Gen.acc.8se.pf Discussion Threads

[ammons] 02/11/2022 20:28

I agree with MRF. After the redemption effing shambles a few years ago, cant see any of the prefs being taken out below par. At par maybe if the prefs trade well below.

[spooky] 02/11/2022 17:59

Not in your statement of fact but in your deliberations about what the implications might be.

[spectoacc] 02/11/2022 16:51

Thanks all, and I hear what you're saying. But I do think Aviva have stated exactly what they intend, and have deliberately done it far enough out to avoid any of the problems/fiasco of last time. Perhaps odds-on that GACA/B disappear in 2026, at "fair market value". My difficulty is working out what that may be (as likely higher as lower!).

Edit - in what way, @Spooky?

I've quoted from the 2020 Aviva AR, happy to be shown why it's wrong/misinterpreted. Has anything happened to Basel II in the meantime for eg?

[spooky] 02/11/2022 16:47

SpectoAcc, your posts are pretty misleading.

[simon gordon] 02/11/2022 16:44

Specto,

Have a look at LLPC & LLPD, Lloyds tendered for some of them earlier this year or last year, I've lost track. Maybe AV. will try something similar. It didn't affect the price and they still trade in volume. The prefs remain popular and it's likely they will still be listed by the time we are all dead.

[spooky] 02/11/2022 16:42

My understanding is that they can't redeem without the agreement of holders. Obviously that doesn't prevent them from buying in the market at some stage in the future.

[spectoacc] 02/11/2022 16:39

"..After taking into account the fair market value of the preference shares at that time" - perhaps that does rule out my "12 month average price" idea. Not sure what "fair market value" refers to - current market price, or something other.

[my retirement fund] 02/11/2022 16:28

I cant see these being redeemed below par no matter what the fair price is for what ever unusual or bizarre situation, not after the last fiasco that resulted in senior heads rolling. I feel its more likely we see these included as capital. Ironically this may be helped by rising interest rates as more and more institutions look to find other forms of raising debt and regulatory capital in a landscape of shrinking money supply.

[spectoacc] 02/11/2022 16:07

@starpukka - as I say, not looked at PIBS/prefs in ages (only hold one), so just chucking it out there. That's what Aviva have said, and my strong guess is that GACA/B have only until early 2026 left. Aviva can't go low-ball with their buy-out price but they've also set themselves up not to have to pay a premium.

Could they offer say a 12 month average price, could shareholders of stamp-duty paying GACA/B do much about it? I don't know.

And if that 12 month average was low due to higher rates, or dodgy markets, or a forced seller (as now)...

I don't know how to price any of that - whereas if they'd said "redeem at par" or "higher of par or market price", we'd at least have had a floor.

Be interested in anyone else's views. I don't expect them to avoid redeeming them - they wanted to previously after all.

Tho do think buying them out when particularly low but before 2026 might be a little too cheeky after last time. "Fair market value" is in their statement.

[starpukka] 02/11/2022 15:58

Specto. Interesting post, thank you. Are you suggesting that, if, for example, the market crashes anytime in the future, preference shares could simply be closed out at a rock bottom price ?

[spectoacc] 02/11/2022 15:41

Seeing talk of perpetual, but:

"“Under current regulation the preference shares will no longer count as regulatory capital in 2026. Aviva will work towards obtaining regulatory approval for the preference shares, or a suitable substitute, to qualify as capital from 2026 onwards. If as we approach 2026 Aviva needs to reconsider this position, it will do so after taking into account the fair market value of the preference shares at that time.”"


Obviously that's after the utter fiasco Aviva caused a few years ago, and the last time I held any of their prefs. But does suggest that if the market price moves down (eg on interest rates rising more than expected, or on some sort of liquidity crisis), that would be the price Aviva cancel you at - so the risk of a capital loss that wouldn't apply (or rather, would be quantifiable) if they'd said they'd buy at par.

[garfield31] 02/11/2022 08:43

Thanks tiltonboy for reply. Have only started to look at preferences recently and encouraged by your post.

[tiltonboy] 02/11/2022 08:00

Garfield,

It was more a matter of availability. Bought just under 600k

[garfield31] 02/11/2022 06:20

GACA And GACB very similar dividend rates. Was there any particular reason for buying GACB over GACA tiltonboy. Has anyone considered STAB or STAC. Had thought to buy for a bit of diversity but possible impact of issues with China put me off.

[tiltonboy] 01/11/2022 21:34

Bought a chunk of GACB at 101.9 this morning

[skyship] 01/11/2022 16:34

Finally moving a little better....cheapest offer at the close 113.8p

[cwa1] 01/11/2022 15:49

113-113.1 spread. VERY tight for GACA

[spittingbarrel] 01/11/2022 15:46

I haven't been involved in Prefs for a few years now but couldn't resist a nibble at 8%.

[cwa1] 01/11/2022 15:39

Certainly seems to be a bit of stir today-including a couple of mark-ups on the bid by market makers even though the spread is narrowing by it being dropped on the offer at the same time. Interesting and respectable volume too

[nk104] 01/11/2022 15:37

Just got too tempting so I've bought some for the Isa. Perpetual 7.8ish per cent isn't to be sniffed at.

[cassini] 01/11/2022 15:35

Just bought a few for 113.25p via II, which is less than the indicated mid-price, so not so sure that seller's gone!

That's 7.84%, not including fees.

[my retirement fund] 01/11/2022 15:09

That's a good analogy. I see they have hiked the bargain offer by half penny, wonder if seller is nearly done?

[langland] 01/11/2022 14:35

Rightly or wrongly I tend to look at these against long gilts (say T52). Yield at lowest point reached 1.9% and climbed to 4.6% before the recent rally. GACA was yielding 5.3 at its price high so a spread of 3.4% over the gilt. If I allow for the accrued on GACA current yield is close to 8%. Current T52 yield is about 3.6%. So, GACA and most of the other prefs which I follow have not joined in the long end rally.I have bought a good amount in the last week. If I am wrong about this being something of a low point, I will buy another chunk 10% (in price terms) lower down.

[jonwig] 01/11/2022 14:19

If expectations are for 0.75 they probably won't move - markets anticipate. I think expectations are for 0.5 to 0.75. Not sure.

[montyhedge] 01/11/2022 14:00

Been looking at these when interest rates go up 0.75% on Thursday will these fall further?