Lloyds tender offer for Preference shares LLPE

Do any of you have any views as to the price being offered by LBG which is out today. I guess it comes down to the current yield based on your purchase price (mine was 95.75 in 2013) and your view as to the direction of travel of the SP given the likely interest rate rises - probably in 2022 now that the BoE has failed to grasp the nettle.

The epic for these I believe is LLPE ie LBG 6.475% non cum irredeemable preference shares. I hold these on HL who quotes 107 sell 113 buy compared with the offer price of 112.050 incl accrued dividend. At least that's what I think reading through RNS.

Divi is due 15th March and September so 56 days accrued (to today) so about 99p if my maths are up to the mark.

Looks like LBG are only offering only just above mid market price

I should of course say that this is not a compulsory tender merely a way out for those who want out

Thoughts from anybody?

Steve

Comments

  • Applies to LLPC and LLPD too, I think.

    https://www.investegate.co.uk/lloyds-banking-group--lloy-/rns/capital-securities-update-and-tender-offer/202111101553459933R/

    Always worried that Lloyds would try again at getting these at knockdown prices but a shade under the BUY price sounds "fair" to me. BOE bottled out last time but will surely be looking to increase interest rates at next opportunity which wouldn't be great for FI prices.

    Plenty of time to mull it over and come to a decision - but where to put the money if I accept??
  • I have 5k of the LLPD andI'm quite happy collecting the 9.75% and as Laughton says ,where do you put the money ???
  • Well, that's one way of looking at it.
    Another is that with the offer of 194.2P the interest rate is 5.6%

    Still mulling.

    Maybe that offer isn't as "fair" as I first thought.
    Maybe they'll come back with a slightly better offer in years to come and I can collect the 5.6% whilst I wait.
    Maybe a lot of holders will accept then all issues will become less liquid so maye not be able to sell at this price again.
    Maybe I can find something that pays a bit more than 5.6%

    Decisions decisions
  • Laughton, isn't the offer price on LLPD 174.2 ??
  • Ooops! - Sorry that was a typo.
    Hope I didn't get anyone's hopes up too much.
  • Thanks Laughton, I'd be delighted at 194.2 !!
  • I need to liquidate some investments to move a lump sum out of my SIPP.

    The problem with fixed income has been, doing this without incurring the usual fixed income spread which for these is currently 165p-168.4p on idealing. Lower than most FI spreads it has to be said.

    So I am minded to take the offer for that reason. Might even buy again once the money is on the "Other side": it's not as though the market abounds with alternatives.

    I note there is a later 6 dec decision point for retail investors (<100k shares) than for institutions.
  • Sold all my LLPE recently so a bit miffed to be missing out on that last penny! At least got them when they were 50-60p. YTM is less than 1% so there is more risk in not accepting the offer IMHO. LLPC/D offer is more nuanced. I don't trust Lloyds or FCA so will be cashing them as the price is at least middling fair. Don't hold many anymore but it's one lest thing to worry about.

    My cynical view of the future: Lloyds send RNS next year stating that these are no longer counting as regulated capital so will be cancelling them at par a la Aviva. Investors send complaint to FCA. FCA responds saying those lovely bankers at Lloyds offered to buy investors prefs at fair value last year so will respond in the way they know best - do nothing. As you can guess I was slightly burnt by the ECN debacle!

    That said the lack of liquidity is also an argument for accepting the offer. It might be worth those thinking of keeping LLPC?D to check on the institutional response. It was very weak for NWBD will it be the same for LLPC?

    By the way it's up now on idealing with 6 Dec deadline as Couponcopia mentioned - still plenty time to decide. We get the December divi too which is nice.
  • edited November 22
    The first results are in - doesn't, to me, look like it was all that popular with the institutions (although as far as I can see it's not possible to tell how many of each were held by institutions vs how many held by us mere mortals.:-

    £198,065,600 6.475% Non-Cumulative Preference Shares4 GB00B3KSB568
    Amount tendered £3,691,321 purchase price 112.050% Amount outstanding after settlement £52,780,890



    £300,000,000 9.25% Non-Cumulative Irredeemable Preference Shares GB00B3KS9W93
    Amount tendered £37,319,867 purchase price 167.250% Amount outstanding after settlement £262,667,862



    £100,000,000 9.75% Non-Cumulative Irredeemable Preference Shares GB00B3KSB238
    Amount tendered £7,168,493 purchase price 174.200% Amount outstanding after settlement £48,572,393


  • Based on these results liquidity, at least for LLPC, should not be an issue for retail holders. Think LLPD and LLPE were subject to previous tender offers in 2009 to convert to ECN for LLPE and to Lloyds shares for LLPD hence the lower amount outstanding but my memory is hazy now.
  • I guess today shows the true value of holding fixed income.

    Of course, the SA variant may turn out to be a storm in a teacup but central bankers might well decide to hold off on or limit increases in interest rates and that would be good for FI.

    I had been leaning towards tendering my slugs of LLPC and LLPD but today those 5.5+% yields are looking very attractive.

    Still a couple of weeks to make a final decision.
  • Agree with you Laughton. I have 2 accounts for my isa's., which I have held for myself and my wife for 14 years. One fixed income investments and one for equities. The equities one has loads of fluctuations and has in the past caused some stress !! However the fixed income sails along steadily with no problems (except for Eros which I binned some weeks ago) As regards values the fixed income is far ahead of the equities and is where I am placing the majority of my funds.
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