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Santander for Aviva refugees

Gilts, bonds, and interest-bearing shares
hiriskpaul
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Re: Santander for Aviva refugees

#354018

Postby hiriskpaul » November 6th, 2020, 10:03 am

GoSeigen wrote:
GoSeigen wrote:
hiriskpaul wrote:On the whole I was quite pleased and relieved by the results. Management continue to run things prudently and no sign (yet) of a significant rise in defaults, which is what the PRA will be looking out for. Not mentioned is the potentially impudent SC appeal. If that goes ahead and MBS lose again, that will likely push everything back another year.


Impudent or imprudent. I don't think the appeal is likely before the end of the year, and others have suggested that final stage of appeal is not that costly. Also it seems to me they have nothing to lose. The earlier cases had already gone entirely against them in terms of costs, so surely the possible outcomes in the Supreme Court are skewed to the upside?

Still, profits are skinny so I don't disagree that losing would further delay the slow recovery of this business.


GS


The above Supreme Court appeal has been heard, judgment expected early 2021. There has been some discussion of MBSR/MBSP and the appeal on this thread:

viewtopic.php?f=52&t=23116&p=349790&hilit=mbsr#p349790


The supply situation for these PIBS has changed significantly AFAICS. Earlier this year I was able to buy as many as I needed without any difficulty. Yesterday though I tried to buy MBSR and supply seems to have completely dried up. This is good for holders but a problem if you want to buy. Anyone know where I can get some MBSR?

GS

Well you will not be buying them from me ;). Got an online quote for 1000 at 30p, but that's it. No problem getting selling quotes for up to 200k at 26.625.

I listened to it all, but do not know enough about the legal details to be able to form much of an opinion as to which way this would go. To win the case and not get net financial recompense seems bizarre to me, but the law can work in mysterious ways. I would have preferred it if MBS had not bothered spending money on this and just concentrated on sorting out their capital in conventional ways. Its a punt, which I guess might pay off.

GoSeigen
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Re: Santander for Aviva refugees

#355056

Postby GoSeigen » November 10th, 2020, 5:08 am

hiriskpaul wrote:
GoSeigen wrote:
GoSeigen wrote:
Impudent or imprudent. I don't think the appeal is likely before the end of the year, and others have suggested that final stage of appeal is not that costly. Also it seems to me they have nothing to lose. The earlier cases had already gone entirely against them in terms of costs, so surely the possible outcomes in the Supreme Court are skewed to the upside?

Still, profits are skinny so I don't disagree that losing would further delay the slow recovery of this business.


GS


The above Supreme Court appeal has been heard, judgment expected early 2021. There has been some discussion of MBSR/MBSP and the appeal on this thread:

viewtopic.php?f=52&t=23116&p=349790&hilit=mbsr#p349790


The supply situation for these PIBS has changed significantly AFAICS. Earlier this year I was able to buy as many as I needed without any difficulty. Yesterday though I tried to buy MBSR and supply seems to have completely dried up. This is good for holders but a problem if you want to buy. Anyone know where I can get some MBSR?

GS

Well you will not be buying them from me ;). Got an online quote for 1000 at 30p, but that's it. No problem getting selling quotes for up to 200k at 26.625.

I listened to it all, but do not know enough about the legal details to be able to form much of an opinion as to which way this would go. To win the case and not get net financial recompense seems bizarre to me, but the law can work in mysterious ways. I would have preferred it if MBS had not bothered spending money on this and just concentrated on sorting out their capital in conventional ways. Its a punt, which I guess might pay off.


Bloomberg yesterday reported a new record low for US junk yields. I'm sure that's bullish for MBSR/P and similar PIBS -- as we have seen their price has already risen quite sharply -- investors seem to like the 4-5% extra yield from junk over treasuries. Preference shares will no doubt benefit too.

https://www.bloomberg.com/news/articles ... ws-created
Already buoyed by Joe Biden’s presidential victory, U.S. junk bond yields plunged to a record low on Monday. The average yield for the Bloomberg Barclays U.S. corporate high-yield index sank to 4.56%, dropping below the previous record of 4.83% set in June 2014.

GS

GoSeigen
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Re: WBS Results

#362600

Postby GoSeigen » December 3rd, 2020, 1:45 pm

GoSeigen wrote:
rthak wrote:I’be been following all of this with interest. One question I hope you can help with - if payments include the PIBS are completely discretionary, why would WBS ever pay them?


