Lloyds Grp 9.25 Discussion Threads

[future financier] 04/11/2009 13:07

what am I missing - but apart from there being no divi for 2 years - what is the problem with ignoring the Offer and doing nothing?

[pyemckay] 04/11/2009 10:28

LLoyds are only looking after their institutions but that is nothing new or nothing that should shock the PI. Its par for the course. Fore!

[pyemckay] 04/11/2009 10:26

As far as i know Simon,this is the case.


I'm getting a lot of info from TMF website. OBR website has LLPF as 4th in list for consideration of ECA. Collins stewart recognise that LLPF may be included for consideration of ECA as well.

As a holder of LLPF my options are clear.

My broker probably doesn't use euroclear so I can either (1)sell them in the market, (2)hold them and tender for ECA(not guaranteed) if successful I will have shares/cash(at lloyds discretion) if unsucessful will hold LLPF for 2 years with no dividend and possibly an illiquid market to sell them.

Its a no brainer for the PI and am intending to sell them . 636 to sell just now but I am looking for 670 although I might not get that

[simon gordon] 04/11/2009 09:44

Pye,

Could you clarify, is the ECA priority list the one for the £1.5bn in ordinary shares for tender?

[pyemckay] 04/11/2009 09:40

llpc / llpd are feeling pain.

LLPF isn't as it is 4th in list for ECA priority so you are certain to get 70% of you investment in most likely shares/but also you may get cash.

[solomon9] 03/11/2009 19:43

anyone have any smartass ideas now about what the fuxk we d now- looks like we're gonna be taking the pain after all.

[p@] 03/11/2009 08:18

Great stuff OBR,I suppose their only get out is if they buy out the stopper.

[coolen] 15/10/2009 22:37

Old Boy, we are indebted to you Sir. Full marks !

[old boy returns] 15/10/2009 10:19

I have been in communication with LBG Investor Relations concerning the LLPF dividend and received a very interesting reponse late last night. I had a bit of a sleepless night deciding whether or not to publish it but, on balance, decided it was worth the risk because I know there are many LBG preference share holders out there who would value seeing it. I have only published on my site because it will be easy for me to remove if I am required to do so. You can read it at:

[future financier] 08/10/2009 10:52

£15Bn RI must be good for these? - Increaased equity buffer - plus reduces EU arguments about State subsidy?

[old boy returns] 02/10/2009 09:23

I had a number of requests yesterday for a copy of the JPM 'Tale of Two Banks' report. It contains a very good analysis of all the RBS prefs / LBG Hybrids and which ones push / stop others and do / do not contain discretionary language.

If anyone else would like a copy please let me know through the Contact Form on my Fixed Income Information website at:

[pollen8] 25/9/2009 16:57

Does anyone no the latest as to dividend payment on this stock and ex date. I can see from the Lloydstsb website that payment date is 30th November, so xd must be soon.

[solomon9] 21/8/2009 09:22

Anyone know why RBS prefs in the US fell around 25% as a group last night?

[kiwi2007] 17/8/2009 12:24

Err...yes, but the graph's changed now... actually I've just found that they did take a couple of 1K bites out of the quantity offered but refused to buy the whole caboodle...

Anyway,

I posted this link on'tother thread - may as well have it here too...

Why I have a preference for prefs

By David Stevenson

Published: August 14 2009 18:06 | Last updated: August 14 2009 18:06

For the last six months, I've been circling around prefs, Pibs and PSBs. These are the confusing acronyms and abbreviations given to the preference shares issued by banks, the permanent interest bearing shares issued by building societies, and the perpetual subordinated bonds issued by former building societies.

They are all bond-like investments offering a fixed-income coupon, and they can be bought and sold at any time through a stockbroker.
EDITOR'S CHOICE
Adventurous Investor: More columns from David Stevenson - Oct-28

In January, I made an initial investment into Halifax PSBs – which, at the time, were actually HBOS stock. It wasn't a great success as confidence in the banking system continued to wobble. But I kept my nerve and, a few months ago, bought some more Lloyds prefs (their new incarnation) at what I thought were very reasonable prices. Since then, I've been quietly stocking up on more prefs and Pibs, with putative purchases of NatWest and Nationwide stock.

Why my interest? Very simply, because private investors don't always get it wrong and sometimes they're the best judges of a real world risk. Let me explain this statement.

Over the past six months, institutional investors have been abandoning prefs and Pibs at a fair old rate. A number of factors have influenced their decision. They are worried about the rating agency downgrades of this hybrid debt (as has happened to Lloyds stock). They know their wealthy clients want to dump income-paying securities because of the 50 per cent income tax rate being introduced from next April. They're also freaked by the decision of the West Bromwich Building Society to cut the coupon on its Pibs massively and issue Profit Participating Deferred Shares (PPDS). No building society has ever defaulted on its Pibs but the West Brom didn't half scare the living daylights out of the institutions!

