The Lemon Fool

I see no reported news today, but Co-op Bank Senior debt was up around 5%, a massive move for a 4-month Senior bond. 2 million reported as changing hands after the bell at 93.5p -- looks like a positive development for holders.

GS

Possible new interest?

http://news.sky.com/story/qatari-and-sw ... d-10908396

Rooky102 wrote:Possible new interest?

http://news.sky.com/story/qatari-and-sw ... d-10908396

Thanks Rooky102, that looks very interesting, but clearly leaves some uncertainty which is not quite so welcome.

Are you a holder, and if so do you know of or have you had any contact with an ad hoc committe representing Senior noteholders?

The Qatar political situation looks like one to watch too. I noted the two 93.5p x 1m transactions in my OP, but note a further trade of 93p x 2m on the 6th June, which made me wonder whether the earlier purchaser bailed out at a small loss after the Qatar news broke? Shouldn't try to read the tealeaves too much I guess...


GS

I still hold a substantial position. No inside knowledge of any bondholder groups though.

Another 1m senior unsecured deal went through today. Clearly someone thinks they are worth having.

Interesting link indeed from Rooky102. Its about time the Bank gave bondholders another update.

I have held on to too many 42RQ, and have no contact with ad hoc committee.

On reading the tealeaves:- a 'A source close to the Co-op Bank' was quoted, so this is presumably an off the record briefing to Sky News, I wonder what they are trying to achieve by it. Auctions don't go too well with only one bidder, so maybe the board is just trying to hint at some competition.

"The current status of the discussions was unclear on Thursday, and sources cautioned that there were a series of significant hurdles to any deal being agreed."
Can't get much more vague than that though.

All we need now is for Comrade Corbyn to get in and nationalise it .....

Rooky102 wrote:All we need now is for Comrade Corbyn to get in and nationalise it .....

That might be a good result for the senior, unlikely to help your 42RQ though as I reckon the PRA would tell him the greedy bondholders don't deserve to be bailed out.

More from Sky news:

http://news.sky.com/story/co-op-group-s ... n-10915335

Sky refers to 'the mutual', which makes me wonder how much they understand, but someone is briefing them pretty well.

Not sure how the Group holding can drop to 5% if they are not putting more cash up (although zero is 'less than 5%!)

Opps, I see that they were referring to Group as mutual, apologies to Sky reporter.

Maybe the Group can contribute other than cash to maintain some shareholding, such as their name or some underwriting of the pension fund.

Sky is getting the news:

http://news.sky.com/story/hedge-funds-e ... s-10916814

They've moved on to the difficult pension fund issues

The view from Bloomberg.
seniors holding up well

https://www.bloomberg.com/news/articles ... co-op-bank

Don't want to tempt fate, but I am feeling much more optimistic about the senior being left whole now. Fingers crossed.

Having long been an account holder of Smile, the Co-op’s successful internet banking arm, I've been following this saga from the beginning. Reading between the lines of this most recent update from the pages of BBC Business concerning the on-going woes of the Co-op bank at …

http://www.bbc.co.uk/news/business-40324354

It seems that having to shoulder a share of the Co-op group’s estimated £8bn of pension liabilities has been the poison pill that has scared off all the acceptable suitors. That being the case then apparently existing investors in the bank are being ‘persuaded’ that it’s in their best interests to inject fresh funds to meet the needed long-term capital requirements. A state of affairs that seemingly they are not too keen on doing - but what’s the alternative if there are no approved buyers?

In short, an orderly rundown by the Bank of England where the Co-op Bank’s account holders are protected but not the stakes of the investors, who can wave bye-bye to most if not all their cash. Very much a case of dammed if you do, dammed if you don’t.

an orderly rundown by the Bank of England where the Co-op Bank’s account holders are protected but not the stakes of the investors

I hope the BoE realises that forcing a rundown on the basis of the pension fund (which is what it now seems to have come down to) won't be better for the pensioners either.

Confirmation of media speculation about "advanced" stage of talks with current investors. Seniors are up a bit more this morning:

http://www.londonstockexchange.com/exch ... 64382.html


Do others agree that the subs are not cheap enough at 39p, given that they are almost certain to be bailed in?

GS

GoSeigen wrote:Do others agree that the subs are not cheap enough at 39p, given that they are almost certain to be bailed in?

I don't know, but without knowing how they would be bailed in and what the equity return would be it is difficult to say. This is the sort of thing that the market tends to ignore and where detailed research on the terms of bailing in is worth doing, but I am too busy to do that at the moment.

GoSeigen wrote:Confirmation of media speculation about "advanced" stage of talks with current investors. Seniors are up a bit more this morning:

http://www.londonstockexchange.com/exch ... 64382.html


Do others agree that the subs are not cheap enough at 39p, given that they are almost certain to be bailed in?

GS

I would say 39p was too high for the risk involved. It looks like a debt for equity LME is highly likely now, accompanied by a capital injection. In that scenario I would not want the unlisted equity, so would sell the subs. Depending on the split of equity between existing sub holders and new money, that might prove profitable, but it is really hard to say how that will pan out. My concern would be a disproportionate amount of equity going to new money.

OTOH, If the bond holders can negotiate away the Group Pension Guarantee, perhaps in return for some shares, that could help cut the PRA's onerous CET1 requirement. It would also remove an uncertainty over future valuation of the equity, so assist in a sale/IPO. The Bank has a significant amount of deferred tax assets. Useless as far as current CET1 requirements are concerned, but potentially very valuable for an acquirer, or long term shareholder. The operational side of the Bank is largely sorted out now, the prime difficulty being lack of CET1, so it could be a really good investment. The bondholder group clearly think it worth their effort compared with a sale or orderly wind up.

No longer up for sale:

http://www.londonstockexchange.com/exch ... 72089.html

Yes and the market seems to like it. Subs up 15%, senior up another 2%. Looks like 39p might have been a good price for the subs after all!

It looks as though a deal has been done. The big question for me now is whether that deal is expecting a contribution from senior bondholders. Could be wrong, but I suspect not otherwise the price would not be as high as it is (big holders would have been consulted on this), so will be holding on to all of mine.

Co-Operative Bank Agreement on the Terms of a Capital Raising Plan

http://www.investegate.co.uk/co-operati ... nk%20Alert

"Retail" and "institutional" holders get different treatment - again.