Tender offers Bristol & West prefs and BOI pibs

[Jwdool]

I hold BOI institutionally and personally and have done for many years. Having considered the proposals I will be accepting the BOI tender. I entirely agree with Swan's analysis. The key here is looking at the comparator, not where the notes were trading last year when rates were <0.5%.

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%

[BondSquared]

I hold at AJ Bell and HL
Both are aware but have not sent any voting forms yet.
I will tender all.
192p or 194p on success is ok in current environment ..may not look great given 220 odd a few years ago but that was vs ultra low rates that we are not going to see again .
Has been a great trade but it is time for me to close out,

Swan

Ditto. It's been nice, from the days of below par trading during the Euro crisis to today, and special mentioning to OldBoyReturns/OBR, but it's coming to a good end now. The offer is very fair - not sure what the point is of comparing absolute bond prices today to historic prices in a different rates environment. Below is a yield table comparing the BoI/BKIR 13 3/8 to the 15Y generic UKT/Gilt yields (ModDuration of BKIR 13/38 is ~14, so 15y yields is a fair proxy for comparison). The last column is the (very simple) yield spread between the gov yield and the bond (some data gaps in the history) - the tender comes in at the tights, by a mile. Sorry for formatting, this is not a table-friendly environment.

Date BKIR 13 3/8 YLD UKT 15Y YLD YLD SPREAD
TENDER @190 (clean) TODAY 7.036 4.486 2.55
TENDER @188 c(lean) TODAY 7.111 4.486 2.625
2023-05-31 7.757 4.438 3.319
2023-04-28 7.908 3.994 3.914
2023-03-31 7.808 3.783 4.025
2023-02-28 7.799 4.118 3.681
2023-01-31 7.773 3.7 4.073
2022-12-30 7.917 3.985 3.932
2022-11-30 7.937 3.505 4.432
2022-10-31 7.943 3.86 4.083
2022-09-30 7.882 4.211 3.671
2022-08-31 7.587 3.181 4.406
2022-07-29 7.872 2.321 5.551
2022-06-30 7.028 2.572 4.456
2022-05-31 7.018 2.396 4.622
2022-04-29 6.438 2.103 4.335
2022-03-31 6.412 1.813 4.599
2022-02-28 6.175 1.61 4.565
2022-01-31 6.159 1.467 4.692
2021-12-31 6.105 1.146 4.959
2021-11-30 6.09 0.971 5.119
2021-10-29 6.134 1.156 4.978
2021-09-30 6.112 1.244 4.868
2021-08-31 6.16 0.926 5.234
2021-07-30 6.212 0.87 5.342
2021-06-30 6.27 1.067 5.203
2021-05-31 6.284 1.147 5.137
2021-04-30 6.294 1.188 5.106
2021-03-31 6.344 1.221 5.123
2021-02-26 1.184
2021-01-29 0.546
2020-12-31 6.499 0.399 6.1
2020-11-30 6.767 0.529 6.238
2020-10-30 6.914 0.499 6.415
2020-09-30 6.345 0.465 5.88
2020-08-31 6.352 0.566 5.786
2020-07-31 6.749 0.341 6.408
2020-06-30 7.277 0.403 6.874
2020-05-29 7.326 0.372 6.954
2020-04-30 6.342 0.42 5.922
2020-03-31 6.359 0.599 5.76
2020-02-28 6.36 0.663 5.697
2020-01-31 6.315 0.768 5.547
2019-12-31 1.086
2019-11-29 0.938
2019-10-31 0.861
2019-09-30 0.716
2019-08-30 0.716
2019-07-31 6.536 0.985 5.551
2019-06-28 6.558 1.187 5.371
2019-05-31 6.6 1.21 5.39
2019-04-30 6.649 1.492 5.157
2019-03-29 6.784 1.337 5.447
2019-02-28 6.753 1.619 5.134
2019-01-31 6.759 1.43 5.329
2018-12-31 6.775 1.508 5.267
2018-11-30 6.757 1.637 5.12
2018-10-31 1.613
2018-09-28 1.718
2018-08-31 6.261 1.572 4.689
2018-07-31 1.594
2018-06-29 1.564
2018-05-31 6.152 1.534 4.618
2018-04-30 6.153 1.679 4.474
2018-03-30 5.877 1.588 4.289
2018-02-28 1.753
2018-01-31 1.76
2017-12-29 1.506
2017-11-30 1.639
2017-10-31 1.663
2017-09-29 6.195 1.675 4.52
2017-08-31 1.414
2017-07-31 1.59
2017-06-30 6.428 1.619 4.809
2017-05-31 6.559 1.43 5.129
2017-04-28 6.714 1.466 5.248
2017-03-31 1.493
2017-02-28 6.805 1.504 5.301