The net result of all this is that the big institutional investors have been major sellers of this stock. If you look at the institutional versions of these investments – issues that are dealt in minimum blocks of £50,000 to £100,000 – you'll see yields at least 2 to 4 per cent higher than "normal" blocks sold to private investors. In fact, you can still buy hybrid stock with running flat yields of between 10.5 per cent and 15 per cent if you have enough money to buy big blocks.

Now, that strikes me as a good deal. I think this is especially true of the stock issued by the large banks and building societies where I contend that the chances of default are now minuscule (although not impossible).
I also think that the chance of these guys not paying the coupon is very low (but only in the case of the big boys).

My calculation is that the government wants the banking sector recapitalised and it wants to sell its bank equity as quick as possible. So why destroy a higher-ranking debt instrument if you want to sell the junior equity?

There are some well-flagged exceptions – Bradford and Bingley and Northern Rock, for example, where the government decided, rightly, to destroy the existing equity – and, in effect, the hybrids including prefs.

In addition, some of the smaller building societies may still decide to jump ship and replace their Pibs with PPDS stock to save money – although I sense this would only be allowed in extreme circumstances.

So, in my opinion, yields of 10 to 15 per cent are a decent bet for low-grade debt (the senior corporate debt is, of course, much safer) with low credit risk. I think that when the banking crisis turns into a boom – at some distant point – you could see yields fall back to 8 to 10 per cent, implying some capital uplift. There have already been some chunky gains in the bank prefs.

I'm slightly less sure about small building society Pibs, where I think the risks are elevated as this recession grinds on. That caution explains my slight worry about a new Pibs investment fund from Guardian Managers. It's the first of its kind, and I'm amazed that it has taken this long for someone to cotton on to this specialist theme. Many fund groups I've talked to invest in this stuff on and off, and have expressed an interest in setting up a fund. But no-one has actually done it, until now. So full marks to Guardian.

Sadly, this fund has a minimum investment of €125,000 which will put off most private investors. However, for those with a lot of money, it offers a way to buy into a diversified basket of fairly safe Pibs – the managers are not, for the time being, investing in banking prefs which I think is a mistake given the higher yields. Still, Guardian maintains that, even after costs, it should be able to target long-term returns of 7 to 9.5 per cent a year.

I have to be honest and say that the Pibs niche interests me less at the moment, precisely because the institutions are mostly so small and there is a risk of Pibs suffering if PPDS are issued. I'm also slightly worried that if long-term gilt rates start rising above 4 and then 4.5 per cent, some fixed-income investments yielding 6 to 8 per cent a year will begin to look less appealing.

At that point, I reckon investors will only really be interested in higher-
yielding, riskier debt – which is why I'm still a buyer of the bank prefs.

[e-mail]

[pillion] 16/8/2009 10:42

Kiwi

.........they stepped the price down every time I placed..........


A bit like this ?

[kiwi2007] 14/8/2009 13:47

Sold some yesterday - but when I tried today they stepped the price down every time I placed...

[jaws6] 05/8/2009 12:37

SteMis
Thanks.
On gaca is it in isa or outside for tax divi reason .

[stemis] 05/8/2009 12:34

GACA (8.875% prefs) 97p to buy = 9.15% yield
GACB (7.875% prefs) 88.5p to buy = 8.90% yield

AV.B (8.375% prefs) 104p to buy = 8.05% yield

RSAB (7.375% prefs) 93.5p to buy = 7.89% yield

[jaws6] 05/8/2009 12:29

kirk
Whats code for gen acci pref ? i think llpc had seller . want to buy but not sure.

[kirkie001] 05/8/2009 12:26

Hi SteMiS - yep; I agree. If I had more cash available; I'd be putting it in. However, the recent cash I've had has gone into NWBD (for the reasons you note above); and I'm pretty happy with 2 (over-ish)weight holdings in LLPC and NWBD. The other change I've made is to swap out of my Aviva prefs into General Accident prefs - same group; but a higher yeild available.

K

[nickcduk] 05/8/2009 12:19

Haven't really got a clue why LLPF are not motoring ahead in the same way. Why would anyone after anything other than liquidity be buying LLPC ahead of LLPF?

[stemis] 05/8/2009 12:06

Market suddenly starting to realise that LLOYs isn't going bust, the pref dividends are going to continue to be paid and that a (now) 9.9% yield is very good value at current interest rates.

Aviva 8 3/8% pref are trading on a yield of 8.17%. That yield would put LLPC on a share price of 113p.

Strangely the Nat West Prefs NWBD aren't responding to the situation as much and now yield 11.5%. On a comparable basis to LLPC they should be 91p (currently 78.25p).

[spacecake] 04/8/2009 17:56

Noticed that these had AU next to them around mid day - Mid day auction - is that usual ?