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NATW 11.5%

Gilts, bonds, and interest-bearing shares
rthak
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NATW 11.5%

#345485

Postby rthak » October 5th, 2020, 10:36 pm

https://www.hl.co.uk/shares/shares-sear ... -sub-notes

I this security and wondered whether anyone knew why NatWest would convert it into c.8% prefs? Surely the lower rate is better for them?

I appreciate that they might not longer receive a tax deduction for the interest but at current corporation tax rates that is only worth 19% - which is less than they would save!

Rthak

rthak
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Joined: November 22nd, 2016, 10:08 am
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Re: NATW 11.5%

#345647

Postby rthak » October 6th, 2020, 2:47 pm

Let me start again - not sure what happened to my English on the post above.

I hold some 11.5 per cent. Undated Subordinated Notes convertible into 200,000,000 8.392 per cent. Non-cumulative Preference Shares of £1 each. The prospectus is here: https://investors.natwestgroup.com/~/me ... 078535.pdf

I wondered whether anyone knew why NatWest have not exercised their conversion option to convert these notes into 8.392% non cumulative preference shares of £1 each? Surely the lower rate is better for them?

I appreciate that they might no longer receive a tax deduction for the interest on the 11.5% bond but at current corporation tax rates that is only worth 19% - which is less than they would save!

Any thoughts greatly appreciated.

Rthak

88V8
Lemon Quarter
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Re: NATW 11.5%

#363641

Postby 88V8 » December 7th, 2020, 10:00 am

Perhaps because as of 2026, Prefs will no longer count toward regulatory capital.
Last week, I sold most of my Prefs for that reason.

V8


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