The Lemon Fool

The forward yield on LLOY is now 5.9%, whilst the yield on LLPD is 6.0% , so I've sold out of LLPD and bought LLOY, hoping for an uplift in both capital and increasing dividends compared to LLPD.

LLPD has served me well, but with inflation on the rise, I'm less interested in the Prefs if they don't offer a sensible margin over a regular dividend.

Yield on LLPC now 5.7%.
I am still nervous of equity in banks but with the yield on prefs below the yield on ords I have switched half of my prefs into ords. Still hopeful that with prefs becoming effectively mandatory in the upcoming Basel III changes, Lloyds will buy them out (having crashed the price knowing them.... )

I am not the least bit interested in the ords. Much different level of risk than the prefs. Admittedly Lloyds do look as though they are making bucket loads of money, but that takes no account of the regular clangers they drop, fines and redress they end up having to pay. Senior management are reckless and I don't trust them. Picking an unnecessary fight with ECN holders for example and just scraping victory in the SC with votes 3 against 2. Any bank that goes out of its way to do over its creditors is likely to be troublesome IMHO.

OTOH, swapping some LLPC/D for some PFG debt is looking like a strong possibility...

I was wondering about Provident Financial and if they have irrecoverably screwed up their 150 year old business model. Don't think they'll be paying divi's for a while. The only debt I can find are these seniors;

https://www.providentfinancial.com/inve ... investors/

and price seems pretty stable at present.

Actually, if I can convince myself that PFG aren't going bust the seniors are interesting.....

I started a thread here on PFG debt yesterday viewtopic.php?f=52&t=7023

Unfortunately the prices have risen quite a lot today. Still in junk territory though with 10%+ yields. No subordinated debt to speak of, so senior quite risky. Spreads are wide and I think MMs short of stock so you need to watch the quotes carefully. I think it highly likely the debt will fall into junk status (it was only just investment grade anyway), in which case certain institutions will need to sell and that could lead to lower prices again.

Hi all,
Tempting as it is to swap prefs for ords..i am not selling anything with a "guaranteed" income stream.

LLOY ..i have been trading for a few years now..current ploy is buying close to 60p and selling close to 70p..hardly life changing but
if you can pick a divi up along the way its handy and fairly "safe" punting.

Perps and prefs have been on a decent run of late..if i had the confidence that i would be able to buy back in at a 20% pullback, i would be
trimming my book ..but i am not that confident we get such a pull back in the near term and possibly longer.

Good luck,

Swan

Agree Swanmore1, like a lot of people, I have big profits on some of my Perps and Prefs but can't think of anywhere else to put the money. Can't see interest rates moving up substantially anytime soon so I'll just stick with them.

Surerera

Surerera wrote:Agree Swanmore1, like a lot of people, I have big profits on some of my Perps and Prefs but can't think of anywhere else to put the money. Can't see interest rates moving up substantially anytime soon so I'll just stick with them.

I also participated in the prefs capital gain, but I have sold the vast majority. The yields are around 6-7% and you can find equity with 5% (some of which is covered), although capital values can go up, the biggest risk is a drop in capital values.