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The Investec Impala Bond Programme

Simple Innovation; Driven by Clients

THIS VIDEO IS FOR INSTITUTIONAL AND PROFESSIONAL CLIENTS ONLY. It is not to be viewed by or used with retail clients.

Impala bonds

Investec brings together extensive experience in:

  • bond and credit linked origination and structuring
  • interest, currency and inflation hedging solutions
  • asset management expertise

The team originates high quality, liquid Floating Rate Notes and Inflation linked bonds at low cost to the client and with no Investec credit risk.

Our Clients include discretionary managers, private banks, family offices, endowments, superannuation schemes, pension funds, insurers, asset managers and corporates.

To access full information (legal documents, pricing, terms) on the existing Impala bonds (trading in the secondary market), please click on the arrows below.

Impala bonds

Impala ‘A’ Rated Basket Fixed-to-Floating Rate Notes: 3.00% to 2018, 3mL + 0.40% thereafter

Impala 'A' Rated Basket Bond

Issuer Series

IMP 'A' RTD BSKT 3.00% / FLTG RTE NTS 16/12/24

ISIN

XS1278289977

TIDM

IM90

SEDOL

BYW6M52

Format

Senior Secured, Dated, Unsubordinated

Security

1) Wells Fargo Bank: WFC 5.25 2023 (A+)
2) Roche Finance Europe B.V.: ROSW 5.375 2023 (AA-)
3) GE Capital UK Funding: GE 4.125 2023 (AA-)
4) National Grid Electricity Transmission Plc: NGGLN 5.875 2024 (A-)
5) HSBC Holdings PLC: HSBC 6.5 2024 (A+)
6) Anheuser-Busch Inbev N.V.: ABIBB 9.75 2024 (A)
7) BHP Billiton Finance Ltd: BHP 3.25 2024 (A+)
8) Society of Lloyds: LLYDIN 4.75 2024 (A-)
9) MetLife Inc: MET 5.375 2024 (A-)
10) National Grid Plc: NGGLN 7 2024 (A-)

Security Rating

Min A- to AA-.  See above individual rating in bracket ()

Issue Date

Tuesday, 8 September 15

Maturity

16 December 2024, amortising as the underlying bonds mature
Issue & Redemption Price 100%
Coupon (% p.a. paid quarterly, Act/365) 3.00% p.a. to September 2018; thereafter
3-month GBP LIBOR + 0.40% p.a. to Maturity Date

Minimum Transfer Amount

£1k plus Increments of £100

Listing

London Stock Exchange

Pricing

SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)

Secondary Market

Available on the secondary market

For the full Impala 'A' Rated Basket Bond Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Aviva Plc Fixed-to-Floating Rate Notes: 5.125% to 2020, 3mL + 2.40% to 2030 (1st Call)

Impala Aviva Plc Fixed-to-Floating Rate Notes

Issuer Series

IMP AVIVA 5.125%/FLTG RTE NTS 04/06/50

ISIN

XS1246232604

TIDM

IM88

SEDOL

BZ0CSG2

Format

Senior Secured, Unsubordinated

Security

Aviva Plc Fixed-to-Floating 2030/50 Subordinated (Tier 2) debt

Security Rating

Baa1/BBB

Issue Date

30 June 2015

Maturity

04 June 2050 (1st Call date of Security, 04 June 2030 and every coupon date thereafter, at 100)

Issue Price

100

Coupon (paid quarterly, Act/365)

5.125% p.a. from and including Issue Date to but excluding 04 June 2020; then
3-month GBP Libor + 2.40% p.a. from and including 04 June 2020 to but excluding 04 June 2030 (1st Call date of Security)

Step-up If not called, 3-month GBP Libor + 3.70% p.a. from and including 04 June 2030 to but excluding Maturity Date

Minimum Transfer Amount

£1,000 plus increments of £100

Listing

London Stock Exchange

Pricing

SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)

Secondary Market

Available on the secondary market

For the full Impala Aviva Plc Fixed-to-Floating Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Secured BT Fixed-to-Floating Rate Notes: 4.20% to 2020, 3mL + 2.50% thereafter

