Tuesday 6 February 2018

HYG's biggest position SFR 2026s

I thought I would take a quick look at what HYG owns. Its paying a yield of 5% and the principal value of the ETF is exposed to default losses. 

On the iShares website the biggest position is SFR 2026's, adding two smaller holding the US high yield ETF has $180m or so in a French telco with a mostly French language website. I had never heard of SFR before. 

The income statement is in the attached. Bonds are down 9 points since last summer. Moodys I think has them on 'B' and negative watch ie 'clients better sell them before we downgrade them again'. 

In the 9m to Sept stated assets are EUR29.9bn. But only EUR10.5bn are actual, the rest is goodwill and intangibles... for a teclo/ mobile/ datafirm. Equity is EUR2.9bn. Retained losses are EUR3bn, suggesting its never been that terribly profitable. 

The other liabilities, mainly debt and payables total about EUR27bn. 

Goodjob they havent had to write off the goodwill and intangibles as they would be stuck in an EUR18bn hole and trading insolvently. 

Pretty standard for a French employment project, but perhaps not what US investors signed up for.  

Anyway thats a brief summary of one of HYG's biggest and presumably best positions. 

Wonder what is lurking at the bottom of the portfolio.



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