[Dicky99]

Bristol Water prefs down 7.6% as I write which I'm guessing is related to Thames Water news. But is Bristol and West down 6.4% because it has Bristol in the name. Just wondering

[PeterGray]

I'm ready to move on from BOI, not the perfect price, but good enough. I bought at just over par 13 years ago so more than happy with the interest received since. They show up in my brokerage account as having been bought at 31p, sadly not the case, though nearly 50% interest would have been nice! I consolidated them from 3 accounts into II when the forced redemption at 20p was planned and the price was very depressed. Most have been sold meanwhile between 1.90 and 2.20, so to see the last lot go at 192/4 is OK by me.

[FrankSeymour]

I see HL have actioned a response on their website for BOI but I do not see BWSA,
nothing seen on II.
I hold a large chunk of BOI in my portfolios , much purchased below par in the dark days of the last potential forced redemption, my daughter has a chunk purchased at 39p, lucky her.
These are perpetual bonds, perhaps they will not manage to get 75% of those that vote, perhaps a forced redemption oppresses the minority and is therefore not the right thing for a Bank to do.
The 2% bonus is for me a red herring, the price has fluctuated more than 2% many times.

It seems a tidy up exercise for the Bank, they should not care about £45 million in a Billion pound enterprise.
They have waited ten years or so and are giving it another try.
A nice little project for a few trainee lawyers, but attacks minority holders and leaves a bad taste in the mouth.
The Bank should be ashamed.
Most of the institutions have probably exited or the last remnants will exit in the coming weeks.
So the rump will be held by a bunch of retail investors.
I bought BOI to boost my retirement income, rather than surrender my capital to an annuity, so what I see is the income stream, i do not care about the capital value.
I do not want to reinvest in other fixed interest, and find that I get bought out again, there is not much perpetual paper around.
My daughter holds some in her SIPP and some of my grandchildren hold in JISA's and SIPP's. It is just a buy and forget income stream.
I am disappointed the bank is deserting pensioners, £45 million in capital is peanuts.
I will vote no and advise all my relatives and financial friends to vote no.

I attended the two meeting in London for the last redemption, I see they are discouraging attendees this time , I wonder why???
The meeting room at the very last meeting was in a conference room in a tall building in Canary Wharf if I remember correctly, it had spectacular views
I hope the meeting room this time is as nice, a good day out.

I shall vote no and encourage others to do the same....

[JohnEdwards]

I agree with a lot of FrankSeymour's post, having bought much at below par. It's the increasingly scarce PERPETUAL income stream that I value in retirement and the capital value is of little interest.
Of course the (not so) historic highs are likely to be unachievable in the foreseeable future (until the next national crisis?), but I am impressed by the argument that NATW exampled by coming back with a much more generous offer to clear the awkward squad (it would still take a lot to persuade me!).
HL notified me today and have a simple online form to complete - including the option NOT to tender AND vote against, which I've chosen (deadline 31 July). Can I emphasise that those who feel as I do MUST choose this route - an abstention is not effective if you really want to defeat the 75% majority required.

[88V8]

I hold BOI institutionally and personally and have done for many years. Having considered the proposals I will be accepting the BOI tender. ...
The following list of alternatives with approx current yield might be helpful for those considering what to do.

I topped up NWBD this morning and added GACB to my holding of GACA, as I reckon these could be the next take-outs. Didn't go all-in, expecting further falls after the next rate rise.

If BWRA fall any more I might top them up although I must take a look at their accounts to see how much debt they are carrying.

Yes, at the mo there are other FI parking places although the PIBS are mostly tradeable only by phone which is a nuisance.
Trouble is, the universe keeps shrinking... in the end we will all be clinging to the same fragments of wreckage....