Impala Secured BT Fixed-to-Floating Rate Notes

Issuer Series

IMP SECURED BT 4.2% / FLTG RTE NTS 10/12/25

ISIN

XS1204597758

TIDM

IM72

SEDOL

BWCGX22

Format

Senior Secured, Unsubordinated

Security

Telereal Securitisation Var 2031 Secured Class C Debt

Security Rating

BBB / BBB

Issue Date

01 April 2015

Maturity

10 December 2025

Issue Price

100

Coupon (paid quarterly, Act/365)

4.2% p.a. from and including Issue Date to but excluding 10 March 2020
3-month Libor + 2.50%, p.a. from and including 10 March 2020 to but excluding Maturity Date

Minimum Transfer Amount

£1,000 plus increments of £100

Listing

London Stock Exchange

Pricing

SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)

Secondary Market

Available on the secondary market

For the full Impala Secured BT Fixed-to-Floating Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala AA Fixed-to-Floating Rate Notes: 4.125% to 2017, 3mL + 1.00% thereafter

Impala AA Fixed-to-Floating Rate Notes

Issuer Series

IMP AA BD 4.125% / FLTG RTE NTS 31/07/25

ISIN

XS1106516351

TIDM

IM63

SEDOL

BQN1DB3

Format

Senior Secured, Unsubordinated

Security

AA Bond Company Ltd Secured debt: AA 6.269% 2025

Security Rating

BBB-

Issue Date

22 September 2014

Maturity

31 July 2025

Issue Price

100

Coupon (paid quarterly, Act/365)

4.125% p.a. from and including Issue Date to but excluding 31 July 2017
3-month Libor + 1.00%, p.a. from and including 31 July 2017 to but excluding Maturity Date

Minimum Transfer Amount

£1,000 plus increments of £100

Listing

London Stock Exchange

Pricing

SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)

Secondary Market

Available on the secondary market

For the full Impala AA Fixed-to-Floating Rate Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Thames Water Fixed-to-Floating Rate Notes: 4.00% to 2017, 3mL + 0.50% thereafter

Impala Thames Water Fixed-to-Floating Rate Notes

Issuer Series

IMP THA WTR CAY 4% / FLTG RTE NTS 19/06/25

ISIN

XS1082769321

TIDM

IM56

SEDOL

BNLPWJ7

Format

Senior Secured, Unsubordinated

Security

Thames Water Utilities Cayman Finance Ltd Senior Secured debt: THAMES 4% 2025

Security Rating

A- / A3

Issue Date

10 July 2014

Maturity

19 June 2025

Issue Price

100

Coupon (paid quarterly, Act/365)

4.00% p.a. from and including Issue Date to but excluding 19 June 2017
3-month Libor + 0.50%, p.a. from and including 19 June 2017 to but excluding Maturity Date

Minimum Transfer Amount

£1,000 plus increments of £100

Listing

London Stock Exchange

Pricing

SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)

Secondary Market

Available on the secondary market

For the full Impala Thames Water Fixed-to-Floating Rate Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Old Mutual Fixed-to-Floating Rate Notes: 5.20% to 2017, 3mL + 2.15% thereafter

Impala Old Mutual Fixed-to-Floating Rate Notes
Issuer Series IMP OLD MUT 5.2% / FLTG RTE NTS 03/06/21
ISIN XS1066346294
TIDM IM52
SEDOL BMP36S7
Format Senior Secured, Unsubordinated
Security Old Mutual plc Subordinated Unsecured debt: OLDMUT 8% 2021
Security Rating Ba1/BB+
Issue Date 28 May 2014
Maturity 03 June 2021
Issue Price
100
Coupon (paid quarterly, Act/365) 5.20% p.a. from and including Issue Date to but excluding 05 June 2017
3-month Libor + 2.15%, p.a. from and including 05 June 2017 to but excluding Maturity Date
Minimum Transfer Amount £1,000 plus increments of £100
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For the full Impala Old Mutual Fixed-to-Floating Rate Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Old Mutual Fixed Rate Notes: 6.95% to 2025

