Wasps bond suddenly more than halved in value?

[SteveTodd]

It is down to £30 - £32 now, does anyone know any specific about why? Obviously I realise times are very  tough, but that drop in value seems to mean that it is all over now, and the bond is unlikely to be repaid, and the stadium will be forfeited.

EDIT: I have just checked the prices of other bonds, so it does look like part of a general sell of, rather than a reaction to specif bad news related just to Wasps.

[Rossm]

I am totally ignorant of finances but would it be possible for Derek to buy back the bonds?

[NellyWellyWaspy]

A lot of 'investors' have taken fright and are selling all their shares/bonds (in all companies) and converting them all to actual cash. Even gold and silver are tumbling in price.

A lot of people selling, and very few buying, means the price will crash. If there is even a real market for them at all. Many may be trying to sell and not finding a buyer. If you are a cash rich Wasps supporter, they will be a bargain to buy, as I expect it will all come OK in the end.

If you think that price drop is bad, take a look at the holiday (especially cruise) companies. Their shares are next to worthless.

Maybe Joy will get her way and buy the Ricoh for a pound.

[SteveTodd]

A lot of 'investors' have taken fright and are selling all their shares/bonds (in all companies) and converting them all to actual cash. Even gold and silver are tumbling in price.

A lot of people selling, and very few buying, means the price will crash. If there is even a real market for them at all. Many may be trying to sell and not finding a buyer. If you are a cash rich Wasps supporter, they will be a bargain to buy, as I expect it will all come OK in the end.

If you think that price drop is bad, take a look at the holiday (especially cruise) companies. Their shares are next to worthless.

Maybe Joy will get her way and buy the Ricoh for a pound.

I am fully aware of the sell off, our investments have fallen by over 30% in the last month or so. Shares can recover, but individual bonds either mature and redeem or they don't. Although because it is secured on the stadium, if it all goes wrong (like the current price seems to imply) there should be some sort of payment. My only hope is that it is panic selling and not based on any news other than the terrible current economic climate. But such a sudden drop seems to imply that someone out there knows something.

[SteveTodd]

I am totally ignorant of finances but would it be possible for Derek to buy back the bonds?

He could if he was confident that Wasp's situation is still viable. He could buy the bond at £34, and it pays £100 back in just over 2 years in May 2022. So he could buy a huge share in the stadium with about 80% off its value, the stadium (if we get back to normality at some point is worth almost twice the bond value). The price has crept up from about £28 yesterday to almost £34 right now (and since my first post this morning it has increased £2).

[Neils]

I generally think it is a reflection of the market.

[Heathen]

I generally think it is a reflection of the market.

Spot on Neils!

[SteveTodd]

I generally think it is a reflection of the market.

It went down from about £68.75 to £27.75 in one day, nothing else that I'm aware of has dropped by about 58% in one day. But it does look now that it was panic selling, rather than something based on Wasp's specific news, because the price has just reached £40. I did try and buy earlier when the price was lower at £33, but there were no trades available. But I'm happy enough if it recovers a bit more.

[Vespula Vulgaris]

I think it's a combination of the general market, and the concerns about rugby being over for the season.

I tried to buy while it was at £25, but couldn't. Makes me wonder if it was just canny traders shorting.

[EssexWasp]

The way these bonds work is that there is no continuous trading. That means the price is marked down to the point where buyers appear or up to the point where sellers emerge - the probability is that there were a couple of sellers who spooked the market and the price was marked down accordingly with almost no volume. Given the rout in the corporate bond market, this isn't surprising and when VV tried to buy the price went up on no volume!
On the other board, I enquired as to the security on the bond and was told there was none. Can this be true?

[SteveTodd]

The way these bonds work is that there is no continuous trading. That means the price is marked down to the point where buyers appear or up to the point where sellers emerge - the probability is that there were a couple of sellers who spooked the market and the price was marked down accordingly with almost no volume. Given the rout in the corporate bond market, this isn't surprising and when VV tried to buy the price went up on no volume!
On the other board, I enquired as to the security on the bond and was told there was none. Can this be true?

No, that isn't true, it is definitely secured on the stadium.

Like VV I too tried to invest (at £33) but there was no market for buyers.

[Neils]

The way these bonds work is that there is no continuous trading. That means the price is marked down to the point where buyers appear or up to the point where sellers emerge - the probability is that there were a couple of sellers who spooked the market and the price was marked down accordingly with almost no volume. Given the rout in the corporate bond market, this isn't surprising and when VV tried to buy the price went up on no volume!
On the other board, I enquired as to the security on the bond and was told there was none. Can this be true?

No, that isn't true, it is definitely secured on the stadium.

Like VV I too tried to invest (at £33) but there was no market for buyers.

Do.

[welsh wasp]

Why is anyone surprised. Look at what has happened to the financial markets & shares generally.
Unfortunately there are also people who will take prices down with the intention of buying low.
It’s called capitalism.

[SteveTodd]

Why is anyone surprised. Look at what has happened to the financial markets & shares generally.
Unfortunately there are also people who will take prices down with the intention of buying low.
It’s called capitalism.

The markets are currently nowhere near 58% down! I think the point that you are missing is that when corporate bonds go down as low as the mid 20's it is usually a sign that the bond is expected to default. But it seems that it was over sold (even in this bear market), possible (no one actually knows it is all up in the air) evidence of this is that it has recovered by its price by about 50% from that low point, which is huge in this falling market. I actually think that the Wasps bond (obviously accepting significant risk) represented great value at the low point (and also possibly where it is currently) price. But our investment portfolio is currently over £1m down from peak, so I really should be looking for value on much safer investments, rather than the risky Wasps bond (which I already have about £67k invested, and if it survives I will get £77k returned, plus all that high interest earned.

EDIT: This is just my opinion, but I think (after reading a forum thread on here) that the reason for the huge fall was the proposal to cut player's salaries, and the (partial mini) recovery was the favourable reaction from the Wasps players. The dates do seem to match up to the price movements.