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What next for prefs ?

Gilts, bonds, and interest-bearing shares
Alaric
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Re: What next for prefs ?

#219270

Postby Alaric » May 3rd, 2019, 1:34 pm

daveh wrote:They were trading at 98/103 when I looked and I assume par is 100 and they seem to have be trading around 100 (between 94 and 110) for the last 3 years.


The announcement refers to a "contractual right". One assumes then, this was priced in and that's why the price has been around 100.

daveh
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Re: What next for prefs ?

#219324

Postby daveh » May 3rd, 2019, 4:10 pm

Alaric wrote:
daveh wrote:They were trading at 98/103 when I looked and I assume par is 100 and they seem to have be trading around 100 (between 94 and 110) for the last 3 years.


The announcement refers to a "contractual right". One assumes then, this was priced in and that's why the price has been around 100.



I'd assume so, which is why I checked the price action on the LSE website and also checked if there had been a fall in the price of LLPC/D ( a slight dip from 152-148 yesterday). As I don't have the prospectus for C/D or G to compare to see how the wording for the issues differ I just thought it post on here and see if anyone had any thoughts. After the debacle with the ECNs I wouldn't necessarily trust Lloyds though.

daveh
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Re: What next for prefs ?

#219329

Postby daveh » May 3rd, 2019, 4:22 pm

I've now been and looked at the prospectus:
Lloyds TSB 9.25% Preference Shares
The provisions of the Lloyds TSB 9.25% Preference Shares will provide, among other things:
(i) that dividends will accrue at 9.25 per cent. per annum, and will be payable in arrear on 31 May and 30 November in each year, save that the first dividend payment will be made on 31 May 2009 and will be 4.625 pence per Preference Share; and
(ii) that the Preference Shares will be irredeemable instruments


Lloyds TSB 6.3673% Preference Shares
The provisions of the Lloyds TSB 6.3673% Preference Shares will provide, among other things:
(i) that dividends will accrue at 6.3673 per cent. per annum from (and including) their issue date to (but excluding) 17 June 2019, and will be payable in arrear on 17 June in each year, save that the first dividend payment will be made on 17 June 2009, and will be £63.673 per Preference Share;
(ii) that from (and including) 17 June 2019, dividends will accrue at a rate, reset quarterly, of 1.36 per cent. per annum above three-month sterling LIBOR, and will be payable quarterly in arrear on, subject (where applicable) to adjustment, 17 March, 17 June, 17 September and 17 December in each year; and
(iii) 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 17 June 2019 or any Dividend Payment Date thereafter at the liquidation preference amount per Preference Share.


My bold

So yes a significant difference in the terms.

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Re: What next for prefs ?

#219662

Postby AJC5001 » May 5th, 2019, 1:23 pm

daveh wrote:I'd assume so, which is why I checked the price action on the LSE website and also checked if there had been a fall in the price of LLPC/D ( a slight dip from 152-148 yesterday).


LLPD went ex-div on 2nd May for the 31st May payment. I assume LLPC are the same.

Adrian

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Re: What next for prefs ?

#219751

Postby ursaminortaur » May 6th, 2019, 11:41 am

daveh wrote:I've now been and looked at the prospectus:
Lloyds TSB 9.25% Preference Shares
The provisions of the Lloyds TSB 9.25% Preference Shares will provide, among other things:
(i) that dividends will accrue at 9.25 per cent. per annum, and will be payable in arrear on 31 May and 30 November in each year, save that the first dividend payment will be made on 31 May 2009 and will be 4.625 pence per Preference Share; and
(ii) that the Preference Shares will be irredeemable instruments


Lloyds TSB 6.3673% Preference Shares
The provisions of the Lloyds TSB 6.3673% Preference Shares will provide, among other things:
(i) that dividends will accrue at 6.3673 per cent. per annum from (and including) their issue date to (but excluding) 17 June 2019, and will be payable in arrear on 17 June in each year, save that the first dividend payment will be made on 17 June 2009, and will be £63.673 per Preference Share;
(ii) that from (and including) 17 June 2019, dividends will accrue at a rate, reset quarterly, of 1.36 per cent. per annum above three-month sterling LIBOR, and will be payable quarterly in arrear on, subject (where applicable) to adjustment, 17 March, 17 June, 17 September and 17 December in each year; and
(iii) 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 17 June 2019 or any Dividend Payment Date thereafter at the liquidation preference amount per Preference Share.


My bold

So yes a significant difference in the terms.


Yes, the LLPG were always callable on the 17th June 2019 whereas Lloyds have no power to redeem LLPC or LLPD.
The other type of Lloyds preference share which a number of people here may hold which are also redeemable are LLPE which will be callable on the 15th March 2024.

daveh
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Re: What next for prefs ?

#219778

Postby daveh » May 6th, 2019, 2:56 pm

Yes, the LLPG were always callable on the 17th June 2019 whereas Lloyds have no power to redeem LLPC or LLPD.
The other type of Lloyds preference share which a number of people here may hold which are also redeemable are LLPE which will be callable on the 15th March 2024.



Interesting price differential between LLPE and LLPC (which I own). LLPE is available (according to the LSE site) for 110 and LLPC for 147. This puts the yield for LLPE at ~5.5% and for LLPC the yield at ~6.3%. Now to me that seems a little odd as with LLPE I'm getting (or would be if I bought them) a lower yield plus I would take a capital loss of 10p per share in March 2024. This suggests that the market thinks the risk of LLPC being called at par is not negligible - or am I missing something.


Personally I'm willing to take the risk and continue to hold LLPC for the dividend, but then I bought them at a price much closer to par than they are available for today.


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