• The second document above ("announcement") says: "The offer will be made available to certain institutional and professional investors" will it be available to the small fry?
  • I had a quick look at the documentation and it looks like it has been designed so that the minimum trading unit is £25k (eg 250 shares of £100 each). So for those of us with smaller portfolios, pretty much off limits.

    Do others read it the same way as me?
  • The biggest concern for me is not the £25k, it's the constant reference in the prospectus to the "absolute discretion" of the board in making the distributions. Given that the building society is not obliged to make any other distributions or dividends apart from to CCDS holders, there will be no leverage for investors to argue that they are being treated prejudicially in comparison to other investors. The CCDS holders will have virtually no voting rights. The only incentive for the Society to continue making distributions in line with its policy stated in the prospectus is the desire to maintain confidence in the instruments as a whole. If the Society and / or the market were to decide that the instruments were no longer effective or relevant, the distribution policy and market price would inevitably suffer a catastrophic negative impact. With no redemption date, there is not even the consolation of waiting for a return of capital.
  • I think the purpose of these securities is to ensure that Grannies don't purchase them, ie those who need a guaranteed income to live on. Professional Investors only!
  • Clearly non grannies will be expected to read every page of the 427 page prospectus. Only serious investors who are also serious readers can qualify, provided they can read it before the cut off date!!. Advisers must earn a fortune putting these things together!

    Seriously though, any one know whether this will be available through the regular platforms e.g HL, Sippdeal etc.
  • edited November 2013
    It is amazing how the investment arena has altered over the past 10 years.

    We, as investors, have been fairly quiescent, with the fact that the financial system completely collapsed in 2007/8 and the Government has had to print new bank notes to fill up an empty till.

    We all discuss the creation of new entities like CCDS in a calm manner and put our money in retail bonds to try and get a real return but one does wonder what that return can be measured against.

    I have always been brought up to believe that the value of paper money has to be equated to the asset behind it.

    The only asset this country's debt has, is it's intellectual property and the working capital of the population and the businesses they work in.

    I wonder whether the creation of artificial money can be sustained in the long run and whether we retail bond investors are living in a fake universe where our returns will only be valid as long as the system holds up.

    A bit heavy I know, but worth raising with you all for your comments

  • I would assume that PIBS may become a "valuable investment" in the knowledge that CCDS holders would take the brunt of any financial difficulty, Any other opinons?
  • As mentioned by finn sbove, the discetion element is enough to warn off all but the bravest,( or fool hardy.)

    I have attempted to see if anywhere within the offer documentation are there any objective hurdle or conditions, that if met, would trigger the consideration for payment of a 'dividend.' From what i can see there is nothing but subjective marco headlines. So besides being discetionary it also appears to be arbitary.

    I cannot get my mind around the possibility that once 500MM is raised the NBS can simply say that payment is not going to be made. Counter to this i would assume institutional investment houses would not invest unless the discretion and abitary element had been suficiently defined in order to negate this risk. This said, would the institions deem that this is offered in good faith and with the ultimate fall back being legal redress?

    In tbe pragmatics of institutional investing i cannot see how the risk v reward can be balanced. Is there anything fundemental that has been over looked that would reconcile this balance?
  • Agree with commenters above. The arbitrary nature of the dividend would be enough to put me off, even if I wanted to invest £25,000 in a single shot (which I don't). I wonder what influence the institutional investors will be able to wield on dividend payments. Might improve the standing of PIBS with the latter being one step further up the food chain but who knows, if PIBS begin to look like a comparatively burdensome inconvenience to the issuers, I guess they might be looking for some way to phase those out.
  • I believe the point is that these are the equivalent of shares for a mutual organisation. So in the same way that a share dividend is not guaranteed and depends on profits, so these don't have a guaranteed payment. Based on current profits they have stated that the likely distribution would have been between £9.50 to £11.50 per £100 which doesn't sound that bad! Need to weigh up whether you think Nationwide's future profits will be sufficient to sustain this level.
  • I get your point, Frugal, but dividends are paid to shareholders with a vote. If the dividend falls, shareholders are not happy and vote accordingly. This instrument does not offer that response.
  • On the linked question of the PIBs, I believe the issue of CCDS does make the PIBs more secure as they rank higher. They can be traded in small amounts and have a yield around 7%. Agree Nationwide want to get rid of them (they made a tender offer recently) and since they have call dates I would expect Nationwide to exercise their option to redeem at par at those times.
  • I have tried several times to get Barclays stockbrokers to sell a tranche of the CCDS to me but they steadfastly refuse. I run a large portfolio in which these would be a small part, but to no avail. However, they do think I could buy some of their own Contingent Convertible bonds, so it would be interesting to know why the different treatment.
  • Frugal, I agree with your point, that Nationwide is likely to exercise their options on call dated PIBS, also applies for other BS PIBS.
    Just purchased a few Skipton BS 6.875% which has a call date of 13/04/2017 (priced 89.5) for that main reason (yield if called = 10.45%)
  • might not skipton reset at LIBOR+2.5%?
  • Skipton 6.875% resets at 3 month LIBOR + 256 bp
  • I am guessing that any existing PIBS will be called as they no longer count towards to reserves levels, as CCDS replace them.
    Lots as you indicate may reflect the 3 month Libor rate at that time, if low they may be tempted to keep them, but should the libor rate + 256 be above average deposit savings rates, then it may be prefential to encourage more deposit savings at the expense of continuing the PIBS, that serve little purpose?
    Also possible, they may place a tender (below par price) before the call date, to get larger holdings off the books before any calls?
    Only time will tell!
  • I'm holding the Skipton 8.5% - no call (that's why I bought them - seemed to be a trend away from calling but maybe now, as you say, there will be a trend in the opposite direction.) If they made me a generous offer (unlikely), I might sell them.
  • Rick24,
    I think most Building Societies will follow the footsteps of the Nationwide, and encourage institutional investors to divest in some way. No doubt some private investors, in particular pensioners & SIPP holders will hold on, unless there is a "generous" offer.
  • edited December 2013
    The avuncular prose of Mr Butt was influential in my purchase of this issue (through Sippdeal, indicative price 110-116, limit of 115, achieved 113.5- anecdotal reports on TMF indicate nat west brokers got much better price.)

    Banking is ultimately a matter of trust and my assessment is similar to Oliver's, including a suppressed conscience sputtering "Heresy, the terms of the bond are the terms of the bond! This bond has no terms! Out, demon!". Inner recriminations will follow if this one goes south, but also a kind of ghastly satisfaction.
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