Lloyds Grp 9.25 Discussion Threads

[pugugly] 31/12/2009 08:59

LG:> Sorry Human Rights only apply to the poor, celebs,politicians, and those of alternative faiths, race, or gender disposition NOT to those who create wealth, give employment or try and protect their property.

Have a great New Year - The Realist. !!

[lord gnome] 31/12/2009 08:19

Surely this is for the 6.475% prefs, 2bozmo. If so, it is the first that I have heard of it. It sounds like a bargain. Sell your stock to LBG for 70p and then buy it back in the market for 55p? Shurely shome mishtake.
I have a feeling that I am not eligible - does this offer to some shareholders only affect my human rights? ;-)))

[2bozmo] 30/12/2009 11:07

Another opportunity for 9.75% prefs - is this right? first i've heard of it

[solomon9] 10/12/2009 11:58

The ECN conversion has been Xmas come early for those who got in

[marben100] 25/11/2009 22:15

Here's the word from the (black) horses mouth ;0):

"The Existing Securities may be adversely affected by the outcome of negotiations between the Company, HM Treasury and the European Commission. These negotiations have made clear that the European Commission intends to require a commitment that members of the Group will not make a discretionary payment of coupons or dividends on hybrid capital securities issued by members of the Group (other than members of the Company's insurance group) and blocks on the exercise of optional early redemption features (capital calls) for a period of two years commencing 31 January 2010 (the ''Affected Period''). A list of the relevant affected securities and certain information regarding the payment of interest and dividends thereon during the Affected Period, is set out in Appendix 9 to the Exchange Offer Memorandum."

Couple of things to note from this:

a) Use of the word MAY in the first sentence. It is not certain that dividends will be suspended (but does seem likely).
b) It does not seem likely to me (barring a further economic meltdown) that coupons will be suspended beyond the end of the "affected period" i.e. beyond 30th January 2012.

Regards,

Mark

[tdoghouse] 25/11/2009 20:42

das:

OldBoyReturns who posts on here and Fool has a site of his own that may be useful:

[jonwig] 25/11/2009 20:04

It's my reading of the announcements that the two years start on 01/01/10. That way all the pref issues will miss four coupon payments.

There is, of course, always the possibility that LLOY won't be in a position to resume prefs dividend payments after that time, and that's reflected in the share price of - say - LLPC.

The bank is a geared play on a recovery in the UK economy, and most commentators seem to be thinking that growth will turn positive early in 2010 and reach trend about the end of that year. If that's the case, it's been suggested that LLOY will actually be over-capitalised (ie. core tier-1 ratio too high ... over 10%).
In such a situation there would be dividends and share buybacks.

None of this need happen, though.

[das3] 25/11/2009 18:35

tdoghouse: many thanks. 2 years from when exactly? is there a good website where I can learn up on this and other prefs?

tia das

[tdoghouse] 25/11/2009 14:09

das3:

Thanks to EU sticking their noses in our business, the dividend will be suspended on LLoyds pref shares for AT LEAST 2 years. If Lloyds comes out of this mess within two years and feels it wants to pay a dividend on the ordinary shares, then they must resume the payments on these first. They are not cumalative (also unlike NWBD where you get payed in new pref shares in leau). But once started they should in theory go on for ever (they are irredeemable) and the yield will be far greater than the ordinaries.

Thats the theory, but who knows what will happen to banks/UK in the next 2 years.

[spittingbarrel] 25/11/2009 13:58

tdoghouse - Fair enough, it's all a gamble I guess.

[das3] 25/11/2009 13:32

Excuse novice questions but hopefully simple answers:

0% yield at present?

2 year dividend suspension: fact or educated guess?

When divs resumed, are back entitlements due?

If so seems a goldmine.

Thanks ia

das

[tdoghouse] 25/11/2009 12:33

I've got far more NWBD than LLPC as it happens. Just spreading my risk I suppose

The plan is to top up in LLPC as and when the market gives me a chance between now and 2 years time (if its 2 years as you say). In the short term people may get out of them due to a lack of dividend, possibly driving the price down. But eventually the banks will sort themselves out (my guess would be LLoyds way before RBS) and lloyds in particular will want to start paying divs again to get investors (insto) confidence back again in them, driving up the price of LLPC much more than say NWBD. So in short I think over a 2-5 year period, I think I've got a good chance of capital appreciation in LLPC, followed by hopefully a wonderful yield (well until the next banking crisis - hopefully another 70 years time, by which time it will be someone elses headache).

