Tender offers Bristol & West prefs and BOI pibs

[Jwdool]

For those interested the prices have fallen a tad since I posted the list - variously between 5-20bps - which makes tendering the BoI/ BWSA more attractive. In terms of call/ maturity/ perpetual - all of the list below are theoretically perpetual save for Coop. It is likely the prefs on the list will be tendered for in 2026 (or at least the insurers) given the change in the capital rules - however, one suspects you'll get a lovely 10-15% bump as we've seen with BoI when the time comes. There is a small residual risk that some of these instruments can be called at par (as per the Aviva debacle some years ago). To that I'd suggest that many of them are trading at or around par; management are highly unlikely to try this given what happened in the Aviva case (who can no longer call at par given public statements and the effect of estoppel) and the FCA "Dear CEO" letter - required issuers to make their positions clear with respect to calls back in 2018 - so the fact they are still trading in 2023 tells you a call would cause them a huge regulatory headache if they tried it. On the PIBS, my understanding is that these cannot be called - and there is a desire for this capital to be hoovered up as with BoI - which again gives them a potential boost once tenders come in. The Manchester - now Newcastle paper is particularly attractive, given it only contributes 25% of its face value to CET1 - so I'd expect a call/ tender before too long. There is also a 2030 call on the 6.75% notes - if you are able to pick some up below par, which makes this note particularly attractive.

If one recycled the BoI into MBSP (now the Newcastle 6.75%) - then effect of a potential double tender would leave you able to buy the 30% year gilt without losing too much income - and end up with a far better credit than sticking with BoI at the original market price of 169p (which given recent moves would now be closer to 155-160p). I suspect that if the issue isn't taken out by 75% vote, the rump issue will trade down towards those levels. For me the trade is a no brainer - given the availability of far better alternatives and the likelihood of further tenders - with the possibility of AAA rated senior note such as the Welcom Trust 1.5% 2071 paper now trading ~5% for those who like duration.


quote="2boi2"]

..
The following list of alternatives with approx current yield might be helpful for those considering what to do. These yields ought to be borne in mind when considering BoI are taking out holders at <7%:

AV.B 7.45%
AV.B 7.3%
ELLA 7.2%
GACA 7.85%
GACB 7.8%
LLPC 7.35%
LLPD 7.35%
NWBD 7.3%
SAN 8.15%
STAC 8%
Coop 42 TF 10.4%
Coop 42 TE 8.2%
Coventry PIBS 8.1%
Leeds PIBS 7.9%
Newcastle PIBS 7.7%
Nottingham PIBS 7.8%
Skipton PIBS 8.2%

I assume the tender will go through and my mind is turning to what to do with the cash so thanks for the list. I should add though that some of those are not easily tradable, eg HL for one no longer let you buy Leeds or Skipton. Relatedly the spreads will be big. Also some have maturity dates which are not far off.

I was wondering about a long dated bond ETF, e.g. iShares Over 15 Years Corporate Index Fund, Yield To Maturity 5.86%, average maturity 24 years. Or Lyxor iBoxx GBP Liquid Corporates Long Dated YTM 6.57%. Still not as good as BoI though.[/quote]

[Laughton]

Yields changing daily and online quotes not always optimum so worth phoning brokers.

For example, best I could get, and bought, this morning on:

Co-Op 42TF - 2.65p for a Yield of 8.77% (only small amount available at this price)
Co-Op 42TE - 105.40p for a Yield of 8.40%
GACA - 114.69p for a Yield of 7.74%

Yields quoted all inclusive of dealing costs.

[FrankSeymour]

I have been trying to contact HL concerning attending the meeting on the 4th of next month.
I secure emailed them seven days ago-----no response
I phoned today " Our wait times are longer than we would like, at more than 15 minutes, please press one and we will call you back"
So I press one, " we will call you back within two hours"
this is HMRC customer service not a FTSE100........

[GrahamPlatt]

Halifax have finally released their corporate action notification on BOI…
There are two options
a) tender your shares
b) vote yes

No third option - other than do nothing - there is no option to positively vote No.