Impala Old Mutual Fixed Rate Bond
Issuer Series IMP OLD MUTUAL 6.95% / FIXED RTE NTS 03/11/2025
ISIN XS1323982915
TIDM IM54
SEDOL BYSZ8V1
Format Senior Secured, Dated, Unsubordinated
Security Old Mutual plc 7.875% 2025 Subordinated Debt
Security Rating Ba1/BB+
Issue Date Monday, 7 December 15
Maturity Monday, 3 November 25
Issue & Redemption Price 100%
Coupon (% p.a. paid quarterly, Act/365) 6.95% p.a. from and including Issue Date, to but excluding the Maturity Date
Minimum Transfer Amount £1k plus Increments of £100
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For the full Impala Old Mutual Fixed Rate Notes Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Senate FRN: 3mL + 0.90%

Impala Senate FRN
Issuer Series IMP SENATE FLTG RTE NTS 16/01/26
ISIN XS0976932854
TIDM IM38
SEDOL BF8HVG0
Format Senior Secured, Unsubordinated
Security 1) Severn Trent: SVT 3.625% 2026
2) National Grid: NGG 5.875% 2024
3) Tesco: TSCO 5% 2023
Security Rating 1) BBB+ / A3; 2)  A- / A / A3;  3) BBB- / BBB- / Baa3
Issue Date 24 October 2013
Maturity 16 January 2026
Coupon (% p.a. paid quarterly, Act/365) 3mL + 0.90%
Issue & Redemption Price 100%
Minimum Transfer Amount £1,000 plus increments of £100
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For prospectus terms and documents, please complete the Download access form

Impala Scottish Widows FRN: 3mL + 2.90%

Impala Scottish Widows FRN
Issuer Series IMP SCOT WID FLTG RTE NTS 16/06/23
ISIN XS0963352884
TIDM IM31
SEDOL BDC7QG7
Format Senior Secured, Unsubordinated
Security Scottish Widows Plc Subordinated Unsecured debt: SCOTW 5.50% 2023
Security Rating BBB+ / BBB+ / Baa3
Issue Date 23 September 2013
Maturity 16 June 2023
Coupon (% p.a. paid quarterly, Act/365) 3mL + 2.90%
Issue & Redemption Price 100%
Minimum Transfer Amount £1,000 plus increments of £100
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For the full Impala Scottish Widows FRN Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Scottish Widows Inflation-Linker: 1.90% (real coupon)

Impala Scottish Widows Inflation-Linker
Issuer Series IMP SCOT WID 1.9% INFLTN-LKD NTS 16/06/23
ISIN XS0963352025
TIDM IM30
SEDOL
BDC7QD4
Format Senior Secured, Unsubordinated
Security Scottish Widows Plc Subordinated Unsecured debt: SCOTW 5.50% 2023
Security Rating BBB+ / BBB+ / Baa3
Issue Date 23 September 2013
Maturity 16 June 2023
Coupon (% p.a. paid annually, Act/365) 1.90% real interest rate (adj. for RPI)
Issue Price 100%
Redemption Price 100% * growth in RPI (floored at 100%)
Minimum Transfer Amount £1,000 plus increments of £100
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For the full Impala Scottish Widows Inflation-Linker Factsheet, please click here

For prospectus terms and documents, please complete the Download access form

Impala Barclays FRN: 3mL + 4.90%

Impala Barclays FRN
Issuer Series IMP BARC BK PERP FLTG RTE NTS
ISIN
XS0894194769
TIDM IM21
SEDOL B9NWGT6
Format Senior Secured, Undated, Unsubordinated
Security Barclays Bank plc Perpetual Jr. Subordinated debt: BARC 14% Perp/2049 
Security Rating BB / Ba1
Issue Date 07 May 2013
Call Date 15 June 2019 and every quarterly interest payment date thereafter
Issue Price 100
Coupon (% p.a. paid annually, Act/365) 3mL + 4.90% floating
Denomination £100,000 plus increments of £1,000
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For prospectus terms and documents, please complete the Download access form

Impala LSE FRN: 3mL + 2.73%

Impala LSE FRN
Issuer Series IMP LSE FLTG RTE NTS 02/11/21
ISIN GB00B8CQ6M56
TIDM IM05
SEDOL B8CQ6M5
Format Senior Secured, Unsubordinated
Security London Stock Exchange plc Senior Unsecured debt LSE 4.75% 2021
Security Rating A- / Baa2
Issue Date 02 November 2012
Maturity 02 November 2021
Coupon (% p.a. paid quarterly, Act/365) 3mL + 2.73%
Denomination £1,000
Listing London Stock Exchange
Pricing SEAQ (London Stock Exchange), Bloomberg (Pricing source: IVSS)
Secondary Market Available on the secondary market

