Aviva Share Discussion Threads

[carpingtris] 11/9/2020 19:27

More importantly why such a small MCap if they hold all that cash?

[richyggg] 11/9/2020 19:23

If there is a net cash position of 8.7 bn, why was the dividend cancelled ?
(Not an expert).

[essentialinvestor] 11/9/2020 18:54

* total debt is a bit over £10 Billion.

[wm2020] 11/9/2020 18:54

Some chat earlier today about debt, net debt etc and some people not understanding the terminology.... Just to be clear, as at 30 June Aviva had 19.1 bn cash and borrowings of 10.4 bn, therefore a net cash position of 8.7 bn and not a net debt position.

The board has indicated paying down some of these borrowings, I expect proceeds will be used to pay these down.

GLA

[whatsup32] 11/9/2020 18:51

‘But I’m no expert either’

Well that makes three of us :)

[edmundshaw] 11/9/2020 18:49

The trouble with the prefs is you have to pay a market rate, though I admit that is considerably cheaper than paying off the coupon. For example the Aviva plc (AV.B) 8 3/8% prefs can be bought at around 140p at the moment. But Aviva cannot easily buy them in the open market as the price would quickly go up. Not sure how they would buy them anyway other than chunks from institutions that were happy to sell at some reasonable price...

Paying off the 6+% debt would be simpler. Can they offer for that anyway and refinancing at closer to 2 or 3%? I would think just paying it off is cleaner, especially if they are worried about debt levels for some reason...

But I am no expert in this stuff either...

[whatsup32] 11/9/2020 18:20

Selling France arguably brings in £2.8b plus Singapore net £1.2b plus holding div£700m that’s Total £4.7b

edmundshaw. True enough but I just don’t see interest rates going up soon . With Covid collapsing economies world wide and Brexit to come Plus low inflations we are stuck at current rates for 2 to 5 years and then incremental small increases.
As eurofox comment buy back high rated debt 6% plus and if necessary replace with low rated debt , I can’t see any reason why they can’t replace with 1%

[dr biotech] 11/9/2020 18:20

Is it that simple? I mean surely AV could already borrow at a much lower coupon to replace these prefs. Admittedly not my area.

[edmundshaw] 11/9/2020 18:08

Buying back the preference shares might not be great timing. At some point interest rates will rise and the pref shares will get cheaper to buy back. On the other hand delaying selling costs the coupon. So the timing is tricky...

But there is £450m 6.625% Subordinated debt callable in June 2021, £800m 6.125% Subordinated debt callable in Sep 2022 and €650m 6.125% callable in 2013 that they could offer for, which sound like sensible options.

[whatsup32] 11/9/2020 18:03

‘Aviva sells Singapore operation to local rival’

Decent writ up, suggest more sales to come as well as France possibly Italy and Turkish.

[eurofox] 11/9/2020 17:30

They actually have net assets (over £4/share) rather than net debt, but quite a lot of the debt carries a higher coupon than a company with a strong balance sheet should be paying now, therefore it makes rotation of that debt into new long term debt with much lower coupon costs a very attractive move.

[essentialinvestor] 11/9/2020 17:21

They keep referring to ...paying down debt,

can someone clarify what their total net debt is, thanks.

[whatsup32] 11/9/2020 17:19

eurofox.. thinking same

Singapore gone and France in the pipeline plus £700 odd milyon saved from not paying dividend cash pile is getting nice and high.

[eurofox] 11/9/2020 16:54

Any rotation of existing high yield debt into new low yield long duration debt would be a welcome move that is profit supportive

[tornado12] 11/9/2020 16:41

Finally some decisive action. Is a good first step to put the share price in better territory. Now we need to understand the future dividend policy which remains completely unclear. The proceeds here to pay down debt I’m not against in current climate but needs to be balanced with SH return and the strategic next steps. Clearly we have all been impressed with first steps from AB. Amazing how things can change when leader at the top is dynamic and has real commitment & vision GLA

[dr biotech] 11/9/2020 15:58

The new business will initially be branded as Aviva Singlife in Singapore.
"We believe this constitutes exceptional value creation for the group and represents clear delivery from the new CEO Amanda
Blanc on her promise for decisive action," Jefferies analysts said.

AB not just words then. My Friday red will be decent tonight.

[hhhold2] 11/9/2020 15:52

I'm not even going to ask if Kylie rockets allowed on this thread?

[leedslad001] 11/9/2020 15:47

Friday pm rns as well lots won't even know about the news so looking forward to Monday

[edmundshaw] 11/9/2020 15:43

On the face of it this looks a good deal. It certainly underlines the value not only of Aviva's income streams but of the assets that it can sell, making a PE of 6 look very cheap indeed.

[whatsup32] 11/9/2020 15:41

Thanks for updates spud

[spud] 11/9/2020 15:36

Aviva noted the deal would have strengthened its June 30 net asset value by GBP700 million, its Solvency II capital surplus by GBP500 million and "group solvency ratio on a shareholder basis by approximately 4 percentage points".

spud

[hhhold2] 11/9/2020 15:28

All aboard for the next leg up.

[dk37] 11/9/2020 15:27

From today's announcement .... brilliant deal by the way

"The proceeds will be used to further strengthen Aviva's central liquidity and will be considered as part of Aviva's broader capital management and debt reduction objectives."

Plenty of scope developing to return cash to shareholders but specifically in terms of reducing the debt this could result in another attempt at buying in the Preference Shares...this time at an appropriate premium, currently yielding around 6%

[whatsup32] 11/9/2020 15:23

May get Sunday paper coverage

[eurofox] 11/9/2020 15:22

well, that's made the size of my holding and commitment to keeping it as a core holding well worth while.... presumably this is just the start of such disposals