[Laughton]

Halifax have finally released their corporate action notification on BOI…
There are two options
a) tender your shares
b) vote yes

No third option - other than do nothing - there is no option to positively vote No.

iweb started out the same until I pointed out that there should be an option to vote No and not tender any bonds but receive the voting fee. They then added another updating "Corporate Event" which entailes having to contact them by phone or webcat to give instructions. I did that yesterday and they assured me that my choice would be registered.

You don't want to "do nothing" as then you don't get the voting fee.

[hiriskpaul]

The Manchester - now Newcastle paper is particularly attractive, given it only contributes 25% of its face value to CET1 - so I'd expect a call/ tender before too long.

PIBS no longer contribute to CET1 for any building society. PIBS can contribute to tier 2 though, subject to a limit, so still counts as part of overall capital. Most building society CET1 comes from reserves, but building societies can issue CCDS should they need or desire more CET1.

Any callable PIBS will likely be called at the first opportunity, assuming PRA approval is given. Tenders for PIBS without call options are I think quite likely as well. It will be interesting to see how many societies go down the BOI route, with complicated carrots to try to insert call options, to sweep up holdouts.

[FrankSeymour]

I have just been reading ( some of it at least) the 62 page "Offer Memorandum dated 21 June 2023, issue by BOI , for the 13 3/8 bonds.
I am confused, on page two of this document there is are tables covering the voting fee.

The table concerning, if the vote to redeem is successful, there is a question
"Did you vote", ( including by tendering you bonds in the tender offer)
it does not say " did you vote Yes or did you vote No."

Under this table it seems to me if you go to the meeting on the 4th and vote "No",
SINCE YOU HAVE VOTED ( irrespective of the way you have voted) you would get the 2% sweetener bonus.

What am I missing????

[GoSeigen]

What am I missing????

A discussion of this very topic earlier on this thread?



GS

[PeterGray]

I have just been reading ( some of it at least) the 62 page "Offer Memorandum dated 21 June 2023, issue by BOI , for the 13 3/8 bonds.
I am confused, on page two of this document there is are tables covering the voting fee.

The table concerning, if the vote to redeem is successful, there is a question
"Did you vote", ( including by tendering you bonds in the tender offer)
it does not say " did you vote Yes or did you vote No."

Under this table it seems to me if you go to the meeting on the 4th and vote "No",
SINCE YOU HAVE VOTED ( irrespective of the way you have voted) you would get the 2% sweetener bonus.

What am I missing????

Anyone who votes gets the 2%, regardless of voting yes or no, IF (and only if) the overall result is yes.

[FrankSeymour]

Halifax have finally released their corporate action notification on BOI…
There are two options
a) tender your shares
b) vote yes

No third option - other than do nothing - there is no option to positively vote No.

Is this legal?
Is this morally correct???

[JohnEdwards]

I have just been reading ( some of it at least) the 62 page "Offer Memorandum dated 21 June 2023, issue by BOI , for the 13 3/8 bonds.
I am confused, on page two of this document there is are tables covering the voting fee.

The table concerning, if the vote to redeem is successful, there is a question
"Did you vote", ( including by tendering you bonds in the tender offer)
it does not say " did you vote Yes or did you vote No."

Under this table it seems to me if you go to the meeting on the 4th and vote "No",
SINCE YOU HAVE VOTED ( irrespective of the way you have voted) you would get the 2% sweetener bonus.

What am I missing????

I'm pretty sure that if you insist on either appointing a proxy or attending the meting, you are disqualified from receiving the voting fee.

[hiriskpaul]

Halifax have finally released their corporate action notification on BOI…
There are two options
a) tender your shares
b) vote yes

No third option - other than do nothing - there is no option to positively vote No.

Is this legal?

It is until a HC judge says it isn't. The FCA could take a view as well of course, but I am not holding my breath on that one.

Is this morally correct???

No AFAIAC.

Legality and morality are of course only very loosely related.