For prospectus terms and documents, please complete the Download access form

Create your own diversified portfolio of Floating Rate Notes

Example of a diversified portfolio of Investment Grade FRNs:

  • 1/3: Barclays FRN: paying 3mL + 4.90%
    -  Secured by Barclays Bank plc Jr. Subordinated debt. Rated Ba1/ BBB- 
  • 1/3: Scottish Widows FRN: paying 3mL + 2.90%
    -  Secured by Scottish Widows plc Subordinated bond. Rated Baa2/ BBB+ 
  • 1/3: Senate FRN: paying 3mL + 0.90%
    -  Secured by 3 credits:
            - Tesco Sr. Unsecured bond. Rated Baa1/ BBB+
            - National Grid Sr. Unsecured bond. Rated A3/ A-/ A
            - Severn Trent Sr. Unsecured bond. Rated A3/ BBB+

Diversified Investment Grade Basket

  • with an average maturity of 8.4 years
  • paying a spread of 2.79% over 3 month Libor, with an initial yield of 3.29% and an average expected yield of 5.10%
  • net of all costs
Holdings Years to maturity Current Yield Current Spread (3mL + %) Expected Yield* Weight
Barclays FRN – 3mL + 4.90%, Perpetual/2019 5.37 5.18% 4.68% 6.52% 33.3%
Scottish Widows FRN – 3mL +2.90%, 2023 9.37 2.56% 2.78%  5.22% 33.3%
Senate FRN – 3mL + 0.9%, 2026 10.37 1.42% 0.90%  3.56% 33.3%
Aggregate 8.375 3.29% 2.79% 5.10%  100%

* Based on current market expectations of 3mnth libor
Pricing as at 31.01.2014
Source: Bloomberg Investec

The allocations above are for illustration purposes only, we can customise portfolios to meet specific investor demand.

Contact us if you are interested in getting more details or would like to place an order 020 7597 5726

Daily Pricing


Impala Bond Pricing*

Live Pricing

100
Impala Bond Coupon Maturity Bid Offer Industry ISIN SEDOL TIDM
'A' Rated Basket 3.00% to 2018, 3mL + 0.40% thereafter 16/12/2024 99.875 102 Diversified Sectors XS1278289977 BYW6M52 IM90
AA Fixed-to-Floating 4.125% to 2017, 3mL + 1.00% thereafter 31/07/2025 92.75 95 Retail - Consumer Discretionary XS1106516351 BQN1DB3 IM63
Aviva Fixed-to-Floating 5.125% to 2020, 3mL + 2.40% to 2030 (1st Call) 04/06/2050 102.25 104.5 Life Insurance XS1246232604 BZ0CSG2 IM88
Barclays FRN 3mL + 4.90% 15/06/2019 (first call date) / Perp 105.875 107 Banking XS0894194769 B9NWGT6 IM21
London Stock Exchange FRN 3mL + 2.73% 02/11/2021 106.625 108.5 Financial Services GB00B8CQ6M56 B8CQ6M5 IM05
Old Mutual Fixed-to-Floating 2021 5.20% to 2017, 3mL + 2.15% thereafter 03/06/2021 96.375 97.625 Life Insurance, Banking XS1066346294 BMP36S7 IM52
Old Mutual Fixed 2025 6.95% fixed 03/11/2025 113.25 114.75 Life Insurance, Banking XS1323982915 BYSZ8V1 IM54
Secured BT Fixed-to-Floating 4.20% to 2020, 3mL + 2.50% thereafter 10/12/2025 97.5 99.5 Telecom / Real Estate XS1204597758 BWCGX22 IM72
Senate FRN 3mL + 0.90% 16/01/2026 99 99.75 Corporates XS0976932854 BF8HVG0 IM38
Scottish Widows FRN 3mL + 2.90% 16/06/2023100 104.375 105.25 nsurance XS0963352884 BDC7QG7 IM31
Scottish Widows Inflation-Linker 1.90% (real coupon) 16/06/2023 126.25 127.375 Life Insurance XS0963352025 BDC7QD4 IM30
Thames Water Fixed-to-Floating 4.00% to 2017, 3mL + 0.50% thereafter 19/06/2025 97.625 99.625 Utilities XS1082769321 BNLPWJ7 IM56

*Pricing is updated once a day at approx. 9am on this website however Intraday pricing is available from the LSE, Bloomberg or by contacting the desk directly on 0207 597 3813.

