Unburdened by gilts

Article Abstract:

The United Kingdom market for convertible loan stocks has been boosted by the strong performance of government securities (gilts) which have seen a rise in price and a drop in yields to 7%. Overseas investors have been attracted to UK bonds despite a drop in the value of pound sterling. Convertible preference stock yields will be affected by action on dividend tax credits in the United Kingdom Budget. Many convertible offer high yields compared to yields obtain from other vehicles.

Capital market, Capital markets

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Caution in the air

Article Abstract:

UK interest rates look set to rise in the medium term and US rates are likely to be raised, prompting an international rise. The impact of changes in interest rates may not be felt rapidly by UK government stocks, but investors should be cautious when considering convertible stocks. Conversion terms have become less easy to assess since companies have become less predictable during 1996. Some companies have seen a drop in their share prices such as Wagon Industrial and Adscene.

Interest rates

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Stocks that bloom in the spring

Article Abstract:

Convertible loan stocks have performed well in spring 1996, especially those offering high yields. Lower-yielding convertibles have not seen such strong gains, and some have not followed rises for underlying shares. Market fluctuations are more likely when yields drop, especially following a lackluster performance from government securities. Some low yielding convertibles still offer better yields than underlying shares, with low conversion premiums.

Securities industry

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