I have just noticed that our AVIVA prefs have fallen a lot. I have been asleep. Anybody know why? I have googled and not found anything.
Is redemption being muted, again.


  • I have quite a lot of money in these, as well as GACA, GACB, STAB and STAC, because in present circumstances I need the income, but it is a dangerous game. I have not seen any rumours of redemption but that does not mean that there have not been any. My interpretation of recent price movements is that they are a reaction to the expected interest rate rises from central banks, which in turn will tend to increase bond yields. Of course bond prices have an effective floor provided by their redemption value, but with preference shares who knows? At today's selling price AV.A are paying over 6% with central bank rates around zero. If the return demanded by the market rose to 9% the price would fall by more than 30% to less than face value. At that price Aviva might start buying them back! As always it is easy to sell, but what to do with the money?

  • You are have it correct. The falls in the prefs reflect expectations of rising interest rates. You are also correct that prefs being undated react more than bonds which have a fixed expiry date.
  • Thank you both. Am relieved, I think.
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