Useful information


Useful Information

Features & Benefits

Key Impala bond features

  • Ranking of the Impala bonds: Senior Secured Note
  • Security pool: bonds (which the investor wants exposure to), Gilts and cash solely 
  • Coupon format: fixed rate, floating rate or inflation linked bond
  • Denominations: typically min. 1,000
  • Currency: GBP, $, € & CHF 
  • Listed on the London Stock Exchange
  • As liquid as the underlying bond, with intra-day liquidity
  • No Investec credit risk

Benefits

  • When managing a fixed income portfolio, Impala enables investors to achieve their targets via a simple direct bond investment
        a) Removing/reducing duration risk
        b) Diversifying credit exposure
        c) In any currency
        d) Flexibility to rebalance portfolios on an ongoing basis
        e) Access to what is unavailable in the market:
            a. Longer dated, more liquid, Floating Rate Notes
            b. Shorter dated, more liquid, positive real yielding, Index linked bonds
            c. Credit across sectors, in 1,000 minimum denominations
            d. Issued at par
  • Maintain the liquidity of a fixed rate bond whilst buying a FRN/RPI linked bond
  • Price transparency and bid/offer spread of a fixed rate bond, while buying a FRN/RPI linked bond
  • Maintain and/or increase exposure to longer dated bonds, with the option of running no interest rate duration and / or inflation risk
  • Lock-in profits on existing holdings whilst keeping credit exposure

Example: Fixed to Floating

Switching from Fixed to Floating rate

One of the leading concerns for fixed income investors, when making investment decisions, is that of interest rates rising and eroding the value of their investments (the price of fixed coupon bonds are negatively impacted when interest rates move up). With global interest rates at historic lows, investors believe that this interest rate risk is more to the upside than the downside.

An Impala Bond in a Floating Rate Note (“FRN”) format would pay variable coupons that are pegged to a reference rate, such as three-month LIBOR (London Interbank Offer Rate) plus a spread (i.e. a fixed credit spread). Coupons are therefore reset periodically (every three months) and can rise or fall with changes in the reference rate (three-month LIBOR), whilst the credit spread remains constant. The FRN therefore (1) protects investors against interest rate hikes and (2) offers higher yields than fixed rate bonds in a rising interest rate environment (3) reduces the duration of a bond portfolio

There is a limited supply of FRNs in the market and they are typically issued by Financials, have low credit spreads and short maturities (3 to 5 years).

An Impala FRN offers investors (4) a longer dated FRN (i.e. the maturity they want) (5) credit they want exposure to (any corporate which has issued a bond in large size of 250m+) (6) with a spread higher than what’s on offer in the FRN market and (7) using a reference rate which suits investors.

Example: Fixed to Inflation linked

Switching from Fixed to Inflation linked

When the price of the basket of goods that comprise the inflation index are rising, inflation erodes the value of fixed income investments.



An Impala Bond in inflation linked format has its principal (i.e. initial investment amount) adjusted by inflation whilst the coupon payment is calculated on the inflation adjusted principal.

It therefore aims to protect the value of the principal, and income from inflation, by delivering returns that are directly linked to inflation.

The majority of the return of an inflation linked bond is in the form of the capital adjustment from inflation indexation (adjusted principal). The income yield would therefore typically be lower than a comparative fixed rate bond.

There are a limited supply of inflation linked bonds in the market and most are issued by governments or corporates with an inflation linked revenue stream (only a few sectors), almost all are very long dated (20yr+) and trade at a price well above par (as they were issued some time ago and the principal has benefitted from inflation adjustments). They therefore predominately offer low or even negative real yields.


An Impala inflation linked bond gives investors access to (1) shorter maturity (2) higher real yield, and (3) diversified credits (any corporate which has issued a bond in size greater than 250m).

