Lloyds Grp6.475 Discussion Threads

[hosede] 04/11/2009 13:24

doowIE
Remember they can't pay any other dividends without paying this, so how are they going to persuade anyone to buy the ordinary (21Bn rights issue for example)? The total dividend on all the Prefs is tiny in real terms, so will the small amount saved by not paying it be worth the loss in confidence in the whole Company? I think not and that it will continue to be paid

[solomon9] 03/11/2009 19:42

so the sh1t has finally hit the fan.

[doowle] 03/11/2009 19:36

As I said. Owning sub debt in a UK bank is highly dangerous and prefs even more so.
They will not pay the interest for years, believe me.

[simon gordon] 18/10/2009 17:16

LLPE when it was called HBOX.

[old boy returns] 02/10/2009 08:25

I had a number of requests yesterday for a copy of the JPM 'Tale of Two Banks' report. It contains a very good analysis of all the RBS prefs / LBG Hybrids and which ones push / stop others and do / do not contain discretionary language.

If anyone else would like a copy please let me know through the Contact Form on my Fixed Income Information website at:

[zangdook] 22/9/2009 07:49

That was a laughable article. Compare the headline with the text.

[doowle] 21/9/2009 20:09

This does not bode well for the prefs:

You do not want to be holding subordinate debt in a bank at the moment.

[colinc57] 24/8/2009 15:35

shorting the lloy equity as an edge against my pref holding

[solomon9] 21/5/2009 09:15

institutional opinion on RBS is changing- L series are now $10.70 ROCK ON - reckon RBS is gonna make it.....

Have a look at Bank of Ireland 13.375% bonds asking price 74p- they have been going up- recent results yesterday well received, capital ratios better, bond buyback underway which should net the co €500m in H1.

[simon gordon] 04/5/2009 09:02

Hi Pref Guys,

I have started a new thread which has the charts for c/d/e/f/g together:

[tyranosaurus] 01/5/2009 21:05

Thanks Old Boy.

They are both yielding around 22% then.

[old boy returns] 01/5/2009 15:22

tyro - the difference you are looking at relates to the difference in nominal value of the shares.

LLPF have a nominal value of £1,000 and are currently about £274.50 to buy
LLPG have a nominal value of £1 and are currently 28p to buy

So they are both trading at about 28% of nominal value.

Hope that is clear.

[tyranosaurus] 01/5/2009 15:18

Yes but why do two similar ones have such different prices. Surely one is not worth ten times the other.

[simon gordon] 01/5/2009 13:59

OBR,

Thanks

=====

Ty,

LLPF is £274.50 to buy.

LLPG is 28p to buy.

It is best to ignore the indicated bid/offer.

[tyranosaurus] 01/5/2009 12:55

How come the LLPF 6.0884% ate trading at 318p while the LLPG 6.3673% are trading at 30p.
There must be a reason.

[old boy returns] 30/4/2009 13:32

simon gordon - IIRC the reversion rate is 3 month LIBOR + 1.3%. In 5 years time this is just as likely to be above the current coupon as below imho so I do not think it has much of a bearing on the current yield. Also the yields on the various Lloyds prefs have only diverged in the past month or so - on 1 April they were all about the same. Also LLPF has a lower historical high premium above gilts than LLPC/D/E. I think the yield difference is more down to what PI's have been buying than anything else. The G's are tricky to buy and little known, the F's a bit easier but big spread and dealing units and the C, D and E's are easy to deal online. Hence most unsophisticated PI's who have heard about fixed interest recently have gone for the C, D, & E's.

[extrader] 30/4/2009 11:34

Simon,

I think yo'll find it's because LLPG resets (as a floater at something over Libor) and there's a perceived interest rate risk....check the Banking Sector board on Motley Fool where these and RBS Prefs are regularly discussed.

HTH

[simon gordon] 30/4/2009 11:17

Any ideas on why there is a differential between LLPE that yields 13% and calls 2024, whilst LLPG yields 23% and calls 2019?

[solomon9] 11/4/2009 19:50

they are quasi debt in that the prefs cannot absorb losses in the same way as ordinary share capital unless the bank was wound up hence the bank's move to swap its high yield prefs for ordinaries. Yes they are core tier one but not equity tier 1. If they bought back the prefs, a big if, they would cut their cost of capital given low cost of interbank funds.

[jonwig] 10/4/2009 13:17

solomon - I hope I didn't suggest these were as safe as gilts: it was a purely academic exercise.

To be clear, the prefs are not 'bank debt' they are core Tier 1 capital! There would be no improvement in core ratio to be gained by buying them back *, unlike the subordinated bonds which banks have been busily repurchasing at a discount.
Now that has improved the Tier 1 capital ratio.

*That's not entirely true, as the capital structure at Tier 1 level would change, but at the moment, it's not a key consideration, I feel.

[solomon9] 10/4/2009 11:46

After this banking crisis I don't think investors will ever view bank debt as being safe as gilts, no way. To get anywhere near that valuation you'd have to wait 20 years for a new generation of investor IMHO. Reckon you could get a 9% or 10% yield scenario ie situation of last November. The only real buyer for these prefs are Lloyds, they might buy some back at £75 or £80 and still make big profits. There would be willing sellers at that level in my view.

[colinc57] 09/4/2009 17:44

I've held these since original HBOX issue date.. but last year was in/ out generally for a small profit.

Came in again last oct at 62p but seriously topped up in the high thirties ( on way down) , so now in paper profit on the current holding . was tempted to add more when below 40 but would have had to short the ord equities to avoid being over exposed.

[jonwig] 09/4/2009 16:38

The question really is, "What would I pay for a perpetual income of 6.475p?"
The key factor is the discount rate you'd choose:

15% ... 50p
10% ... 71p
5% .. 135p

The market was pricing these as riskier than tinpot mining minnows (at 35p), and is still pricing high risk.
If you think they're almost as safe as gilts, maybe 135p or more.

As usual, political risk is the hardest to price in - for obvious reasons which it would be unkind to go into!
I bought LLPC, and should have added with some of these, as they rallied a day or so later.

[colinc57] 09/4/2009 16:17

I would accept par value at moment ,
but once all the rubbish is sorted out, if we are still around then these must be worth a hell of a lot more...