Lloyds Grp 9.25 Discussion Threads

[nickieg] 14/11/2021 18:02

Without messing around with accrued iterest calculations, the exit yield on NWBD at their tender offer was 5.14%. At current mid market price of 169.25 the exit yield without entitlement to the April dividend has risen to 5.31%.

Obviously, the lower the exit yield, the better the offer so some of the others such as Aviva, Santander, Standard Chartered etc may well sit it out before coming to market with any offers.

The exit yield for LLPC based on the tender offer is 5.53%. The lower the exit yield, the better price you get so on a comparative basis, there may be room for an improved offer but don't count on it. If interest rates look like their taking off any time soon, why would they?

I'm with AJ Bell and can trade pretty much anything quoted on LSE. I moved from Barclays Smart Investor (formerly Barclays Stockbrokers) because when they changed, I couldn't any longer trade Corporate Bonds or PIB's.

[holts] 14/11/2021 16:25

It’s a point , but also quite ridiculously I read that some brokers II for example are not allowing trading in quite a number of fixed income stocks , will llpc and llpc join the list ?

[nickieg] 14/11/2021 14:01

On 3 Nov. this share dropped by over £5 (more the value of the Nov dividend) presumably reflecting market expectation that the MPC would shortly start to move interest rates up to deal with rising inflatioary pressures caused by covid, brexit and global supply issues. So, the question now is when and how far interest rates will rise in the near to medium term.

NWBD shares are already £5 below the last summer's tender offer price of £175 suggesting the market believes any new offer for the 84% outstanding shares (some of which I hold) is likely to be lower reflecting future hardening of interest rates and presumably comparable increses in yields for fixed income investments.

CNBC analysts on 3 Nov were suggesting a 1.25% BoE base rate by end 2022, a full 1.1% above the current rate. Just a 0.5% increase in LLPC yield which is less than half the predicted movement in base rate, would suggest a drop in LLPC share price to around £153.50, or -8.3%.

So maybe this tender offer looks good. Food for thought!

[holts] 12/11/2021 18:41

Glavey I think that was Baileys response to Aviva trying to shaft their pref holders

[redartbmud] 12/11/2021 10:35

hirani

I messaged H-L and they replied that Provident Financial Notes had been redeemed.
PF was not in my text!!
They are obviously up with events.
Not holding my breath that i can execute the tender, even if I wish to.

[glavey] 12/11/2021 10:11

"Andrew Bailey reviewed the situation when and felt it was ok so long as they notified the market correctly."

MRF, Would you be kind enough to evidence that please, or give further detail? Thanks.

[jaf111] 11/11/2021 19:20

Only announced yesterday afternoon!

[hirani2] 11/11/2021 18:22

Hi I hold Llpc with Hargreaves Lansdown I have not heard of any offer being made for this by loyds.

[holts] 11/11/2021 18:18

That's a reasonable point , NWBDs' offer had a very poor take up though , now whether that was to do with penalty clauses in some way I don't know , but I can not see how that was the case .

[my retirement fund] 11/11/2021 15:51

The door has been left wide open if they want to cancel the prefs to effectively redeem you at par. Andrew Bailey reviewed the situation when and felt it was ok so long as they notified the market correctly. I guess the way to tackle it is offer a couple of low ball offers. Then the remaining diminished pool of holders will be to weak and small and not have an argument when the issue finally gets cancelled.

[rahosi] 11/11/2021 12:08

I agree with Boystown re mortgages. No government (western world) can materially raise interest rates, short or mid term.

Michael Foot's manifesto might have been the 'longest suicide note in history'. Such an interest rate rise would be 'the shortest suicide note in history'.

[boystown] 11/11/2021 11:55

I can't really see why income-seekers would be tempted at 5.53%. There would be an almighty row if they tried to redeem at par as there was with Aviva, along with legal challenges etc. Also, the RNS explicitly states: "The legal ranking of the Preference Shares will remain unchanged."

Also, if interest rates were to rise to the kind of level that began to make these prefs look less attractive any time in the foreseeable, half the country would lose their houses.

[rahosi] 11/11/2021 11:54

This refers to both LLPC & NWBD. Are there regulations relating to trades not being publicised until 19:00 each day?

[williamcooper104] 11/11/2021 11:51

The aviva prefs are still there and aren't going to get par called

[kenny] 11/11/2021 11:20

I suspect that now that Lloyd is following Natwest, a number of other financials institutions will also do the same - like Aviva, Santander, Standard Chartered and others.

All financial companies have the same problem with preference shares currently in issue, namely, they are not recognised as capital under the latest Basel rules. The solution is to get all or as many as possible redeemed. Probably all will follow the tender route because no one wishes to repeat the disaster of Aviva trying to buy them back at par.

For those not tendered, there may be further tender offers in later years, which may or may not be at current prices if interest rates rise materially. Investors who intend to hold their shares throughout the interest rate cycle may not tender, but others will.

The 16% take up on NWBD has not put Lloyds off and they are even offering a slightly lower exit price (higher exit yield) than Natwest.

[cerrito] 11/11/2021 11:14

Thank you for reminding me that Lloyds have form as far as redemption are concerned ie what they did with the ESN's(sp?) issued after the GFC.

[kirkie001] 11/11/2021 11:03

What are the implications of the change in capital treatment at the end of the year? They don't explicitly spell this out other than saying "in accordance with the terms and conditions of the notes".

If they cease to be regulatory capital, can they be compulsorily redeemed at par? Or would any repurchase offers be at market rates with no "stick" of forced redemption?

[cerrito] 11/11/2021 10:58

I find this a difficult decision and for me depends on one's view of long term sterling interest rates which for me have the potential to go sharply up. On the other hand what do I do with the cash.

[my retirement fund] 10/11/2021 22:12

Take it, there next offer could be redemption at par imo !

[holts] 10/11/2021 18:57

Get stuffed

[kenny] 10/11/2021 18:15

I am guessing that a lot of institutions will accept the tender. They will not like being stuck holding a large percentage of what could become an illiquid security.

[boystown] 10/11/2021 17:33

Well at 1.6725, the yield is 5.53%, so I think I'll probably do nothing?

[folderboy] 10/11/2021 17:28

Boystown: that's my reading of it - but that sounds far too obvious. I guess we risk not getting £1.6725 but we have to offset that against the loss of the dividend - and the problem of finding somewhere that will pay the same, or better, dividend.

[boystown] 10/11/2021 17:23

So we're being offered £1.6725 for these (and we get the divi) - but if we decide to decline, nothing changes right?

[folderboy] 10/11/2021 17:09

Thanks for this - much to think over and, unless I am mistaken, not very long to do that thinking. Hopefully others, wiser than I, will make their views known.