Final Terms

FAQ's


FAQ's

What is the Impala Programme?

A secured Euro Medium Term Note (“EMTN”) programme.

  1. What type of EMTN’s can be issued?
    Fixed coupon, floating rate and inflation linked bonds.

Who is the Issuer?

Investec Bank plc – although there is no credit risk to the balance sheet of Investec Bank as the Impala bonds are secured.

What do we mean by secured?

Investors have no credit exposure to Investec Bank plc

  1. How is this achieved?
    When investors purchase the Impala Bond, the cash proceeds are used to buy securities which are placed in the security pool. The security pool is a discrete, secured, ring-fenced account with Deutsche Bank who act as independent custodian.

  2. How is the ring-fenced account enforced?
    A fixed charge over the security pool is registered at Companies House in favour of the Independent Trustee who acts on behalf of the Impala Bond holders in the event of an Investec default.

  3. Is there daily margining?
    Yes. If the value of the security pool falls below the value of the Impala Bond plus the Independent Amount (see definition below), Investec will be required to post additional security in minimum increments of £10,000 or equivalent. This is checked on a daily basis.

What happens if Investec defaults?

The Independent Trustee will step in and liquidate the security pool and return the proceeds to the Impala bondholders. As the security pool is margined on a daily basis, on the day of an Investec default the security pool value will reflect the value of the Impala Bond. The value may however change before the security pool is liquidated.

  1. Who pays the Trustee for the liquidation?
    On issuance of the Impala Bond, Investec places an Independent Amount (£50,000 or equivalent) with the Trustee, which remains with them until maturity. The Independent Amount is used to cover any administration costs incurred by the Trustee. In the unlikely event the fees exceed the Independent Amount the Trustee will settle its fees first and return the remaining proceeds to investors.

  2. Does the investor ever have risk to Investec?
    If during the liquidation period the value of the security pool falls below the value of the Impala Bond, then the proceeds returned to investors may be lower than the value of the Impala bonds, as valued on the day of the Investec default. Investors will then have an unsecured claim on Investec for any residual balance.

What happens if the custodian defaults?

Deutsche Bank act as our independent custodian. Should they default Investec will appoint a new custodian to hold the security. The security can only include the fixed rate bond plus cash and Gilts.

What is the security pool?

This is defined prior to a bond issuance and is detailed in the Final Terms of the Impala Bonds (available on the Investec website or the London Stock Exchange website). Typically this will be defined as a combination of cash and Gilts as well as the bonds of the underlying credit Reference Entity (see below for further detail). The security pool is important for investors as it serves as their protection in the event Investec defaults.

What is the credit Reference Entity?

This is the credit exposure that investors chose to take (i.e. the fixed coupon bond issued by the underlying corporate). The fixed income from the credit Reference Entity bond is converted by Investec into the desired payoff profile (floating/inflation linked). The credits available include Financials, Supranationals, Sovereigns and Non-Financials/Corporates. This range of credits gives investors the flexibility to match their risk appetite with their desired payoff profile.

What if the Reference Entity defaults?

The Impala Bond ceases to pay any further coupons and investors will receive the recovery rate of the Reference Entity, less any costs of unwinding hedges put in place by Investec to provide the payoff profile of the Impala Bond. The recovery amount therefore may be more or less than the underlying Reference Entity recovery amount.

What is the difference between the Reference Entity and the security pool?

The Reference Entity provides the desired credit exposure for the investor whereas the security pool mitigates the investor’s exposure in the event of an Investec default.

Is there daily liquidity/secondary market pricing?

Yes. The Impala bond will be listed, liquid and Investec is committed to provide intraday pricing on Bloomberg.

How committed is Investec to providing this liquidity?
Liquidity is entirely dependent on the liquidity of the underlying bond. The secondary market pricing of the Impala Bond is therefore transparent and liquid.

What are the minimum denominations?
The programme has the capability to issue and trade in sizes of 1,000 or equivalent. If you are acting in an Agent Advisory capacity to retail clients then the minimum denominations will need to be raised to 100,000 or equivalent.

