Lloyds Grp 9.25 Discussion Threads

[investing wisely] 26/4/2018 20:44

Nicholas Blake

Thank you very much.

Are BP Prefs the only Prefs that you think are protected from a return at par? Or do you think that there are any other Prefs that are protected?

I am interested mainly in the larger size issues such as the big banks, NWBD,SAN,STAC and also insurer RSA, and Northern Electric NTEA.

[nicholasblake] 26/4/2018 20:29

It's in the articles, which are on BP website. If the ords attempted to remove the Spens clause it would be a variation of the terms of the pref's, which I seem to recall requires a class vote of pref's. Ought to be easy to find in articles.
The yield at the repurchase price for the pref's has to be the same as that of a reference long dated gilt, or a suitable replacement if no longer in issue.

[loglorry1] 26/4/2018 19:44

Nicholas what if the BP ords vote to change the articles to remove the spens clause in the BP prefs? Is the protection in the prospectus if so can you link to it?

[investing wisely] 26/4/2018 19:41

Nicholas Blake

That is interesting. I have not heard about this capital return rule for BP Prefs. Can you please explain exactly what the formula or rule is about gilt yields and where did you see this information? Are BP Prefs the only Prefs that you think are protected from a return at par? Or do you think that there are any other Prefs that are protected?

[nicholasblake] 26/4/2018 13:42

Wood and trees.

[carcosa] 26/4/2018 13:29

The last rate hike (November 2017) of 0.5% knocked off 1% of the LLPC price... and a month later LLPC share price increased by 6%...

[nicholasblake] 26/4/2018 13:28

FF, I think you'll find that pre-Aviva the best yield was c. 5%.
The fixed interest market isn't pricing in 1%, more like 0.25%. No certainty of anything.
If Lloyds agreed to a five year moratorium,following which all bets off, then on a YTM of 5% the bonds would trade at around 120p.
Too risky for me. I'm going for prefs like BP, which can only have capital returned at a price based on gilt yields.

[future financier] 26/4/2018 13:09

nicholas - I would expect that the pricing of all fixed interest securities should already have 1% fully priced in. The appeal of these is their 5 3/4% yield - not the potential for capital growth. Were it not for the track record of LLOY then I am sure that these would be on a far lower yield - after all there are many bonds at under 2%.

[nicholasblake] 26/4/2018 12:49

One thing to ponder. How much upside is left? If Lloyds comes out and say they have no plans in the next YEAR will the shares rise much?
I don't think it is realistic to expect them to tie their hands with a permanent commitment -- conflicts with their duties to ordinary shareholders. In the meantime, a one per cent increase in interest rates over the next year or two could readily knock 15% off the price.

[alphorn] 26/4/2018 12:32

Continue to hold LLPE. Out of favour here?
Less risk if they were taken out at par.

[loglorry1] 26/4/2018 12:23

Jean write to Lloyds and the links above and tell them this.

[steve3sandal] 25/4/2018 10:31

No plans to cancel them have they.....I find it discourteous and disgraceful that they haven’t or don’t or won’t reply to the FCA which requested much more specific information.
For the record lloyds, I have no current plans to ever do any business with you or lend you money via ord shares or irredeemable prefs again. You may get along fine without me but I’m OK that you are no longer by my side (slightly pinched your advert sorry).

[joe say] 25/4/2018 09:39

Even bankers wouldn't make that mistake again would they?

Mind you the FCA wouldn't notice for months in any event

[cwa1] 25/4/2018 09:04

Price seems to be telling us something. Think the FCA will want a definitive response at some time in the not too distant though. Nice to hear the "no discussions and no plans to cancel" line but certainly want something more concrete than that-especially from an organisation as mendacious as Lloyds.

[nicholasblake] 25/4/2018 09:00

LLOYDS BANKING GROUP CHIEF FINANCIAL OFFICER SAYS NO DISCUSSIONS AROUND PREFERENCE SHARES AND NO PLANS TO CANCEL THEM.

Which means they ARE cancellable, but nothing to talk about at the present time. No long term commitment, though.

[holts] 25/4/2018 08:54

Price seems to agree with you

[nicholasblake] 25/4/2018 07:52

You can bet the analysts will ask about it.

[holts] 25/4/2018 07:30

can not see any mention of prefs in interim statement .

[nicholasblake] 19/4/2018 09:06

The FCA ought to have done this long ago. The announcement is tantamount to an admission that its former guidance/rules were too lax. It might just be that it is it which is at fault rather than the issuers.

I expect most of the issuers of the 'financial' pref's 'irredeemable' pref's to clarify that they are repayable at 100% subject to a court scheme but not class meetings -- in other words those were the terms all along!

And my read of the letter is that issuers are entirely entitled to state that they have no present intention of repaying at par but that they will make a statement if that changes. The Takeover Panel would treat such statements as kicking them into touch for six months.

There must be a real risk, though, that any affected pref's will drop significantly on such announcements?

[joe say] 19/4/2018 08:53

red - me too

But you do have to still ask - where were the FCA when it mattered ? (many have lost for example)

and equally - are the rumours true of them having green-lighted the proposal in advance

If only London could up its monitoring standards instead of being good at creating the illusion of that

[p@] 19/4/2018 08:42

probably get the stock answer-The board has no intention at the present time to cancel these shares at par.

[redartbmud] 19/4/2018 08:37

CWA

Thanks. At least it is something positive.
I read it as an attempt to ensure that any company undertaking a cancellation or redemption, at anything less than a premium to the prevailing market price, must have a watertight legal reason, and approval of that class of shareholder. It is a deterrent of sorts.

[loglorry1] 19/4/2018 08:30

Don't forget the institutions who hold these prefs will have a few things to say to Lloyds if they come out and state that they intend to cancel.