Investing in Commonwealth Bank Bonds

YBAF Pilot on 24/05/2022 - 11:43
Last edited 24/05/2022 - 14:17

Hey everyone, I have been looking into how to invest some monies that we have received from selling our property. I was recently made redundant at Deloitte (COVID), we therefore decided to sell our principle place of residence and move back into our apartment as I have gone back to uni to finish my Bachelor of Education degree (2yrs left).

So I was looking for something relatively low risk with an appropriate interest return. I came across a mob called Bond Street Custodians, and they have a wide ranging portfolio in regards to bond investment. One caught my eye offered by Commonwealth bank, which has a maturity date in 2028 returning 9% per annum. Looking at the current fixed term rates, I don't think they are necessarily the best investment opportunity due to the low cash rate. So this 9% per annum seems to buck that trend and appears to pretty solid to me, however I just have a tingle in the back of my mind feeling this might be a to good to be true scenario.

I have tried to do some research on the compnay offering these saving bonds, but there are limited reviews on them. Short of me finding they are registed and have appropriate ABN and AFS licenses, does anyone have any pointers what steps I could follow to do better due diligence?

EDIT:
Ok guys, I am pulling the pin. I think with the help of the community I am gonna call time on this and realise that this is just another dodgy scam. At least my spidey sense is somewhat intact.

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Comments

  • JimB on 24/05/2022 - 12:19
    +4

    "I just have a tingle in the back of my mind feeling this might be a to good to be true scenario."

    My spidey senses are tingling too.

  • Ocker on 24/05/2022 - 12:30
    +2

    9% yield on CBA bonds that have a 6 years maturity - run away while you can

  • wannagrababargain on 24/05/2022 - 12:37
    +1

    Do you know what you are buying? Is it a covered/debt bond, an investment bond or a commbank corporate bond? Generally the % on bonds will reflect the risk.

    Due diligence would be to read the PDS and understand the risk level. Maybe also seek a financial adviser.

    • YBAF Pilot on 24/05/2022 - 13:14

      I am actually waiting on them to forward me the PDS. I have a meeting with my FA next week, and yes will definitely bring it up then.

  • Seraphin7 on 24/05/2022 - 12:52
    +3

    Can you provide a link to exactly what you are talking about? I suspect there might be some crossed-wires here.

    Unless someone is running a scam, Bond Street Custodians are an entirely reputable company that is a subsidiary of Macquarie Bank. I didn't think they issued investment products directly, as I've only ever come across them in the role of custodian rather than issuer, but happy to be corrected there.

    I think this is far more a misunderstanding than anything else, but I think it is improbable that you'll be able to get 9% on this investment, but very happy to have a look at it for you.

    • YBAF Pilot on 24/05/2022 - 13:04

      Apologies, not 100% certain what you mean by thiis "Can you provide a link to exactly what you are talking about? I suspect there might be some crossed-wires here."

      I was approached by www.bondstreetcustodians.com via phone call. I surmise they garnered my details from a 3rd party as I did put feelers out that I am wanting to invest. All other/further correspodance has been directly through email and phone.

      Is there a way that I can forward you the particulars safely in the regards to the CBA bonds? I am still waiting on them to forward me the PDS.

  • donbot on 24/05/2022 - 13:05
    +1

    Dont bond prices generally shift with interest rate movements?

    Eg. a $100 bond maturing in 2028 with a 9% coupon might be priced at $130 today - which means by the time you factor in the $30 loss, the $9/year coupon your getting levels out and you end up with an overall 4% return or something like that?

    That'd be my guess.

    • YBAF Pilot on 24/05/2022 - 13:12

      In this case it is a Fixed Rate Coupon (FRC) and my understanding is that the interest rate on these bonds are set when first issued and remains fixed for the life of the bond. What you might be referring to are Indexed Bonds.

      • donbot on 24/05/2022 - 13:23
        +1

        Yes, but the rate you pay to buy the bond may be more than its face value of $100 if its coming from the secondary market. Thats what I'm getting at.

  • Resist deal on 24/05/2022 - 13:40
    +2

    Why does this sound so much like https://www.news.com.au/finance/money/costs/nsw-teacher-lose…

    • YBAF Pilot on 24/05/2022 - 13:42

      Far out, there are way too many similarities there. Think I might need to pull the pin.

  • Drakesy on 24/05/2022 - 14:14
    +1

    If it's too good to be true it generally is.

    Mind you i've had a FA mate who says some of his 'smartest' clients such as surgeons, lawyers, engineers are the ones with the least idea about investing.
    The number of times he's turned them away from Ponzi schemes, shitcoins and time shares is astonishing given their wealth.

  • redfox1200 on 24/05/2022 - 15:12
    +1

    just rent out the PPOR rather than selling it

    edit: whoops to late

  • JIMB0 on 25/05/2022 - 07:35

    At that rate I'd be more concerned about the return of captial rather than the return on it.

  • Wardoworld on 25/05/2022 - 09:56
    +1

    This is 100% a scam just do a Google on fixed bond scams or government bond/treasury bond scams. I'd reccomend emailing [email protected] to make them aware and reporting it to scamwatch

    • temporiser on 27/05/2022 - 18:41

      Have you used this company before?

      • MrMarket on 02/06/2022 - 15:10

        No, I don't invest in bond but I know they are legit and been around for a long time
        you can run background check on them with a call to ASIC etc..

        • stingysydney on 07/06/2022 - 11:08

          There's no need to use FIIG. They charge you an arm and a leg in bid/ask spreads as well as custody fees.

          There are several bond ETFs that are cheaper and are more than adequate. These ETFs come in both floating rate and fixed rate depending on your preferences, as well as corporate or government bonds.

          • MrMarket on 07/06/2022 - 15:22

            @stingysydney: I don't invest in bonds so I don't know fees and charges I just point to a site that I know is legit and a list of bonds
            as you point out there are many cheaper alternative

  • Lana90 on 25/06/2022 - 08:24

    It was a scam indeed. I got contacted by them too . They even use the real ACN and AFS from the real Bond street custodians Ltd which is under Macquarie bank umbrella. I have called Macquarie bank directly and they said Bond street custodians Ltd don’t deal with individual customer. To use their service , u have to be an eligible customer who need to register with the so-called Macquarie wrap platform

    • HenryX on 01/09/2022 - 12:55

      I too was approached by Bond Street Custodians and several other brokers offering the CBA ZAR bond yielding 9%. In order to get a link to the original 2018 prospectus I was required to open an account that entailed sending a copy of my drivers licence and a utility invoice. I have not sent any bank account details or transferred any money but they do have a copy of my drivers licence. Do your consider I may be at risk for having done so?

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