Where is the secondary market price found?
Investec will post secondary market pricing continuously on Bloomberg (using the pricing source IVSS on ALLQ screen). Investors can call Investec and trade at the price, up to the lot size, as indicated on screen. For trades larger than the lot size on screen, or where the underlying Reference Entity cannot be sourced at its screen price, investors may receive a slightly higher or lower secondary market price. Investec will also post pricing on SEAQ, which will be a committed, firm price in that lot size. As Investec is committing to a price, typically the bid/offer on SEAQ will be wider than on Bloomberg. Investec hopes to be able to trade at the price on Bloomberg however SEAQ provides comfort that there is always a committed bid/offer price and is reflected on the London Stock Exchange website.

How is the price of the Impala Bond calculated in the secondary market?
The price of the Impala Bond is the sum of:

  • the mark-to-market of the underlying bond, and
  • the mark-to-market of the swap
  • Investec's margin of [25 – 40bps] p.a. is priced into the credit spread. The yield and secondary market price of Impala bonds are therefore net of all fees

What is the bid/offer of the Impala Bond?
The bid/offer will be at least as wide as the underlying Reference Entity bond.

Testimonials

Testimonials from clients and the press

Client testimonials

Given our view that interest rates can only rise from here we are conscious of the need to diversify both credit and interest rate exposure within our client portfolios, as many clients are unaware of the duration or interest rate risk they assume when buying fixed rate bonds. Investec has helped us rebalance our client portfolios, reducing interest rate risk whilst maintaining yield and exposure to investment grade UK corporate.

Towards the end of 2013 we were looking for investment alternatives for the Gilt and cash components of our portfolios. We wanted an investment that would deliver similar capital security but with higher income, daily liquidity and no duration. After having scoured the market for non-financial floating rate notes we engaged the Investec Impala team and worked together in constructing a diversified basket of highly rated corporate credits. The basket delivered floating rate returns in excess of anything available in the market, whilst addressing our key investment objectives.

Press testimonials

Aimed at general insurers and reinsurers, investment firm Investec's Impala bond programme looks to hedge duration risk in fixed income bond portfolios. [...] The Impala bond programme is designed as a form of internal swap by Investec for fixed income investment grade bonds, as a response to a relative lack of floating rate bonds in the market.

Investec’s Impala programme aims to offer insurance and pension fund clients protection against rising interest rates and inflation by swapping fixed rate bonds for floating rate or inflation-linked payments. […] Insurance companies are heavily long bonds and have a dearth of attractive opportunities, given the fact that most FRNs are issued by banks in the three to five-year maturity and pay a very low coupon.

the Impala wrapper comes at relatively cheap price. The net cost to the client comes in at around 10-12 basis points, clearly a big driver in a low yield environment, and far cheaper than an absolute return fund—a tool many pension funds are choosing at the moment.

Mid-sized pension funds are also looking at the Impala bond as a way to remain liquidly invested in the run up to a pension risk transfer, Gorre adds.

Bright ideas for long-term problems. Investec’s Impala programme gives investors inflation and interest-rate protection by turning fixed-income bond payments into either floating-rate or inflation-linked cashflows. The bank buys existing bonds and then does a long-dated swap, enabling it to provide investors with returns in the format they require, charging a fee in return.

Investec has established the Impala bonds programme to help pension funds and other investors unable to access inflation-linked assets. This offers investors inflation linked or floating rate returns by buying bonds and executing a long dated swap on investor’s behalf. Investors take the credit risk of the underlying bonds but Investec, via the swap, provides the kind of cashflows investors need.

Investec (the investment banking division) offer their Impala series of floating and index-linked products, effectively swapped-out from various underlying bonds on an on-demand basis, including the LSE 4.75% 2021. The latter is currently offered at 111 to give a discounted margin of L+127bp and can be accessed in retail size.

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Risk.net – Insurance Risk – UK life firms rethink forex hedging after PRA note
22nd April 2015

By Rob Mannix

Investec is also pitching a solution, offering to issue senior secured banknotes with security to insurers over the assets they no longer want to hold. [..] Other banks are understood to be touting similar but more structured ideas to clients, but Investec is alone in proposing to issue its own notes with security over the problem assets. The bank is also proposing the idea as a way to deal with callable bonds and possibly inflation-linked assets.

Read the full article