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Preference shares -- keeping it simple

Gilts, bonds, and interest-bearing shares
moorfield
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Re: Preference shares -- keeping it simple

#418436

Postby moorfield » June 9th, 2021, 5:17 pm

GN100 wrote:What to replace NWBD with? There's BOI (BANK OF IRELAND GROUP 13 3/8% UNSECURED PERPETUAL SUBORDINATED BONDS) yielding 6%. Went through a bit of a wobble during the crisis but seems pretty steady now.



Moving away from the financials, I am currently building up a holding of RAVP. 10.5% today. Here's hoping they don't "do an RE.B".

ChrisNix
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Re: Preference shares -- keeping it simple

#418486

Postby ChrisNix » June 9th, 2021, 9:54 pm

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


The offer is straightforward, with ie no "vote in favour of capital reduction in order to tender" type shenanigans, so I cannot see how this could "force retirement". We may end up with an illiquid hard to trade rump though if there is a big take up.


So even if there is a 99% acceptance, will the remaining 1% just continue to trade on the market ? Are there no fixed rules about this ?


The Tender announcement says prefs accepted will be promptly cancelled. Which means it will require 75% of the reduced amount in issue to approve any cancellation. No forced retirement.

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Re: Preference shares -- keeping it simple

#418492

Postby 88V8 » June 9th, 2021, 10:55 pm

ChrisNix wrote:.... 75% of the reduced amount in issue to approve any cancellation.

This is where it potentially becomes perilous.

V8

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Re: Preference shares -- keeping it simple

#418523

Postby GoSeigen » June 10th, 2021, 7:25 am

FWIW I've already sold mine. Prefer the option value of the cash to the extra 1% or so I gain by waiting another month. Yeah I know it's irrational but I can take advantage of lower priced alternatives now before the rush.


GS

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Re: Preference shares -- keeping it simple

#418558

Postby 88V8 » June 10th, 2021, 10:41 am

Oh!
How did that happen....

Idly, I get a quote to sell 40,000 NWBD... it's 176.1... above the tender.
So I sold them.
Won't be another divi, and I can shelter the gain.
176.... someone thinks they're a good thing....

I also have some in my ISA, which I'll probably keep as the exit yield is not that brilliant.

As regards NATW, ii can't even give me an online price, but looking elsewhere the price seems to be below the 185 tender.
Haven't decided what to do with those.
It would be easier if there were an obvious alternative.... thanks GN100 for the reminder re BOI, but I'm already loaded and I don't regard them as 'safe', not really.
I also have BP.A/B but the entry yield is poor, and BWRA which is slightly better and might be a home for part of the dosh.

I sold RAVP and RE.B many moons ago.

The shrinking universe.

V8

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Re: Preference shares -- keeping it simple

#418584

Postby Laughton » June 10th, 2021, 12:05 pm

Yeah I know it's irrational but I can take advantage of lower priced alternatives now before the rush.


Do tell.

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Re: Preference shares -- keeping it simple

#418596

Postby Kirkie001 » June 10th, 2021, 12:51 pm

What are the "non-safe" aspects of BOI? I know that it trades at a 50-75bps premium to other prefs - but why do you consider it to be less safe? (genuine question - it's years since I read the details of them - but I do hold a slug and am debating trading into that with my NWBD, if I sell...)

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Re: Preference shares -- keeping it simple

#418615

Postby simoan » June 10th, 2021, 1:46 pm

88V8 wrote:Oh!
How did that happen....

Idly, I get a quote to sell 40,000 NWBD... it's 176.1... above the tender.
So I sold them.
Won't be another divi, and I can shelter the gain.
176.... someone thinks they're a good thing....

I guess if you're an institutional holder with a large holding already and you believe it is a poor offer and so have no intention of tendering, then why wouldn't you buy more waiting for them to comeback with a higher price offer? If the take up of the tender is very small and they really want to retire them, then they'll have little choice. FWLIW I'm sitting tight for now although I was just offered 176.55p for mine.

All the best, Si

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Re: Preference shares -- keeping it simple

#418616

Postby GoSeigen » June 10th, 2021, 1:51 pm

Laughton wrote:
Yeah I know it's irrational but I can take advantage of lower priced alternatives now before the rush.


Do tell.


Will do.

GS

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Re: Preference shares -- keeping it simple

#418617

Postby GoSeigen » June 10th, 2021, 1:54 pm

simoan wrote:
88V8 wrote:Oh!
How did that happen....

Idly, I get a quote to sell 40,000 NWBD... it's 176.1... above the tender.
So I sold them.
Won't be another divi, and I can shelter the gain.
176.... someone thinks they're a good thing....

I guess if you're an institutional holder with a large holding already and you believe it is a poor offer and so have no intention of tendering, then why wouldn't you buy more waiting for them to comeback with a higher price offer? If the take up of the tender is very small and they really want to retire them, then they'll have little choice. FWLIW I'm sitting tight for now although I was just offered 176.55p for mine.

All the best, Si


Hmm, looks like I was too hasty as usual. 176.55 is a great price compared to 175+accrued div in a few weeks' time...

GS

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Re: Preference shares -- keeping it simple

#418621

Postby GN100 » June 10th, 2021, 2:09 pm

I'm beginning to have second thoughts about the 175p offer - it's hardly generous. Maybe later on they may come back with a more generous offer but with them being virtual 'must pays' because of the 4/3 shares in lieu of unpaid div clause, even if they don't come back with an improved offer in the future they should still provide the income they were originally bought for.
A further point is that they are virtually owned by UK Gov (money no object?). Also the bank prefs are of no use to them now for Tier 1 Capital so just become an expensive cost to the bank.

