Lloyds Grp 9.25 Discussion Threads

[insipiens] 27/10/2011 12:19

I'm not sure LBG can do, reasonably, much more than they already have done to indicate the prefs will resume.

[harmonics] 27/10/2011 10:59

Mmmm....if there is no forward notification then how can the market know or even predict the loss (or not) of coupon?
Basically zero indication means we know as much as the city or are there other underlying factors?

[insipiens] 24/10/2011 20:15

silver, I held llpe back in 09 and the declaration was not always notified in advanced. I hope you're right though.........

[silverballs] 24/10/2011 17:19

It seems that there are five of these LBG Preference shares.The earliest one that will be able to pay its coupon circumstances permitting is the 6.475% LLPE which would be payable on 15th March.This would presumably involve a declaration to pay in early February.So only about three months to wait to find out the Banks intentions.

[holts] 21/10/2011 15:24

They surely will make no comment , if at all , until the last possible moment .

[jonwig] 21/10/2011 13:49

If they resume in Feb 2012, I'd expect LLPC to trade at least near 90p. That suggests the market here is discounting more than one more year of missed coupons - an average of two, in fact.

So, if you think they'll miss at most one coupon (and re-start in 2013) they should be bought at today's price.

If you think they'll miss more than two ("game over") you've then to explain why the ords are trading at 32p.

[harmonics] 21/10/2011 13:39

So then, whats the odds of Lloyds switching the divi back on again in Feb 2012?
The market is actively ignoring LLPC but the spread discouages any short term trading.
Will Lloyds make any comment in January, are they obliged to make any comment prior to 01 Feb 2012?
Please forgive me if I am asking daft questions, I am playing catch up here.
I am considering going heavy on LLPC but I already have a holding.
If you buy at this point it's nearly 13% PA return, got to be good for any pension plan but will it happen?

[coolen] 18/10/2011 22:26

I agree fully with Jonwig and Dalesiders, which surely underlines the nonsense of Preference Capital having to be accounted for as "Debt" under the new IFRS accounting rules.

Hence my original point: when it comes to considering the Pref divs next year, can Lloyds really decide that part of its "debt" should remain un-serviced despite the EU handcuffs being released ?

If so, the balance sheet will start getting very messy with explanations that some IFRS debts are being paid and t'other IFRS debts (ie. the Pref capital) being deferred.

Thus, I suspect they'll pay the prefs and that present prices will firm up well in advance.

[dalesiders] 17/10/2011 09:20

Nor will the rating agencies

[jonwig] 17/10/2011 07:02

coolen - as I understand it, the accounting standards (IFRS) are responsible for determining how the balance sheet is constructed, hence prefs being placed under 'debt'.

However, the definition of 'capital' as it applies to Basel rules is different - you can't read straight across from the IFRS balance sheet to the Basel definition.

[coolen] 16/10/2011 21:30

Non payment of dividends, even on preference shares, would not normally be default.

However, Renew has highlighted what may become a crucial matter:

Under the latest IFRS accounting rules, Lloyds (along with many companies) includes some of its Preference shares as Debt as opposed to Share capital. My understanding is that Pref shares must now be classified as Debt unless the Directors are specifically required under the Articles to "declare" the Pref dividend before payment. If a declaration is required, Pref shares can remain as Share Capital and not Debt.

The goons who compiled these stupid IFRS rules (which mix up share capital and debt) have overlooked the situation where the Board, as in the possible case of Lloyds, may postively decide against paying a Pref dividend.


I stand to be corrected but, were that to be the case in 2012, would Lloyds need to re-write its balance sheet, moving the non-dividend paying Prefs back to Share capital and/or admit that, under its present balance sheet definitions, it was failing to service all of its debts ?

[renew] 15/10/2011 09:27

Dalesiders
I certainly understand the difference between equity and debt.
However I dont understand the relevance of your statement to mine.

[catcheemonkee] 15/10/2011 08:50

To be fair; preference shares, being hybrids, have properties of both equity and debt. Not paying their preference share dividends on time next year will be a problem for Lloyds' reputation in the eyes of future bond holders.

[dalesiders] 14/10/2011 22:56

Presumably you don't understand the difference between equity and debt.

[renew] 14/10/2011 21:32

Presumably non payment of pref divis after Feb would be classified as default by the rating agencies. They still have big borrowing requirements even without raising reserves.How much extra will they have to pay for borrowing if theyre judged to be in default.

[harmonics] 14/10/2011 14:31

The 5p spread should inhibit trading!

[holts] 13/10/2011 21:20

Evening CWA , a few days similar to this one will do , I still cannot decide what the thinking behind payouts will be , on the one hand I would be considering that if I dont have to pay out then in current circumstances hang on to the cash , but in long term financing terms that is not going to be a usefull approach or will the market forgive all sins no matter how naughty you are with your debt ?

[harmonics] 13/10/2011 16:49

Fantastic to get rid of the spread costs, I am now at zero... yipee!

[insipiens] 13/10/2011 11:06

indeed. picked a few up on Monday....

[cwa1] 13/10/2011 09:43

Hi HOLTS

Just posted a comment on LLPC over on the fixed income board re the slight improvement in price and increase in interest in this one this morning, which is nice to see for a change.

Hoping it is the start of a gentle trend upwards culminating in the resumption of the coupon on this one.

[holts] 13/10/2011 08:28

Investment Week reports:

Invesco Perpetual's co-head of fixed income, Paul Read, has told investors now is the time to be bullish on bank debt in the UK, US and Europe, with valuations at three-year lows despite huge improvements in balance sheets.

Read, who along with colleague Paul Causer runs portfolios including the £5.3bn Corporate Bond fund, £299m Tactical Bond fund, and the £3bn Monthly Income Plus fund, has seen performance plunge across the range in the short term having taken a bet on bank debt.

However, Read said he expects the positions to come good over the next three years, as investors reward banks for the way they have repaired balance sheets.

"We are bullish from a fixed income point of view on a lot of the big northern European banks, the big US banks, and obviously the big UK banks," he said.

"The sector has improved a lot from where it was in 2008 and 2009. There has been a lot of deleveraging, so the average big European banks have come down from often 30 times leverage to 20 times."

He said the likelihood of impairments at banks the funds hold – such as Santander, Barclays, Lloyds, Bank of America and Commerzbank – is "very, very low", adding he sees extreme valuation opportunities in the space.

[holts] 30/9/2011 15:41

Yep, dont want them to buy in , just resume and keep paying.

[solarno lopez] 29/9/2011 16:48

Not sure what I have done to deserve a thank you but thank you