Short answer: why are dividends paid on any share? (And yes, I realise the board could be sacked by shareholders but...)

Longer answer: correct me if I'm wrong, but under the standard terms the interest may be cancelled if the society is unable to meet its regulatory capital requirements. So if the capital situation is okay, then there is no strong excuse not to pay. More specifically, under the changed terms of the PIBS since West Brom's bailout, the payment of interest is prevented by the notional deficit in the old PPDS reserve. Once this reserve deficit is cleared (by addition of profits) there will be one less reason not to pay PIBS interest.

Having said all that I agree with you, that eventual payment is not a nailed-on certainty. It may be that holders will need to apply moral pressure on the board to start paying. I am having the same problem with another bond-like instrument I hold, issued by AIB and amended under Irish law to have discretionary/optional interest payments: the problem is AIB is now paying cash dividends to the ordinary shareholders but still not paying interest on this tranche of their debt. It's a bizarre situation and I think I am going to have to cajole and threaten the board with legal action to get them paying again.

I hope this is not what will happen with WBS, but as you say, it is a possibility. The fall-back position though is that surplus profits are supposed to be distributed to members...

GS


https://www.londonstockexchange.com/new ... t/14771037

WBS recently announced half-year results recently, link above. These were the points of interest to me:

1. Still profitable in spite of Covid and capital position improved further. I think they are a bit behind my target of end-2021 to clear the PPDS deficit which is blocking interest on the PIBS, unless the next 12 months are blockbuster.

2. WBS has started making distributions to CCDS holders. Remember these replaced the PPDS and most of the insto-held PIBS. The distributions are interesting because: first, CCDS are junior to PIBS yet are receiving distributions already; my understanding is that this is because the society made clear that PIBS would only pay interest if they would have been able to had the PPDS not been cancelled and then only at the board's discretion. Second, given that both CCDS and PIBS distributions are at the discretion of the board, I think it's a medium-term positive for the PIBS because it will be hard to argue that CCDS should be paid but not the more senior PIBS, once their blocker has been removed. Third, the CCDS distributions of course remove equity from the business which is a small balancing negative for PIBS holders.

3. The report says "On 22 July 2020, the Society purchased and cancelled £1,044,000 of its remaining PIBS." These are some 11% of the PIBS outstanding so significantly reducing liquidity and supply. But it's nice to see the Society buying, and at such low prices too.


GS

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Re: WBS Results

#362622

Postby Gan020 » December 3rd, 2020, 3:28 pm

GoSeigen wrote:
2. WBS has started making distributions to CCDS holders. Remember these replaced the PPDS and most of the insto-held PIBS. The distributions are interesting because: first, CCDS are junior to PIBS yet are receiving distributions already; my understanding is that this is because the society made clear that PIBS would only pay interest if they would have been able to had the PPDS not been cancelled and then only at the board's discretion. Second, given that both CCDS and PIBS distributions are at the discretion of the board, I think it's a medium-term positive for the PIBS because it will be hard to argue that CCDS should be paid but not the more senior PIBS, once their blocker has been removed. Third, the CCDS distributions of course remove equity from the business which is a small balancing negative for PIBS holders.

GS


The payment on the CCDS has been halved from the expected path set out in the prospectus which gives an insight into the profitability and health of the West Brom which has been hit by Covid along with every other bank and building society.

I will continue to hold my PIBS as eventually I think they will start paying but alot depends on default rates which we haven't seen full sight of yet due to furlough. My decision to hold is marginal as returns are more certain elsewhere.

Regrettably as far as I'm aware WBS are the first to not fully pay on their T1/T2 capital due to Covid I nervously wonder how many of other banks and building socities may end up in the same position once forbearance ends.

GoSeigen
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Re: Santander for Aviva refugees

#368225

Postby GoSeigen » December 21st, 2020, 8:52 am

GoSeigen wrote:
hiriskpaul wrote:
GoSeigen wrote:
The above Supreme Court appeal has been heard, judgment expected early 2021. There has been some discussion of MBSR/MBSP and the appeal on this thread:

viewtopic.php?f=52&t=23116&p=349790&hilit=mbsr#p349790


The supply situation for these PIBS has changed significantly AFAICS. Earlier this year I was able to buy as many as I needed without any difficulty. Yesterday though I tried to buy MBSR and supply seems to have completely dried up. This is good for holders but a problem if you want to buy. Anyone know where I can get some MBSR?

