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: 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
Today we will look at two corporate debt securities as investment ideas for this week: Unifin Financiera and Credit Bank of Moscow
In the segment of high-yield securities we will pay attention to the Eurobond of the Mexican company Unifin Financiera. The issuer is a leading independent Mexican leasing company specializing in three main areas: operating vehicle leasing, factoring and auto and other types of loans. The headquarters is in Mexico City, the company employs 400 people.
As of March 31, 1919, the issuer's revenue for the last 12 months amounted to $ 882 million, net profit was fixed at $ 99 million. S&P and Fitch hold a BB rating for the company and its liabilities (with "negative" and "stable" forecasts, respectively). Unifin Financiera shares are traded on the Mexican stock exchange with a market capitalization of $ 0.8 billion.
The senior unsecured Eurobond in the amount of $ 300 million was placed in February 2018. There are 3 calls on the issue, the profitability of the nearest one (February 12, 2022 at a price of 103.688%) is 11.3%.
Last week, Fitch raised the long-term issuer default ratings of the Credit Bank of Moscow from BB- to BB. Rating outlook is stable. Fitch notes that the increase in the Credit Bank of Moscow rating mainly reflects a significant reduction in the volume of high-risk assets over the past two years due to reorganization, sales and an increase in risk reserves.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: HerbalifeNutrition Ltd and Ministry of Finance of the Russian Federation
Among the papers with high yield, we will pay attention to the bond of the world famous company HerbalifeNutrition Ltd. due in 2026. The issuer is engaged in the production and sale of weight control products, food products, sports goods, energy and nutritional products, as well as personal care products. Products are sold in more than 90 countries. The headquarters is located in Los Angeles, the company employs 8.9 thousand people.
As of March 31, 2019, Herbalife's revenue and EBITDA for the last 12 months amounted to $ 4.9 billion and $ 0.8 billion, respectively, while net income was fixed at $ 0.4 billion. Moody’s keeps a “stable” outlook on the company's rating change, S&P - a “positive” one. Herbalife shares are traded on the NYSE with a current market capitalization of $ 6.4 billion.
Issue in the amount of $ 400 million was placed in August 2018. On paper, there are 3 call options, the yield of the nearest one (in August 2021 at a price of 103.625%) is 8.4%. We draw attention to the rather high (7.25%) level of coupon on paper.
Last week, the head of the debt department of the Ministry of Finance of the Russian Federation Konstantin Vyshkovsky did not rule out the placement of sovereign eurobonds in dollars or euros this year. At the same time, the volume of placement will be less than in March 2019, when the Russian Federation sold bonds in dollars and euros by 3.9 billion dollars in equivalent.
Recall that in March, the Ministry of Finance of the Russian Federation placed the European issue with maturity in 2025 for 750 million euros. We decided to see how this issue is now positioned against the background of Eurobonds of countries of similar credit rating. In our opinion, the Eurobond of the Ministry of Finance of the Russian Federation looks interesting.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: L Brands, Inc. and Novolipetsk Steel (NMLK).
Among foreign papers with a higher yield, we will pay attention to the Eurobond of American clothing retailer L Brands, Inc. maturing in 2028. Founded in 1963. L Brands, Inc. owns about 3,000 stores throughout the US, as well as in the UK, Canada and the PRC, offering a wide range of products, including women's clothing, underwear, cosmetics and accessories. The company's brand line-up includes the world-famous brand Victoria's Secret. L Brands, Inc. employs 25.5 thousand people.
As of May 4, 19, the issuer's revenue and EBITDA for the last 12 months amounted to $ 13.2 and $ 1.8 billion, respectively, net profit was fixed at $ 0.6 billion. Shares L Brands, Inc. traded on the NYSE with a current market capitalization of $ 6.7 billion.
NLMK last week expanded its line of dollar Eurobonds, placing a 7-year issue at 4.7% per annum. The volume of placement amounted to $ 500 million. The placement was successful: the demand for securities reached $ 1.7 billion, the initial benchmark yield was 5-5.125%.
The duration of the Russian Eurobond market is on average low, and the emergence of a new 7-year issue should be of interest to investors. This interest becomes even more pronounced if we take into account the increasingly apparent trend of lower interest rates.
Alexey Shternshis
Joint Managing Director
Capital Pi
Today we will look at two corporate debt securities as investment ideas for this week: Southwestern Energy Company and Russian Agricultural Bank (RSHB).
In the segment of foreign papers with a higher yield, let us single out the issue of the American Southwestern Energy Company with maturity in 2026. The issuer is engaged in the exploration and production of natural gas and oil in several US states (mainly in Texas and Arkansas), as well as in Canada. As of March 31, 1919, the issuer's revenue and EBITDA for the last 12 months amounted to $ 3.8 and $ 1.2 billion, respectively, and net profit was fixed at $ 0.9 billion. Southwestern Energy shares are traded on the NYSE with a current market capitalization of $ 2.2 billion. All three agencies of the Big Three hold a “stable” outlook on the company's rating change.
Eurobond in the amount of 650 million dollars was placed in September 2017. On paper, there are four call options, the yield to the nearest of them (04/01/2021 at a price of 105.625%) is 9.8%. Pay attention to an interesting level of coupon on paper (7.5% per annum).
In the segment of high-yield domestic securities, we will focus on the only Eurobond of the Russian Agricultural Bank (RSHB). The subordinated issue maturing in October 2023 was placed in 2013 with a coupon of 8.5%. At present, the paper is trading at a level above par with a yield to maturity of about 7% per annum.
RSHB reported for 2018 under IFRS, for the first time in five years, showing net profit for the year (in the amount of 1.5 billion rubles). The level of capital adequacy of the state-owned bank is 9.5% (the terms of the Eurobond issue suggest the possibility of writing it off if this indicator falls below 2%). It should be noted that the only shareholder of the bank - the state - carries out the additional capitalization of the issuer.
The current spread in the yield of the issue of RSHB to the subordinated Eurobond of Sberbank with maturity in 2023 looks extended relative to the average value over the past 12 months.
Alexey Shternshis
Joint Managing Director
Capital Pi
Ask your question right now and we will contact you!