OneSavings Bank plc - Proposed Redemption of £22,000,000 Perpetual Subordinated Bonds - Redemption

https://www.londonstockexchange.com/news-article/OSB/onesavings-bank-plc-proposed-redemption-of-ps22-000-000-perpetual-subordinated-bonds/15080163

This investment formed an important part of my portfolio, no longer it seems! (1SBB)

The Company has today notified the Law Debenture Trust Corporation P.L.C (in its capacity as Trustee under the Bonds) and Equiniti Limited (in its capacity as Agent under the Bonds) of its intention to redeem the Bonds on 7 September 2021 pursuant to their terms and conditions (the “Conditions”) (the “Proposed Redemption”).

Comments

  • Note the £22m bond seems to be ticker code 1SBA, so perhaps not the 1SBB
  • Managed to buy a few at 93.75,
    New current buying price is now at 100p, ie at redemption value
  • Price on 1SBB has also increased, one would assume that this will also be redeemed on the next pay date (After Aug) on 27th February 2022.
  • edited July 30
    Thank you shaunm: I genuinely think they missed they missed a trick in not redeeming these before. I asked the question why not but received the usual brush-off. I think that their Treasury people might have been criticised a bit for not doing so earlier. They are now taking the first opportunity to redeem although my reading was that redemption could take place only every 5 years in 2026. Assume their lawyers have found a means which allows them to do it. As I was broadly happy with the yield, I retained them. Glad we did. Think that 1SBB will follow if the prospectus permits. Otherwise at the next interest reset - 27.08.24. - I think.
  • Well done Shaunm. I've only got 1SBB and I guess as you say they will go the same way too in due course. I've mixed feelings about that as I was happy to hold them forever and there are so few issues left now.

    I've taken a few more AXI debt fund on the back of this. Their 8th biggest holding is 1SBB. I guess this will be enough to move the NAV above 104p and they are currently available in the market at 92.85
  • Thanks for that Shaunm. Quite gutted, Iswitched out of these (at 87.37. ouch ! ) for the 1SBB because of the downward re rate
  • Both 1SBB & 1SBA can be redeemed on any interest payment date after giving proper notice -
    Paragraph 5.3 Redemption at option of the Issuer
    "on 7th March 2016 or on any interest payment date thereafter"
  • JammyDodger,
    I too only had 1SBB until today, representing 6% of the portfolio, an important part ; now have a few 1SBA for a few weeks
    I liked the "5 yearly interest reset", which gave some protection against future inflation / interest rate rises.
    Will be difficult to replace this income.
    My source of the news came from FT online, where I monitor some of the companies behind the "debt securities"
    I'm wary of "Pref shares" which I exited back in February 2020 due to perhaps higher interest rates giving a big dent in Pref Share prices.
    I will review the AXI debt fund, thanks for the information


  • Many thanks Shaun

    I thought that 1SBB could be redeemed on any reset date rather than any interest payment date - there are two sections in the prospectus, one for each issue

    That needs checking of course .... !

    Woz





  • Woz,
    Thanks
    You are very correct, there are two sub sections
    In essence the 1SBB can be redeemed only at any "Reset date"
    Therefore the earliest is August 2024
    That is good, although the price is unlikely to go above 100p

  • This is really really interesting. I was sure neither 1SBA or 1SBB would be redeemed as the prospectus's showed they were subordinated debt rather than PIBS and therefore they have been Tier2 debt and remain as so going forward. Very different from the PIBS which have been grandfathered from Tier1 to Tier2.

    I therefore loaded up on 1SBB when they were both below 90p as the interest rate was superior. I even switched my very small holding in 1SBA bought higher up to 1SBB.

    Clearly as we see it now 1SBA would have been the better trade although I'm more than happy as I'd rather keep collecting my 1SBB forever and not have it redeemed as right now I find it difficult to see a home for it. Maybe by 2024 things will look different and there will be a home
  • JD: Forgive me but aren’t you little fixated, no offence meant, on Tier 2 and it appears to me you are of the view that some Tier 2 is necessary. It really isn’t. I have two other recent experiences (private banks) where expensive T2 was got rid of. It is a no brainier in the current interest rate environment and, as I indicated earlier, I think that their Treasury should have done it much sooner. The market just didn’t cotton on to the possibility.

    Remember too that Horta-Osario at Lloyds repaid a lot of high interest rate ECNs a couple of years ago.

    That said, I have mixed feelings about this. I like the yield but having loaded up on them late last year I am happy to take the capital uplift.

    I shall also be sad for our PFGs to be repaid in September. Goodness knows what to do with the cash?

    I did take up your suggestion and bought a few AXI though. Thank you.
  • Missed the fact that 1SBA had a yearly call date. It all makes sense now. Was really surprised when they weren't called last year but they obviously could preserve capital last year as required by the PRA but still call this year. Not sure why they didn't call pre pandemic though. Have tried to pick up some more 1SBB but it seems impossible. Pretty good value in my opinion. LLPE with a similar call date are 1.75% to call. RCHA with call in Feb 2024 are 2.4%. PS. Well done Dandigirl you made a good call here - I didn't have the bottle to buy 1SBA but stocked up on 1SBB at the time.
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