[Laughton]

Suggest you just speak or chat or otherwise contact Halifax and point out that they have missed the third option. They're probably just like iweb and haven't appreciated that a third option should have been made available and that you are entitled to the voting "fee" even if you vote NO.

Still a couple of weeks to go so time for them to sort it out.

[BondSquared]

I have just been reading ( some of it at least) the 62 page "Offer Memorandum dated 21 June 2023, issue by BOI , for the 13 3/8 bonds.
I am confused, on page two of this document there is are tables covering the voting fee.

The table concerning, if the vote to redeem is successful, there is a question
"Did you vote", ( including by tendering you bonds in the tender offer)
it does not say " did you vote Yes or did you vote No."

Under this table it seems to me if you go to the meeting on the 4th and vote "No",
SINCE YOU HAVE VOTED ( irrespective of the way you have voted) you would get the 2% sweetener bonus.

What am I missing????

I'm pretty sure that if you insist on either appointing a proxy or attending the meting, you are disqualified from receiving the voting fee.

yes - that's Option 3, attending in person / separately appointing a proxy / attending via video conference - no voting fee if you choose this option.

The meeting is in the A&O office - imho not worth it for the views over Spitalfields market ...

[BobGe]

Still a couple of weeks to go so time for them to sort it out.

Cut-off dates (variable broker to broker) may be less than 2 weeks...

[FrankSeymour]

It appears the Bank and their advisors have briefed the institutions well, they have fallen into line in the hope of future business.
Many of the retail brokers have widely different views on how to respond, and do not have been, or so it appears, coordinated by the Bank.
I know of half a dozen people who, despite the views, have applied to attend, or applied for their proxy to attend.
None of these people have had an invitation.
This is in marked contrast to the last BOI attempt to close down the issue, About ten years ago.
Perhaps because of OBR's efforts the pre meeting paperwork arrived promptly, however that did not extend to the check in procedure, which was more like a Wimbledon queue.

[Padders72]

What are you hoping to achieve by attending the meeting?

[richydicky]

I think there has been some conflation here between the winding up of Bristol and West and the BOI prefs. The winding up of B&W requires a 75% vote - that has nothing to do with BOI, a separate entity, hence the meeting for the Extraordinary Resolution for BOI holders. And here is the relevant section on passing of the resolution to redeem the bonds.

What are the minimum thresholds for passing the Extraordinary Resolution?

Quorum requirement for the Meeting
The minimum quorum required for the Meeting to consider the Extraordinary Resolution is one or more persons present and holding or representing in aggregate not less than two-thirds of the principal amount of the Bonds for the time being outstanding. If the Meeting is required to be adjourned, the quorum at such adjourned Meeting will be one or more persons present and holding or representing in aggregate not less than one-third of the Bonds.

[BondSquared]

I think there has been some conflation here between the winding up of Bristol and West and the BOI prefs. The winding up of B&W requires a 75% vote - that has nothing to do with BOI, a separate entity, hence the meeting for the Extraordinary Resolution for BOI holders. And here is the relevant section on passing of the resolution to redeem the bonds.

What are the minimum thresholds for passing the Extraordinary Resolution?

Quorum requirement for the Meeting
The minimum quorum required for the Meeting to consider the Extraordinary Resolution is one or more persons present and holding or representing in aggregate not less than two-thirds of the principal amount of the Bonds for the time being outstanding. If the Meeting is required to be adjourned, the quorum at such adjourned Meeting will be one or more persons present and holding or representing in aggregate not less than one-third of the Bonds.

Just repeating a previous comment that

the quorum at such adjourned Meeting will be one or more persons present and holding or representing in aggregate not less than one-third of the Bonds

has been met via the institutional tenders/votes already, so we know that the Extraordinary Resolution will either pass or fail depending on the outcome of the vote but will definitely not fail due to not meeting the quorum.

[richydicky]

My bad ... I missed this bit

Minimum votes required for passing the Extraordinary Resolution
The Extraordinary Resolution will only be passed at the Meeting (or, if applicable, the adjourned Meeting) if not less than three-quarters of the votes cast at such Meeting are cast in favour of the Extraordinary Resolution.