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LLPC shares

alphab1
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LLPC shares

#291437

Postby alphab1 » March 16th, 2020, 10:59 pm

Hi,

I have quite a few LLPC 9.25% preferred shares in my Sipp account which I bought when the shares were originally offered. I am thinking of selling some other shares in the portfolio to buy more LLPC shares which has now quite a low price of about 128p, with a yield of about 7%. As I have not recently been following these shares and do not have access to recent discussions I am writing this message to make sure that my understanding is correct.

I will appreciate if some one knowledgeable of these shares could please comment.

Thanks.
alpha

ursaminortaur
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Re: LLPC shares

#291439

Postby ursaminortaur » March 16th, 2020, 11:07 pm

alphab1 wrote:Hi,

I have quite a few LLPC 9.25% preferred shares in my Sipp account which I bought when the shares were originally offered. I am thinking of selling some other shares in the portfolio to buy more LLPC shares which has now quite a low price of about 128p, with a yield of about 7%. As I have not recently been following these shares and do not have access to recent discussions I am writing this message to make sure that my understanding is correct.

I will appreciate if some one knowledgeable of these shares could please comment.

Thanks.
alpha


I'd suspect that the shares that you would sell to buy more LLPC have probably fallen even further.

88V8
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Re: LLPC shares

#291532

Postby 88V8 » March 17th, 2020, 10:10 am

alphab1 wrote:I am thinking of selling some other shares in the portfolio to buy more LLPC shares ..


Fixed Interest in general has fallen of late, some pretty indiscriminate drops on the whole.
As has been pointed out by ursaminotour in another thread #290999 https://lemonfool.co.uk/viewtopic.php?f=31&t=22248 there is a difference between the position of Prefs now and in 2008. Whereas in 08, Prefs survived the banking crash, if there is another crash they will be bailed in.
I hold a good deal of Lloyds prefs (and ords alas) as well as a variety of other Finance debt and I'm not selling, but the Prefs are not totally without risk.

For comparison, look at the yields on BP.A, BP.B, BWRA where the falls have been much less.

Personally I do not really trust the Lloyds management to do the right thing by shareholders, and if I were looking for more Financials I would prefer the Natwest 9% NWBD which are held to be safe from forced redemption, or capital reorganisation as it's more properly called.
As to what value remains in your other shares that you might sell, yes, well.....

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Re: LLPC shares

#291579

Postby Wizard » March 17th, 2020, 11:49 am

88V8 wrote:
alphab1 wrote:I am thinking of selling some other shares in the portfolio to buy more LLPC shares ..


Fixed Interest in general has fallen of late, some pretty indiscriminate drops on the whole.
As has been pointed out by ursaminotour in another thread #290999 https://lemonfool.co.uk/viewtopic.php?f=31&t=22248 there is a difference between the position of Prefs now and in 2008. Whereas in 08, Prefs survived the banking crash, if there is another crash they will be bailed in.
I hold a good deal of Lloyds prefs (and ords alas) as well as a variety of other Finance debt and I'm not selling, but the Prefs are not totally without risk.

For comparison, look at the yields on BP.A, BP.B, BWRA where the falls have been much less.

Personally I do not really trust the Lloyds management to do the right thing by shareholders, and if I were looking for more Financials I would prefer the Natwest 9% NWBD which are held to be safe from forced redemption, or capital reorganisation as it's more properly called.
As to what value remains in your other shares that you might sell, yes, well.....

V8

The issue here is the extent to which companies suffering pass the pain on the banks through defaults on loans. The key is the level of support Govt. is going to give to business, IMHO it is the thousands of SMEs that may go below the radar that could be the issue. I see Sunak due to address the Commons on new measures at 7:00pm tonight.

alphab1
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Re: LLPC shares

#291669

Postby alphab1 » March 17th, 2020, 4:08 pm

Thanks for all the info.

While the current price of LLPC (118p) is tempting I accept that the pref. shares may not be now as safe as they have been originally. The shares I was thinking of selling are ATT (Allianz Technology Trust) which went down about 25% in the last month.

I will wait for a few days more to see if the situation changes.

Cheers.

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Re: LLPC shares

#292963

Postby GN100 » March 21st, 2020, 5:26 pm

As I understand the current situation re bail-ins on banks the prefs would go along with the ords. If you trust Lloyds (and I certainly don't after the ECN Court case) why not go for the ords at a yield of North of 10%? The downside risk would seem similar to the prefs with a greater return. Re NWBD they are virtually perpetuals due to the inclusion in the prospectus of the clause 4/3 payment in shares in lieu of non payment of divi, However I feel that the terms of the prospectus would go in the event of a bail in. This clause in the prospectus contract must now be devalued in the current climate. One possible bright spot in the prefs area is ELLA who stated that they would not attempt a repurchase of the prefs at par. However in a bail-in I think they would be powerless to prevent loss of the prefs.