GS

Well you will not be buying them from me ;). Got an online quote for 1000 at 30p, but that's it. No problem getting selling quotes for up to 200k at 26.625.

I listened to it all, but do not know enough about the legal details to be able to form much of an opinion as to which way this would go. To win the case and not get net financial recompense seems bizarre to me, but the law can work in mysterious ways. I would have preferred it if MBS had not bothered spending money on this and just concentrated on sorting out their capital in conventional ways. Its a punt, which I guess might pay off.


Bloomberg yesterday reported a new record low for US junk yields. I'm sure that's bullish for MBSR/P and similar PIBS -- as we have seen their price has already risen quite sharply -- investors seem to like the 4-5% extra yield from junk over treasuries. Preference shares will no doubt benefit too.

https://www.bloomberg.com/news/articles ... ws-created
Already buoyed by Joe Biden’s presidential victory, U.S. junk bond yields plunged to a record low on Monday. The average yield for the Bloomberg Barclays U.S. corporate high-yield index sank to 4.56%, dropping below the previous record of 4.83% set in June 2014.

GS


As expected these PIBS are still strongly bid, MBSP more so than MBSR. There seems to be little or no supply at the moment. Can anyone get an offer in decent size?

GS

hiriskpaul
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Re: Santander for Aviva refugees

#368236

Postby hiriskpaul » December 21st, 2020, 9:22 am

GoSeigen wrote:
GoSeigen wrote:
hiriskpaul wrote:Well you will not be buying them from me ;). Got an online quote for 1000 at 30p, but that's it. No problem getting selling quotes for up to 200k at 26.625.

I listened to it all, but do not know enough about the legal details to be able to form much of an opinion as to which way this would go. To win the case and not get net financial recompense seems bizarre to me, but the law can work in mysterious ways. I would have preferred it if MBS had not bothered spending money on this and just concentrated on sorting out their capital in conventional ways. Its a punt, which I guess might pay off.


Bloomberg yesterday reported a new record low for US junk yields. I'm sure that's bullish for MBSR/P and similar PIBS -- as we have seen their price has already risen quite sharply -- investors seem to like the 4-5% extra yield from junk over treasuries. Preference shares will no doubt benefit too.

https://www.bloomberg.com/news/articles ... ws-created
Already buoyed by Joe Biden’s presidential victory, U.S. junk bond yields plunged to a record low on Monday. The average yield for the Bloomberg Barclays U.S. corporate high-yield index sank to 4.56%, dropping below the previous record of 4.83% set in June 2014.

GS


As expected these PIBS are still strongly bid, MBSP more so than MBSR. There seems to be little or no supply at the moment. Can anyone get an offer in decent size?

GS

I cannot get an online quote for more than 8000 and have to pay 31.98. No problem selling, was quoted 28.6 for 100k nominal.

GoSeigen
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Re: Santander for Aviva refugees

#368260

Postby GoSeigen » December 21st, 2020, 10:25 am

hiriskpaul wrote:
GoSeigen wrote:
GoSeigen wrote:
Bloomberg yesterday reported a new record low for US junk yields. I'm sure that's bullish for MBSR/P and similar PIBS -- as we have seen their price has already risen quite sharply -- investors seem to like the 4-5% extra yield from junk over treasuries. Preference shares will no doubt benefit too.

https://www.bloomberg.com/news/articles ... ws-created
Already buoyed by Joe Biden’s presidential victory, U.S. junk bond yields plunged to a record low on Monday. The average yield for the Bloomberg Barclays U.S. corporate high-yield index sank to 4.56%, dropping below the previous record of 4.83% set in June 2014.

GS


As expected these PIBS are still strongly bid, MBSP more so than MBSR. There seems to be little or no supply at the moment. Can anyone get an offer in decent size?

GS

I cannot get an online quote for more than 8000 and have to pay 31.98. No problem selling, was quoted 28.6 for 100k nominal.


Same here. It seems that in spite of bad news regarding Brexit and Covid, the market is very much in bullish mood. Is it better to be cautious now -- or is this maybe a great time to buy, when prices are rising steadily??? I always find it difficult to buy when the price has jumped...

GS


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