V8

[RockRabbit]

If BWRA fall any more I might top them up although I must take a look at their accounts to see how much debt they are carrying.

BWRA appear to me to have a debt problem in that approx. 50% of their debt is index linked and therefore their debt load is rising rapidly. However they are part of Pennon, so that should offer some protection?

[entrust]

https://www.londonstockexchange.com/new ... s/16023021

[Jwdool]

For more details on perpetual bonds, see here:

investorrelations.bankofireland.com/app/uploads/Perpetual-Bonds-Interim-Institutional-Investors-Results-Announcement.pdf

[JohnEdwards]

Only 44% of the total outstanding holdings tendered/voted in favour by the institutions then - so it's all to play for!

We don't know how many (if any) of them didn't tender and abstained from voting. Assuming none did, only 45% of the remaining holdings need to be not tendered and voted against to be certain of defeating the insertion of the call option - BUT THEY HAVE TO BE VOTED. Every abstention increases the proportion of retail holdings that needs to not tender and vote against to stop a 75% overall majority of those voting (counting tenders as votes in favour).

[Jwdool]

From the data set, the overwhelming majority of institutional holders voted to redeem.

[PeterGray]

From the data set, the overwhelming majority of institutional holders voted to redeem.

That's what I thought, but I'm not sure what proportion were institutional holdings? Do you have any figures?

[Jwdool]

Of the total institutional votes cast:

20,009,811 voted in favour
135,000 voted against
20,144,811 total number that voted

In other words, more or less all of them voted for. This should give some indication to retail holders that it is a "no brainer". Sadly, some people won't get the nuance. In essence, the people voting "no" are simply voting not to get the extra 2%.

[GoSeigen]

In essence, the people voting "no" are simply voting not[?] to get the extra 2%.

[My emphasis and markup]

I presume the "not" should not be there?

GS

[Laughton]

In essence, the people voting "no" are simply voting not to get the extra 2%.

Are they? I thought it had already been ascertained that simply voting (YES or NO) was enough to get the extra 2% assuming BOI get the 75% in favour they need to carry the day.

[MickR]

Of the total institutional votes cast:

20,009,811 voted in favour
135,000 voted against
20,144,811 total number that voted

In other words, more or less all of them voted for. This should give some indication to retail holders that it is a "no brainer". Sadly, some people won't get the nuance. In essence, the people voting "no" are simply voting not to get the extra 2%.

You get the extra 2%, whichever way you voted, as long as you do vote

[Padders72]

And equally sadly some won’t understand how the process works nuances or not

[GrahamPlatt]

And equally sadly some won’t understand how the process works nuances or not

Well, that does seem to be the case with the institutions, 56.12% of whom neither tendered nor voted.

[BondSquared]

And equally sadly some won’t understand how the process works nuances or not

Well, that does seem to be the case with the institutions, 56.12% of whom neither tendered nor voted.

.... struggling to reconcile that statement with my (non-institutional) personal bond holding ... the above implies that 100% of the outstanding principal is held by institutional investors.

I for my part have no idea about the exact number of bonds held by institutions vs retail, and don't thinnk anyone does, so how many of the institutions tendered or voted is unknown to me, although I assume the very great majority.

I do find the entire processs very fair. Of course the 2% voting carrot - for either consent or dissent - is not entirely altruistic, as it is meant to incentivise a wide vote to reach the quorum - which it successfully has now already after the institutional deadline (we now know that a resolution will be passed (for or against), at the latest at the adjourned meeting), so if anything BoI overpaid for the carrot and was too generous, but who can blame them, these corporate actions in illiquid securities are hard to predict.

I understand those who lament the loss of their pension income, but if you want a pension then get a pension. These are bonds, and hence subject to the dynamics of the bond market, which include corporate actions, bondholder votes, issuer calls and tenders etc. If you use them to build a DIY pension then you cannot expect them to behave just like a pension. You can't just attach an engine and lights to a baby pram, declare it a car and complain when getting pulled over on the M5, it's still a baby pram - unless it gets officially recognised as a car. Perps/PIBS/bonds/securities/... aren't pensions. Uncertain income stream which some may use for retirement - yes.

Tendering.