Reflections after Lukas investuoja conference

Some reflections after last week’s ‘Investuotojo Luko’ (Investor Lukas’) conference, which was organized by Verslo žinios and Manopinigai.lt, and the panel discussion about bonds, that was moderated by BeMyBond‘s general manager Indrė Dargytė:

‘Some positive flashbacks from my bonds panel at Verslo žinios ‘Lukas investuoja’ conference last Thursday.

My panel included a diverse set of speakers, both individual investors who manage their personal portfolios and professional investors, who are overseeing private debt funds at their respective fund management companies.

The speakers shared their views on how they approach investing into bonds. Julija Abromavičienė stressed the importance of secured bonds and issuers’ reputation, and through her experience in real estate sector, she is able to assess the value of collateral. Ugnius Jankauskas values the reputation of the issuers as the most important factor and generally views the investment in Baltic bonds as a ‘sport’, sizing his investments to 10% of his income.

When determining the differences between accessing bond opportunities directly vs investing into private debt funds, Viktorija Vaitkevičienė stressed that all positions in her fund are secured, also the portfolio is highly diversified, something that would be hard to achieve by making direct investments.

Donatas Frejus noted the advantage of having direct negotiations with private issuers and the negotiating power that the fund has vs individual investors.

We also talked about PlusPlus Capital (PPC) and Integre Trans. I have already covered PPC story previously, and further actions are pending as the company is going through reorganization. The last update on Integre is that the bondholders meeting on the 23rd of January did not reach a quorum, hence the vote regarding the amendment of covenants did not happen and has been postponed to the next meeting. Not great, but not terrible news for Integre bondholders.

We touched upon the fact that the private debt market in Lithuania is becoming crowded, both with issuers and newly launched funds, which hopefully will result in better outcomes for the end users, as investors will simple have more choice.

There were a lot of questions from the audience, including how one avoids a default. In reality, it’s impossible, however what one can do is diversify their portfolio either through multiple direct positions or investing into a private debt fund, and further making sure that the bond issues in those portfolios are secured and have strong covenants. We did not manage to answer all of them, however I hope the organizers will produce a number of articles to address those.

I made a note to include the comparison of direct investments vs. bond funds into our next BeMyBond newsletter, as this seems to be an interesting topic to explore further.

I read a review of the conference by a fictional character Lukas at Verslo žinios and really liked how he described the Baltic bonds as ‘toys’. I’m glad to say that we will continue playing with these 'Baltic toys' for the foreseeable future.