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).
INVESTMENT IDEAS Today we will look at two corporate debt securities as investment ideas for this week: Belarus and Sovkombank…
INVESTMENT IDEAS Today we will look at two corporate debt securities as investment ideas for this week: Moscow Credit Bank and Tenneco…
INVESTMENT IDEAS Today we will look at two corporate debt securities as investment ideas for this week: Hewlett Packard Enterprise and Metalloinvest…
Today we will look at two corporate debt securities as investment ideas for this week: General Motors Financial Company and RSHB…
INVESTMENT IDEAS Today we will look at two corporate debt securities as investment ideas for this week: Macro’s Inc. and GeoProMining…
Today we will look at two corporate debt securities as investment ideas for this week: Kinross Gold Corporation and Vnesheconombank…
Today we will look at two debt securities as investment ideas for this week:…
INVESTMENT IDEAS Today we will look at two corporate debt securities as investment ideas for this week: Arconic Inc. and GTLKOA 25…
Today we will look at two corporate debt securities as investment ideas for this week: Ford Motor Company and Development Bank of the Republic of Belarus (the DBRB)…
Today we will look at two corporate debt securities as investment ideas for this week: Belarus and Sovkombank
Last week, S&P affirmed Belarus' long-term and short-term sovereign credit ratings for obligations in foreign and national currency at level B with a “stable" outlook. The agency noted an improvement in the macroeconomic policy of the republic, which allowed to stabilize its level of public debt and inflation rates. S&P experts believe that the Belarusian government will retain access to international capital markets and the possibility of obtaining support from Russia to refinance payments on public debt.
Belarus has three dollar issues of Eurobonds. With the highest premium in yield to the Russian curve, the issue is currently traded with maturity in 2027, which offers a yield of 5.5% with a duration of 6 years. Paper is serviced by NSD.
Against the backdrop of lower yields, relatively high-yield securities are of particular interest, among which the recently posted Sovcombank debut Eurobonds maturing in 2030. According to the results of the first half of 2019, the bank took the 12th place in terms of assets in the Interfax-100 ranking. All three Big Three agencies hold a “stable” outlook on the change in its ratings. Last month, S&P and Fitch increased their issuer ratings, noting that in the medium term Sovcombank could be included in the list of systemically important banks.
A $ 300 million subordinated Eurobonds was placed on September 30 this year with a coupon of 8.0% per annum. On paper, a call option is provided in April 2025 at face value. The minimum issue lot is 200 thousand dollars.
It should be noted that the issue of Sovcombank looks interesting not only in the segment of Russian bank securities of the second or third echelons (see the market map on page 17 of the review), but also against the background of international subordinates with a similar credit rating.
Joint Managing Director
Today we will look at two corporate debt securities as investment ideas for this week: Moscow Credit Bank and Tenneco
In the segment of highly profitable foreign securities, we note one of Tenneco's Eurobonds, one of the world's leading manufacturers of auto parts. The issuer produces products for regulating emissions and controlling the course. It supplies products both for the needs of major automotive concerns, and sells it independently under its own brands. At TENNECO Inc. 81 thousand people are employed. Headquartered in Lake Forest (Illinois, USA). The company's shares are traded on the NYSE with a current market cap of $ 0.9 billion.
The senior unsecured issue with maturity on July 15, 2026 in the amount of $ 500 million was placed in June 2016. The issue market is global. The paper provides for 5 call options, the yield to the nearest of them (07.15.2021 at a price of 102.5%) is 20.8%. Options to review the coupon level are not provided. The minimum lot on paper is $ 2 thousand. Eurobonds are serviced by NSD.
The issue looks very competitive against the background of papers of comparable credit quality.
Last week, Moody’s affirmed the long-term ratings of Moscow Credit Bank (MCB) at Ba3, the rating outlook is “stable”. MCB priority unsecured debt ratings are also affirmed at this level. “The confirmation of the MCB ratings is due to the relative stability of the bank's financial profile during 2018 and in the first half of 2019, taking into account, on the one hand, a decrease in the volume of problem loans and, on the other hand, a weakening profitability, as well as maintaining generally stable sufficiency indicators capital, "- said in a press release Moody's.
The senior issues of the issuer offer a yield in the range of 5-6% and look interesting against the background of international peers.
Joint Managing Director
Today we will look at two corporate debt securities as investment ideas for this week: Hewlett Packard Enterprise and Metalloinvest
In the “investment” securities segment, we will single out the Hewlett Packard Enterprise (HPE) Eurobonds maturing in 2035. The Issuer is an IT company created in 2015 (together with HP Inc.) as a result of the division of Hewlett-Packard Corporation into two companies. HPE has inherited business in the corporate customer segment - the company produces servers, supercomputers, storage systems, network equipment, and is also involved in the construction of cloud infrastructures. HPE employs 60 thousand people. HPE shares are traded on the NYSE with a current market cap of $ 19 billion.