Well thats my reasoning anyway.

[spittingbarrel] 25/11/2009 10:53

tdoghouse - Why take the risk on llpc, when after 2 years div suspension (assuming it is only 2 years and it could be longer) they only yield about 25bp more than a safer bet like nwbd? Or am I missing something?

[tdoghouse] 25/11/2009 09:31

A small top up for me today - added to those I got at 65p a few days ago. I now have a load of NWBD's plus these. NWBD are as safe as they can be when dealing with banking stocks - the yield, irreedemable nature, extra shares for missed payments. However, I've been waiting to buy into the LLPC until the ECN/ECA conversion process had been announced. LLPC not being allowed in, suits me just fine. Am willing to wait out for 2 years before the divs get started again (as I'm sure LLoyds will want to do if they are serious about paying divs on the ordinariess again). At my average buying price currently of 66p, they are going to yield a heck of an amount. Plus the spread should start to narrow once people get used to the fact that the only decent market sized pref shares in LLoyds is now LLPC.

[wilmdav] 25/11/2009 00:36

jonwig - I imagine some of the clued-up heavy weights also have that sort of figure in mind. My theory is that ECNs will start trading high enough on Dec 1st for some holders to want to sell out and switch into LLPC. If today is any guide they may be too late. I had very little dry powder but felt obliged to fire a token shot. Today is the first day Fastrade has allowed any trading for over a week.

No wonder Gordon looked pale and strained in October last year. All that was going on while he saved the world.

SteMiS - I'm also overweight on NWBD but have't got into any of the $ or € prefs.

[stemis] 24/11/2009 17:55

Nor me. I did contemplate it, but the only prefs I've bought recently are Nat West. Still look good value though.

[jonwig] 24/11/2009 17:33

Not mine, David. I've some ords and will take up my rights - enough exposure I think!

Mind, the price might be even moving to something like our suggested 76p since LLPC hasn't lost any liquidity, the ECNs are sorted and the rights issue looks as though it will be OK.

Is the revelation of the £60bn loan to HBOS last year significant? I don't see how, and the BBC (R4 just now) don't seem to have a proper handle on it.

[wilmdav] 24/11/2009 14:12

The market's waking up.

The first miserable 2,259 were mine. The other 124,000 buys were probably jonwig, kiwi and SteMiS!

[p@] 23/11/2009 10:39

Well it looks like we have missed out on the ECN's etc.but at least we have a market tradable amount of shares and a buffer against further downturn with the ECN's taking up the slack,just a two year wait.

[jonwig] 18/11/2009 11:11

Hi, Kiwi.

I suppose that spread is typical of stuff where a corporate action is at a tipping point.
No-one, and that includes MMs has much idea of what the conversion will be. If conversion to ECNs is low, LLPC ought to revert to 'normal' trading spreads. If conversion is high, the rump might be quoted with a wide spread.

FWIW, I've opted for ECN but no alternative consideration. If I end up with some ECNs I might think about selling them and reinvesting back into LLPC if there's any arbitrage in that.

[kiwi2007] 18/11/2009 10:41

Looking to pick up more of these and other LLPXs at a reasonable price. MMs offering to buy LLPC at 56p and sell at 66p - taking the mick surely? Even though I'd be happy to buy near 66p I refuse to line their pockets - so, offer in at 61.5p

[jonwig] 17/11/2009 07:39

Thanks Ptolemy - I see what you mean, though it's unlikely to be a big issue for me.

[ptolemy] 16/11/2009 14:02

Wilmdav/jonwig,
I believe there is a capital gain tax consideration (as well as an income tax issue)if held outside a wrapper. It really makes quite a difference. I posted about this on LLPF but the real gurus are on the Lloyds pref thread on iii.

[wilmdav] 14/11/2009 19:27

Hi jonwig

Tax considerations are clearly more relevant to a higher rate tax payer, which I am not.

Yes, the hoped for ZDP behaviour would be adversely affected if the bank went downhill from here. But in those circumstances I would rather hold the pref than the EPN. That could be a reason to take early profit on an EPN, if it were unexpectedly issued, and reinvest in the pref or elsewhere.

Thanks very much for the maths referral. I will have a good look at it.