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Re: Preference shares -- keeping it simple

#418625

Postby GoSeigen » June 10th, 2021, 2:20 pm

GN100 wrote:I'm beginning to have second thoughts about the 175p offer - it's hardly generous. Maybe later on they may come back with a more generous offer but with them being virtual 'must pays' because of the 4/3 shares in lieu of unpaid div clause, even if they don't come back with an improved offer in the future they should still provide the income they were originally bought for.
A further point is that they are virtually owned by UK Gov (money no object?). Also the bank prefs are of no use to them now for Tier 1 Capital so just become an expensive cost to the bank.


Amazing! The usual complaint is that the buyback price is too high. There are threads all over this site about that. Or that average punters can't participate so the buyback is a "fake" capital return -- whereas here you can tender as many as you like as a retail holder! Or the complaint is that the price is par / far below market. Here it's above market.

You can never please people, huh...


Mind you I'll never forget Osborne telling us Consol holders when they were trading at 65p that he would buy them back if and when the price reached 100p!! Now that was generous... and he was as good as his word.

GS

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Re: Preference shares -- keeping it simple

#418629

Postby Kirkie001 » June 10th, 2021, 2:32 pm

Here's a "market abuse" type question.

If, as part of the tender offer, Natwest had their bankers buying up securities on the market on their behalf - to be sold back to Natwest say just before or just after the tender offer - would this need to be disclosed at this stage?

The offer on the shares is currently 176.55 - ie through the offer price.

So who's buying - and why?

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Re: Preference shares -- keeping it simple

#418635

Postby Holts » June 10th, 2021, 2:51 pm

Yes , just offered 176.55 for 77,000 , someone maybe thinks this is poor deal , can it be improved during the offer period ? I can not see NatWest markets would be allowed to pay more unless it’s perhaps accounting for theoretical accrued , although obviously it is not that .

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Re: Preference shares -- keeping it simple

#418654

Postby everhopeful » June 10th, 2021, 3:52 pm

I have sold at 176.55. Happy with that and did not want to get left in an illiquid rump. No tax as in ISA but what to do with the cash? I have lots of ELLA and would not buy RAVP as I think there is too much political risk. My broker will not trade BOI so I cannot add to my holding of those.

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Re: Preference shares -- keeping it simple

#418701

Postby ChrisNix » June 10th, 2021, 7:29 pm

GoSeigen wrote:FWIW I've already sold mine. Prefer the option value of the cash to the extra 1% or so I gain by waiting another month. Yeah I know it's irrational but I can take advantage of lower priced alternatives now before the rush.


GS


Price skinny, but if opportunity cost greater than 5.1% take the money. Unless one thinks it's a sighter!

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Re: Preference shares -- keeping it simple

#418702

Postby ChrisNix » June 10th, 2021, 7:32 pm

88V8 wrote:
ChrisNix wrote:.... 75% of the reduced amount in issue to approve any cancellation.

This is where it potentially becomes perilous.

V8


Not really. It means the voting power of residual is rising.

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Re: Preference shares -- keeping it simple

#418703

Postby 88V8 » June 10th, 2021, 7:44 pm

Kirkie001 wrote:What are the "non-safe" aspects of BOI? I know that it trades at a 50-75bps premium to other prefs - but why do you consider it to be less safe? (genuine question - it's years since I read the details of them - but I do hold a slug and am debating trading into that with my NWBD, if I sell...)

They're Perpetual Subs rather than Prefs.
The unsafe is perhaps a folk memory harking back to when the Bank tried to retire them at par.
You may recall the campaign against this chicanery led by OBR on TMF.

I hold quite a few but not tempted to add.

i don't think there's any one place I'll put the dosh from selling.

V8

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Re: Preference shares -- keeping it simple

#418720

Postby Padders72 » June 10th, 2021, 9:20 pm

88V8 wrote:
Kirkie001 wrote:What are the "non-safe" aspects of BOI? I know that it trades at a 50-75bps premium to other prefs - but why do you consider it to be less safe? (genuine question - it's years since I read the details of them - but I do hold a slug and am debating trading into that with my NWBD, if I sell...)

They're Perpetual Subs rather than Prefs.
The unsafe is perhaps a folk memory harking back to when the Bank tried to retire them at par.
You may recall the campaign against this chicanery led by OBR on TMF.

I hold quite a few but not tempted to add.

i don't think there's any one place I'll put the dosh from selling.

V8


Folk memory? That makes it sound rather further back that it was, a decade ago still seems quite raw to me. It was both the big threat and the big opportunity with these but you needed strong nerve. At the time I bet the (modest) farm and came up smelling of rose but there are several question marks over BOI that mean while I have been a heavy long term holder I am cutting back. The Brexit question, the associated Irish Government governance issue (which nearly sank them once before) and the looming issue of inflation. All mean that BOI are inherently less safe than NWBD which as noted earlier is why they have yielded at least half a % higher for years. I also hold LLPD which also has looming threats, I wouldn't personally be putting fresh funds there either. I sat out much of the Brexit crash with 50%+ in FI, smiling as the cheques continued to roll in, I'm now down to 25% and falling. Inflation, if and when it comes will hurt FI.

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Re: Preference shares -- keeping it simple

#418725

Postby Alaric » June 10th, 2021, 10:04 pm

88V8 wrote:They're Perpetual Subs rather than Prefs.
The unsafe is perhaps a folk memory harking back to when the Bank tried to retire them at par.
You may recall the campaign against this chicanery led by OBR on TMF.


Are those the bonds that used to be PIBS issued by the Bristol & West Building Society? If so, didn't the FCA have to wave a stick at the Irish government for attempting to write down assets of British pensioners.


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