The senior unsecured issue in the amount of $ 748 million was placed in November 2016. The issue market is global. Six months before maturity on paper, a call option at face value (100%) is provided. There are no options for revising the coupon level (6.2% per annum). The nominal and minimum lot on paper are respectively 1 and 2 thousand dollars.
Note that the release of HPE 6.2 10/15/35 looks very competitive against securities of comparable credit quality.
The ongoing process of active reduction of rates and narrowing of spreads has led to a situation where the prices of many Eurobonds have approached the levels provided for in the framework of make whole call options. Recall that this type of call allows the borrower to withdraw the issue ahead of maturity by paying the holder a certain compensation, which is expressed in the form of a pre-determined premium in yield to the base paper (for US dollars, a comparable UST maturity is used). Note that when implementing the “traditional” call option, the holder of the paper, as a rule, does not get any bonus - he is simply paid the nominal (100%) value of the bond.
Last week, Metalloinvest announced its intention to fully implement the make whole call option on October 30, 2019. It should be noted that make whole call option is provided for a number of Eurobonds from Russian issuers. It is possible that some of these borrowers will want to take advantage of the current situation to refinance their debts at lower rates.
Joint Managing Director
Today we will look at two corporate debt securities as investment ideas for this week: General Motors Financial Company and RSHB
In the segment of "investment" issues, we note the 10-year-old Eurobond of GM's auto-financing unit, General Motors Financial Company. The issuer works with more than 18 thousand GM dealers around the world, offering financing services for the purchase of new and used cars, as well as car rental. The company employs 9 thousand people. The issuer is a 100% subsidiary of the GM group, the current market capitalization of which reaches $ 54 billion.
A senior unsecured issue of $ 500 million was placed in January 2019. The issue market is global. One call option is provided for on the paper three months before maturity. Options to review the coupon level are not provided. The face value and minimum lot on paper are respectively 1 thousand and 2 thousand dollars.
In our opinion, the release of GM 5.65 01/17/29 looks very interesting against the background of securities of comparable credit quality.
On Friday, it became known that the RSHB, which had already received 15 billion rubles from the federal budget this year, could be capitalized by another 10 billion rubles. very soon. This was stated by Deputy Minister of Agriculture of the Russian Federation Elena Fastova. According to her, the presidium of the national project committee at a meeting on October 7 may approve the transfer from 2020 of 10 billion rubles. by 2019. Due to this, the bank can increase lending to enterprises that export agricultural products. “If the presidium approves, the bank will receive these funds within a month,” the deputy minister emphasized.
Note that the issue of RSHB looks interesting against the background of subordinated Eurobonds of domestic issuers, offering a yield of just over 5%.
Joint Managing Director
Today we will look at two corporate debt securities as investment ideas for this week: Macro’s Inc. and GeoProMining
Macro’s, Inc., one of the largest and oldest retailers of clothing and accessories in the USA, marks the eurobond segment with interesting returns. The issuer owns a network of 830 department stores covering almost all of the United States. The corporation also addresses mailing catalogs and electronic commerce. The company employs 130 thousand people. Headquarters Macy’s, Inc. located in Cincinnati (Ohio, USA). The issuer's shares are traded on the NYSE with a current market capitalization of $ 5.3 billion.
A senior unsecured issue in the amount of $ 400 million (securities remaining in the amount of $ 201 million in circulation now) was placed in November 2004. The issue market is global. No coupon revision options are provided. The face value and minimum lot on paper is $ 1,000. The paper is serviced by NSD.
n the segment of high-yield securities with partially Russian risk, let us pay attention to the GeoProMining Eurobonds posted last month. The issuer is a mining company specializing in the extraction and processing of gold, silver, antimony and copper in Russia and Armenia. Last week, the company presented 6M2019 results, showing improved credit metrics. Thus, the metric "Net debt / EBITDA" amounted to 1.7 (at the end of 2018 - 2.0). Interest coverage ratio reaches 5.4. S&P and Fitch agencies hold a B + rating for GeoProMining obligations.
The senior 5-year issue of 300 million was placed at 7.75% per annum. Note that from the moment of placement, the paper practically did not affect the rally on international trading floors. GeoProMining issue looks quite competitive against the background of international Eurobonds with a rating of B +.
Joint Managing Director
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.
Joint Managing Director
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.
Joint Managing Director
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.
Joint Managing Director
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.
Joint Managing Director
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.
Joint Managing Director
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