their international peers. Our focus was the only Eurobond of Borets International Limited, one of the largest manufacturers of submersible electric pump systems for the oil and gas industry.
Last September, the issuer redeemed the dollar Eurobond, and at the current moment, the schedule for paying off its debt looks quite balanced. The financial stability of the company is marked by rating agencies: all three agencies of the “Big Three” hold a “stable” outlook on the change of Borets ratings.
Issuer issuance with maturity in April 2022 offers a 6% yield and looks very competitive against the background of securities of comparable credit quality.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: United States Steel Corp. and Black Sea Trade and Development Bank
Among the securities with a yield to maturity of 8%, we note the release of the company United States Steel Corp. due in 2025. The issuer is a full-featured producer of steel, sheet metal and tubular products, owning production facilities in North America and Eastern Europe. Founded in 1901, it is among the largest steel companies in the United States. The company employs 17 thousand people. Headquarters is located in Pittsburgh (Pennsylvania).
In 2018, the issuer's revenue and EBITDA amounted to $ 14.2 and $ 1.6 billion, respectively, and net profit reached $ 0.8 billion. Agencies Moody's and S&P hold a “stable” outlook on changing issuer ratings, the agency Fitch - “positive.” Shares of United States Steel Corporation traded on the NYSE with a market capitalization of 2.6 billion dollars.
Eurobond in the amount of 750 million dollars was placed in August 2017. There are 3 call options for the security, the yield of the nearest one (15.08.2020 at 103.438%) is 15.1%.
Currently, the highest-ranking securities among Russian Eurobonds are traditionally considered to be the obligations of Lukoil, Novatek, NLMK and MMK, which have a composite rating of BBB. Meanwhile, there is even more highly rated securities that are relevant to Russia. For example, the Eurobonds of the Black Sea Trade and Development Bank (BSTDB), where the Russian Federation is one of the co-founders, have single A. credit ratings.
BSTDB was created to support the development of the economies of the Black Sea basin countries. Its founders are the governments of 11 states, the bank began operations in 1999. Russia with a share of 16.5% along with Greece and Turkey is one of the largest co-founders.
BSTDB has two dollar Eurobond issues. The newly placed senior issue of the issuer with redemption in June 2024 looks very competitive against the background of securities of comparable credit quality.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Terraform Global Operating, LLC and Polyus Gold International Limited
In the segment of issues with an interesting yield, we will focus on the only Eurobond Terraform Global Operating, LLC with a maturity in 2026. Based in the US, Terraform Global Operating, LLC generates electricity from renewable sources, in particular from solar and wind energy, selling to consumers around the world. In March 2017, the issuer for $ 954 million was acquired by Brookfield Asset Management Inc. - a global corporation engaged in asset management in real estate, infrastructure and renewable energy sources. Brookfield Asset Management Inc. Current Market Capitalization is 48 billion dollars.
Issue in the amount of $ 400 million was placed in February 2018. There are 3 call options for the issue, the profitability of the nearest one (01.03.2021 at a price of 103.063%) is 7.7%
Against the background of gold, which has risen to a 5-year high on signals of the Federal Reserve System readiness to mitigate policy, we decided to pay attention to eurobonds of gold mining companies, in particular, to positioning the Polyus curve (Ba1 / BB / BB) relative to its counterparts. In general, in our opinion, domestic producer loans look quite competitive against Eurobonds with BB + / BB ratings. For example, the issue of Polyus with redemption in February 2023 is now trading with a 4% yield.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Enterprise Products Partners L.P. and Public Joint Stock Company Koks.
In the current period of high expectations for lowering rates, the most distant securities are of interest, such as, for example, investment ratings, the youngest subordinated issue of the American giant Enterprise Products Partners L.P. due in 2078. Founded in 1968, Enterprise Products Partners L.P. took in 2018 105th place in the list of the largest American companies in terms of revenue. The issuer is engaged in processing and transportation of gas-condensate liquids and crude oil, owning more than 80 thousand km of pipelines. Headquartered in Houston (Texas). The company employs 7 thousand people.
In 2018, the issuer's revenue and EBITDA amounted to $ 36.5 billion and $ 6.7 billion, respectively, net profit was fixed at $ 4.2 billion. Shares Enterprise Products Partners L.P. traded on the NYSE, the company's current market capitalization is $ 63 billion.
Eurobond in the amount of 700 million dollars was placed in February last year.
Moody’s and Fitch recently confirmed PJSC Koks single B. ratings. The outlook change ratings from both agencies are "stable." In particular, Moody’s notes good liquidity ratios of the company and expects its leverage to drop to less than 3 from 2020 at the end of 2018. At the same time, analysts of the agency point out weak diversification of the product portfolio, dependence on volatile steel prices and the ruble exchange rate, and significant issuer capital expenditures.
The only Eurobond PJSC Koks (with maturity in 2022) is one of the most highly profitable securities in the Russian segment and looks quite competitive against the background of international peers.
Alexey Shternshis
Joint Managing Director
Capital Pi
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