Lloyds Grp6.475 Discussion Threads

[alphorn] 14/2/2016 10:14

Red, exactly. The dividend lever is important if HMG want to shift the remaining ords.

XD Thursday.

[redartbmud] 14/2/2016 09:50

LLPE is a Non-Cumulative Irredeemable Preference Share.
According to the Prospectus, it can be called in 2024. On that basis, Lloyds is unable to touch it until that date.
They could suspend the coupon, but if they did they would not be able to pay a dividend on the ordinary shares.

[nw99] 14/2/2016 07:35

Not these they are still trading nicely at 107

[pvb] 29/1/2016 15:24

Lloyds has decided to tender for those ECNs. ;-)

[pvb] 16/12/2015 20:45

Fed raises rates by 0.25% today.

[4spiel] 12/12/2015 19:54

The coupon on this is 6.45 per cent way above likely interest rate expectations unless we leave the EU - then there are as yet unknown uncertainties. At present we are at 0.5. So we are talking pvb about something different than the current reality in suggesting a scenario of much higher interest rates. If rates rose modestly to say 3 per cent over future years and LLPE fell below 100p say to 70 p then if they were to tender for 75 that is cheaper than buying back at 100p and if the trend for rates is a rising one then some investors would take 85 leaving fewer investors and less liquidity in the series. . As you say there is a call in 2024 and I have previously suggested on this thread more than once that Lloyds might leave this alone as the coupon is not over onerous and go for the C and D series that are more costly. Of course this is only elucidation of possibility - we don't know what they will do but it's logical to me that they would want to unload expensive HBOS baggage with coupons for which there is in present time no justification if they can be rid of.

[pvb] 11/12/2015 18:38

Not sure I agree with everything there, 4spiel.

Yes, if interests rates go up then LLPE price will go down. A lot if rates rise "substantially". But surely if rates did go up, particularly a lot (not expecting or saying they will), then why would Lloyds need to "tender"? If rates where much higher than the LLPE yield they would represent cheap loan capital for Lloyds, they are more expensive now when interest rates are very low.

Also, already Lloyds may at its option, and with the permission of the 'FSA' (as was), choose to redeem some or all of LLPE on 15 September 2024 - and thereafter on the Dividend Payment Date or fifth anniversary of such date.

[4spiel] 11/12/2015 10:39

The only concern I have for these is if interest rates were to rise substantially. It is not on the horizon at all at present time but in such an uncertain world as we live in nobody can predict will be the situation in 2 3 5 10 years. If we get 5 per cent rates some time what is this stock worth. If it were say 70 p would if tender were made for 75p enough accept what would be a nice buy for Lloyds. But as irredeemable you would not have to accept. If you are elderly and want a pension top up you can surrender cash and you get an annuity payout depending upon how old you are. If you buy these you get your coupon and you are not likely to lose all your capital unless something really dreadful happens that one can of course never rule out. Is it preferable to buy the higher yielding C or D series? Depends upon your view : there is the higher yield you pay for and might be less sensitive to smaller interest rate movements - on the other hand Lloyds probably more interested in ridding themselves of higher coupon payments if they can- if interest rates went negative as in Switzerland maybe the higher coupon have more upside scope and maybe is the word because I do not read many opinions about the pros and cons of the better buy !

[pvb] 11/12/2015 10:12

That ECN appeal decision was out yesterday:

[uncle_sam] 14/7/2015 11:40

Now that's a nice little prezzie: I just bought 10K of these, entered order at the ask (104), got filled at the bid (101 and change).

[pvb] 08/7/2015 15:47

Alphorn 1 Jul'15 - 16:56 - 236 of 240

Called investor relations today - after a bit of a fob off they did not have an answer and will need to research - will post when I have an answer.

They don't understand their own prospectus! LOL.

Who can be surprised after the ECN prospectus debacle?

To be fair - I guess it's a bit much to expect "Investor Relations" to be up on all the minutia in all the prospectuses of all Lloyds current 'instruments'. :-)

[4spiel] 08/7/2015 15:19

True not IRREDEEMABLES ! but I am not sure if despite being irredeemable that those securities cannot be 'converted' if enough incentive were given to entice the holders to desire them to for example the Santander prefs occurred to me. But these were originally Halifax - prefs are debt -what bank wants expensive debt if they can borrow cheaper. LLPE is paying less than Lloyds used to sometimes pay retail investors in short term accounts and bonds - at 105 p cannot be a bad buy in proportion in context.

[alphorn] 08/7/2015 15:00

Agreed. They are not however irredeemables.

[4spiel] 08/7/2015 14:45

So it means they could redeem them or tender for those that are offered. Much will depend on the circumstances at the time. the Level of interest rates - higher or lower than it costs the company to pay the coupon how entrenched are the rates then and what is the trend. What is the price of the security at the time 50p 70p close to the 'par' or at a premium - the financial position of the bank if they have plenty of cash and the Opportunity Cost of using it to redeem the stock. The fact there is a call - does it make it any different ? Again it may again depend upon circumstances at the time - and also depend upon how speculators decide to position themselves to obtain the maximum return if it is sensed that they will redeem them. A lot of possible academic elucidation !

[alphorn] 01/7/2015 17:04

Here is a link to the original prospectus that seems to cover most of the Preference shares.



The bit that is relevant to the 6.475%s is:
"that all or some only of the Preference Shares are redeemable, at the option of the Company, subject to confirmation from the FSA that it has no objection to the redemption (if required), on 15 September 2024 or any Dividend Payment Date falling on each fifth anniversary of such date thereafter at the liquidation preference amount per Preference Share".

...........how long will it take IR to come up with the same answer!

[alphorn] 01/7/2015 15:56

Called investor relations today - after a bit of a fob off they did not have an answer and will need to research - will post when I have an answer.

[pvb] 01/7/2015 11:02

I think undated bonds etc. with optional call dates are referred to as 'Perpetual', or by their final redemption date if there is one.

[alphorn] 30/6/2015 18:27

Pvb - that is really what initiated my question because it was not clear to me. Perhaps I should write to investor services? My broker quoted the 2024 date.

edit: From the old HBOX thread:
"They are redeemable on 15/9/24, or any fifth anniversary of this date, for £1 each.
They can`t skip the dividend if they enough distributable profits to pay it".

[pvb] 30/6/2015 17:40

Interestingly described as "Perpetual" here:

[alphorn] 30/6/2015 17:32

Thank you - wonder what rate would be used in your second para.

[pvb] 30/6/2015 17:29

They may be called in their entirety or partially, via a lottery, on the redemption date or every five years subsequently on the redemption date.
OR
Subject to prior confirmation from the FSA(sic) they can be wholly substituted with Qualifying Non-Innovative Tier 1 Securities or the proceeds of the redemption of the Preference Shares shall be mandatorily applied to the subscription or purchase of the Qualifying Non-Innovative Tier 1 Securities.

[alphorn] 30/6/2015 17:16

Buy was at 105.

Thx for the reply - but does anyone know what happens if they are not called in 2024?

[pvb] 30/6/2015 17:15

Nine years.

[loki666] 30/6/2015 17:13

From memory i believe they continue for another 6 to 8 years paying a coupon of 6.475 %, then they can be called again at par

[alphorn] 29/6/2015 20:48

My buy today at 105 went through as a sell. Will wait for the brokers note tomorrow as confirmation.
12mths LIBOR is still out there at 1.05% so the market is not expecting any GBP rate rises any time soon. (I note that these Prefs are callable in 2024 - what is the situation if they are not called?)