NatWest 9% Irredeemable Preference Shares 8%

I read about this in Uk city media and it said it looks tempting - any comments

Comments

  • I've held this for 18 months. Getting more expensive now but still good value, I think. Has tax advantages over corporate bonds, since UK basic rate tax pre-paid.
  • Not sure where the 8% came from in the title but ..

    Natwest tendering two preference shares, including, by the looks of it, NWBD - the 9% ones

    https://investegate.co.uk/nat.westminster-bk--natn-/rns/tender-offer/202106071556180760B/
  • Yes it does include NWBD.
    Not sure how generous it is. I make the yield 5.14% @ 175p.

    From my understanding, these are pretty safe compared to other bank prefs (LLPC, LLPD), requiring a vote from class holders to retire.

    Maybe the next down the list, for me, would be something like ELLA where I make the yield 5.26% but I already hold quite a lot of those so portfolio would become a bit less diversified.

    On the other hand, where goes inflation and therefore possibly interest rates over the medium term with the knock on effect on prices of prefs?

    and

    If they do get a big takeup how does that impact on the possibilty of them getting a vote to force retirement?

    Thoughts??
  • edited June 8
    Woz - Thanks for that information, it had gone under my radar.

    I am tempted to take the offer. With a reduced amount of bonds, liquidity will reduce accordingly, making trading all the more difficult.

    With reference to the BUR1 thread, I will message AJBell about the offer immediately !
  • Here is the text of the announcement.

    "National Westminster Bank Plc has announced that it intends to purchase all the £140,000,000 9% non-cumulative preference shares in issue through a tender offer. This will give you the choice to sell, or tender, your shares to the company at a fixed price with no dealing charges.

    Under the proposed terms of the offer, you will be given the choice to tender your shares at a price of 175% of the liquidation preference.

    In respect of any shares accepted for purchase, the issuer will also pay an amount equal to any accrued and unpaid dividends.

    Please note that the deadline to elect for institutional holders is 10 June 2021, you are considered an institutional holder if you hold more than GBP100,000.00 in this security.

    If you hold less than GBP100,000.00 then you are considered a retail holder, meaning you have until 22 June 2021 to elect to tender.

    To view the Tender Offer Memorandum and associated documentation in full, please copy and paste the following link into your web browser:
    https://www.investegate.co.uk/article.aspx?id=202106071556180760B

    If you choose to tender your shares, you are confirming that you have read the official document, including details of any restrictions, and that you are eligible to participate.

    If you would like to tender your shares, please input your election by specifying how many shares you would like to tender. If you do not wish to tender all of your shares, please enter the number of shares you wish to keep into the default option, 'Take no action'.

    If you choose to tender your shares, the cash proceeds are expected to be credited on or around 29 June 2021."
  • The terms: 175p per share plus accrued div of about 3 month's worth (as last xd date ~10 Mar). Decision needed by 22 June

    The current price of these prefs has risen to around 173.3p i.e. within a whisker of the tender offer, allowing for spread. At the tender price the yield we are being asked to forgo, is 5.14%

    The alternatives:

    TAKE NO ACTION
    Presumably some people will take the tender, so the prefs will become more illiquid.
    No idea as to whether another offer will be made, or when.
    Will the prefs just continue to pay out? If yes, then why not just keep them? If no, then when would they stop?

    TAKE THE OFFER
    The offer is not risible, and I wouldn't have to pay for spread on the sale, which is otherwise quite wide.
    Where to invest the proceeds? Ideally something that will not suffer the same fate

    I note that other prefs e.g. Lloyds have price rises today, presumably in anticipation of a similar tender being made for those.

    Detailed tender wording https://investegate.co.uk/nat.westminster-bk--natn-/rns/tender-offer/202106071556180760B/

  • Just got a quote to sell NWBD at 176.35p.

    Hmmm - decisions decisions.
  • And now offered 176.55p
    What's going on - why would someone want to buy at this price (unless they think a better offer is coming along)?
  • Thinking about it. I guess that's about the same as the 175p on offer plus the accrued.
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