This change has been brought about by HMG being determined after the Banking crisis that the taxpayer would not be on the hook for bank bailouts until the ords and the prefs had been wiped out and the bondholders changed to shareholders. That's the way this area has changed and I don't think there are any free lunches there anymore. See BoE here:-

https://www.bankofengland.co.uk/financi ... resolution

GN

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Re: LLPC shares

#293000

Postby ursaminortaur » March 21st, 2020, 6:47 pm

GN100 wrote:As I understand the current situation re bail-ins on banks the prefs would go along with the ords. If you trust Lloyds (and I certainly don't after the ECN Court case) why not go for the ords at a yield of North of 10%? The downside risk would seem similar to the prefs with a greater return. Re NWBD they are virtually perpetuals due to the inclusion in the prospectus of the clause 4/3 payment in shares in lieu of non payment of divi, However I feel that the terms of the prospectus would go in the event of a bail in. This clause in the prospectus contract must now be devalued in the current climate. One possible bright spot in the prefs area is ELLA who stated that they would not attempt a repurchase of the prefs at par. However in a bail-in I think they would be powerless to prevent loss of the prefs.

This change has been brought about by HMG being determined after the Banking crisis that the taxpayer would not be on the hook for bank bailouts until the ords and the prefs had been wiped out and the bondholders changed to shareholders. That's the way this area has changed and I don't think there are any free lunches there anymore. See BoE here:-

https://www.bankofengland.co.uk/financi ... resolution

GN


As to going for the ords rather than prefs - the ords could have their dividend cut (or even suspended) if the bank suffered a much smaller crisis than one requiring bank resolution. The prefs aren't as safe as before the financial crisis but their dividend/coupon is still safer than that of the ords.

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Re: LLPC shares

#293859

Postby alphab1 » March 24th, 2020, 11:06 pm

I have been receiving half yearly dividends for my LLPC shares on 30 May and 30 November. Can some one please tell me the ex-dividend dates?

Thanks.

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Re: LLPC shares

#293864

Postby Breelander » March 24th, 2020, 11:29 pm

alphab1 wrote:I have been receiving half yearly dividends for my LLPC shares on 30 May and 30 November. Can some one please tell me the ex-dividend dates?


The last two were 31/10/2019 and 02/05/2019. Look on the FULL DIVIDEND BREAKDOWN tab here....
https://www.hl.co.uk/shares/shares-sear ... /dividends

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Re: LLPC shares

#294051

Postby alphab1 » March 25th, 2020, 2:09 pm

Thank you, Bree.
Regards.

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Re: LLPC shares

#294825

Postby 88V8 » March 27th, 2020, 2:41 pm

Speculation that the Bank will interfere with banking dividends... do they have the power to do that?

Anyway, wonder if that would extend to Prefs/price impact either way.

Sir John Vickers, former chairman of the Independent Commission on Banking, has urged the Bank of England to block more than £7.5 bn of dividends to be paid out by banks. The intervention by Sir John, a former senior official at the Bank, heaps more pressure on Andrew Bailey, the governor, to force banks to abandon payout plans, starting with Barclays, which is pressing ahead with a payment of £1.03 bn next Friday. - The Times

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Re: LLPC shares

#295252

Postby ursaminortaur » March 28th, 2020, 11:49 pm

88V8 wrote:Speculation that the Bank will interfere with banking dividends... do they have the power to do that?

Anyway, wonder if that would extend to Prefs/price impact either way.

Sir John Vickers, former chairman of the Independent Commission on Banking, has urged the Bank of England to block more than £7.5 bn of dividends to be paid out by banks. The intervention by Sir John, a former senior official at the Bank, heaps more pressure on Andrew Bailey, the governor, to force banks to abandon payout plans, starting with Barclays, which is pressing ahead with a payment of £1.03 bn next Friday. - The Times

V8


It would be hard to justify instructing banks to suspend paying dividends on capital adequacy grounds as the banks passed their last stress tests and the BoE cancelled the next scheduled stress tests.

https://www.cityam.com/bank-of-england-cancels-stress-tests-over-coronavirus/

The Bank of England has cancelled this year’s stress test of major banks in Britain, saying it could be hard to implement new global capital rules while lenders are focused on supporting customer lending amid the coronavirus pandemic.
.
.
.
“The recent 2019 stress test showed that the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs,” said the BoE.


Of course since the government still own a majority stake in RBS that would be the one bank where they could stop dividends being paid if they wished.

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Re: LLPC shares

#295646

Postby 88V8 » March 30th, 2020, 10:51 am

Wonder if the politicos will resist the temptation to tamper.
After all, they're already distorting the market with QE.

Well, at least this time the EU can't interfere with UK banks.

Andrew Bailey, governor of the Bank of England, came under fresh pressure last night to put a stop to £7.5 bn of dividends due to be paid out by British banks over the next few weeks. Agustín Carstens, head of the Bank for International Settlements — known as the central bank for central banks — called for a global freeze on dividends in the sector. On Friday the European Central Bank ordered eurozone lenders to cancel all dividends until at least October. - The Times

Hmmm, Santander's UK Prefs ??

This is beginning to be worthy of its own Topic.

V8


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