Let’s review the fixed income bond due 2025 offered by William John (HV) PLC.
If you have been proposed this option and want a second opinion, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).
Overall, we do feel like this is a riskier option compared to some of the other options available on the market.
One reason for this is that it will be difficult for them to maintain paying 14% per year forever in addition to the other costs they face as a business.
We have recently heard reports from two people that William John have delayed repayments in the coming weeks, but we are currently waiting on confirmation of this.
What is the company’s trading approach?
The firm’s trading strategy is handled by a third-party technology partner under contract. Small numbers of transactions are made across the major 19 currency pairings, and each position is maintained for less than a day, as is the case with this trading technique.
They are running 9 “EA” Algorithms that all work together to boost performance and mitigate risk in the market. The analysis is performed in real time and simultaneously across 19 currency pairings with the goal of placing trades at prices with a strong chance of earning a profit.
By increasing the amount of money that the technology partner has to invest in trading via the issuance of a bond, economies of scale can be taken advantage of. This in turn helps to ensure a steady stream of profits. Via William John’s bond program, it is able to provide set returns drawn from the company’s earnings.
With that being said, it is very difficult for a company to consistently produce high enough returns to justify paying 14% per year to clients in addition to the other costs associated with their business model.
It is, therefore, unlikely that this will be a model that will work forever.
What are the terms of William John’s fixed income bond offering?
The fixed rate bond bears a 14% yearly coupon that is payable on a quarterly basis. The bond is denominated in US dollar, Euro, and British pound.
William John plans to issue an aggregate 150 million USD worth of bonds under the offering. Qualified investors can acquire the fixed income bond from the open market, with a minimum investment of 125,000 USD.
In addition to being tradable on the market, bondholders also have the option of redeeming their bonds early by availing of a condition that allows them to do so up to 90 days before the acquisition anniversary of the bond. The debt security is also redeemable at any time without penalties should an investor becomes bankrupt. It will take 10 business days to pay off a redemption.
The secured bond listed on the Frankfurt Stock Exchange is set to mature on Feb. 28, 2025.
Once the offering becomes fully subscribed, William John could issue a new bond then sell it to Investors. The subscription terms will vary based on demand.
Who are eligible to invest?
Sophisticated investors and high net worth individuals can participate in the fixed rate bond offering. But you might wonder, who is considered high net worth?
William John said investors who have an income of at least 100,000 pound per year and/or net assets of at least 250,000 pound are deemed high net worth. Such assets must exclude primary residence, insurance, or pensions.
You can consult with a financial advisor before making any move.
How does one go about making an investment?
When you’re ready to make an investment, fill out a Bond Application online. Applications will be reviewed, and if you are approved, you may then submit payment using the banking information shown on the application. After your request has been processed, William John will issue your fixed income bond, which will be accessible to you within 30 days.
What would my investment returns look like?
Since the yearly interest on the fixed income bond is 14%, you can expect to collect a profit share of 3.5% of your investment per quarter. The principal amount is due in full on the maturity date.
How is investment in this fixed income bond secured?
The security trustee, VFS Trustees Ltd., holds a debenture that is secured against the assets of William John. This means that if the firm fails to make its interest and/or principal payments as agreed, the security trustee may seize its assets and dispose of them. This provides some limited protection for bondholders.
VFS Trustees is regulated by the Guernsey Financial Services Commission.
However, it is a mistake to be overly reassured by this.
Many investments with security trustees have failed in the past.
Do I have to pay taxes?
Taxes that should have been withheld on the interests paid will be the responsibility of the investor. Each investor’s personal tax situation and country of residency will determine the amount of tax that must be withheld from their investment (if applicable).
What are the pros and cons of investing in William John’s fixed income bond?
A fixed income bond can be an attractive investment option for those looking for steady income and capital preservation. The regular, fixed payments they provide can give investors a reliable source of income.
Additionally, a fixed income bond is typically considered a low-risk investment, which means that investors are less likely to lose their initial investment. This can be especially appealing for those who are risk-averse or looking for a more conservative investment strategy.
However, it’s important to note that a fixed rate bond may not provide as high a return as other types of investments, such as stocks.
Another potential disadvantage is that it can be affected by changes in interest rates. When interest rates rise, the value of an existing fixed income bond can decrease, as new bonds with higher interest rates become more attractive to investors.
Such an event can lead to a loss in the value of the investment, particularly if the investor needs to sell the bond before it matures. On the other hand, when interest rates fall, the value of existing fixed income bonds may increase, making them more valuable to investors.
While they can provide a reliable source of income and capital preservation, they may not be suitable as the sole investment option for every investor.
So, by diversifying your investments across different asset classes, you can reduce your overall risk and potentially increase your returns over the long term.
Finally, and perhaps most importantly, we need to remember that 14% per annum is not a normal return.
There are other private debt instrument paying 10%-12% per year, which offer safer returns than this.
Overall, safer options exist.
Pained by financial indecision?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
Good day. I am a Accruvis bondholder and the last two rounds of interest coupons have not been paid due to the company restructuring and refinancing itself by removing the security trustee in order to restore liquidity. Communication regarding the changes and delayed interest payments have been ongoing however there have been a number of delays and no clear answers to what caused the problem in the first place and when payments will resume. Without a security trustee the risk is too high for me and I will be withdrawing from the bonds.
Dear Wayne
same issue here , hope we can have a talk to see what can we do ?
I can confirm they have failed to pay the coupons and Bond redemption after issue +90 days.