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Preference shares -- keeping it simple

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

#419889

Postby scrumpyjack » June 16th, 2021, 10:31 am

The investment bankers setting up this offer will have talked with institutional holders first to find out what price they would be minded to accept.
They will then have set the offer price based on this.

As always private shareholders are second class citizens and never consulted in this way. That's how the city works, and I say that from personal experience.

I am not a holder but if I were I would hang on to the prefs partly to irritate NW and partly because the rump will probably get a higher offer a few years on.

hiriskpaul
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Re: Preference shares -- keeping it simple

#419966

Postby hiriskpaul » June 16th, 2021, 2:02 pm

Only 14m tendered. Think I will probably hold.

https://www.investegate.co.uk/nat.westm ... 11031316C/

Laughton
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Re: Preference shares -- keeping it simple

#419968

Postby Laughton » June 16th, 2021, 2:03 pm

https://investegate.co.uk/nat.westminst ... 11031316C/

So, unless I'm reading this wrongly (definitely a possibilty) the take-up from institions has been pretty dismal.

A higher offer on the way??

(hiriskpaul beat me to it)

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Re: Preference shares -- keeping it simple

#419982

Postby JohnEdwards » June 16th, 2021, 2:42 pm

"The Issuer today announces that it will accept all Securities validly tendered by Institutional Holders pursuant to the Offers for purchase in cash (the "Acceptance"). The details of such Acceptance are set out in the table below:

Description of Securities

Aggregate Principal Amount / Liquidation Preference validly tendered by Institutional Holders and accepted for purchase pursuant the Offers

Purchase Price

Expected aggregate Principal Amount / Liquidation Preference Outstanding following the Institutional Holder Settlement Date

£140,000,000 9.00 per cent. Non-cumulative Preference Shares Series A (the "Preference Shares")

(ISIN: GB0006227051)

£14,327,240

175 per cent.

£125,672,760


£200,000,000 11.50 per cent Undated Subordinated Notes Callable on or after 17 December 2052 (the "Subordinated Notes")

(ISIN: XS0041078535 and GB0006210255)

£2,013,000

185 per cent.

£32,219,000"

So - 10.25% of the TOTAL NWBD issue was tendered by the institutions - but that doesn't show what proportion of THEIR holdings were tendered! In any event, it doesn't indicate that the remaining holdings will necessarily be insubstantial - it depends on the retail take-up.

I shall hang on.

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Re: Preference shares -- keeping it simple

#419994

Postby Tara » June 16th, 2021, 3:54 pm

It looks like a very small acceptance of the offer.

It is not surprising really given that these are “must pay”.

I will wait for the next offer somewhere over £2.

88V8
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Re: Preference shares -- keeping it simple

#419997

Postby 88V8 » June 16th, 2021, 4:16 pm

It will be interesting to see whether the tender now underpins the prices of NWBD & NATW, even when inflation gets going and FI prices in general start to fall.

I have moved most of the proceeds of selling NWBD (selling, not tendering) into ITs with a higher and hitherto reliable yield, and also realised a useful capital gain. However I shall retain the holdings in my ISA.

V8

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Re: Preference shares -- keeping it simple

#420028

Postby Tara » June 16th, 2021, 6:56 pm

88V8 wrote:It will be interesting to see whether the tender now underpins the prices of NWBD & NATW, even when inflation gets going and FI prices in general start to fall.

I have moved most of the proceeds of selling NWBD (selling, not tendering) into ITs with a higher and hitherto reliable yield, and also realised a useful capital gain. However I shall retain the holdings in my ISA.

V8


Inflation may be on the increase but there is no sign at all of any meaningful rises in interest rates in the UK, Europe, or in the US.

It will be several years I think before interest rates are even back at 2%.

air04
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Re: Preference shares -- keeping it simple

#420036

Postby air04 » June 16th, 2021, 7:20 pm

88V8 wrote:I have moved most of the proceeds of selling NWBD (selling, not tendering) into ITs with a higher and hitherto reliable yield, and also realised a useful capital gain.
V8

88V8, I have been wanting to put money into some IT. I have a some in Prefs/Bonds. A lot of the money is in <1%. I am(retired) and so wanted low risk. Would you mind sharing what ITs you decided to invest in?

Thanks

88V8
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Re: Preference shares -- keeping it simple

#420052

Postby 88V8 » June 16th, 2021, 8:31 pm

air04 wrote:
88V8 wrote:I have moved most of the proceeds of selling NWBD (selling, not tendering) into ITs with a higher and hitherto reliable yield, and also realised a useful capital gain.
V8

88V8, I have been wanting to put money into some IT. I have a some in Prefs/Bonds. A lot of the money is in <1%. I am(retired) and so wanted low risk. Would you mind sharing what ITs you decided to invest in?

As this is o/t for the Board, I'll just give you the EPICs.
You can find further info on the AIC site here by searching under Find and Compare Investment Companies / Compare Companies https://www.theaic.co.uk/aic/find-compa ... desc=false

IAAG posts a regular listing of ITs which for some reason I can't recall he puts on the Strategies Board here https://www.lemonfool.co.uk/viewtopic.php?f=31&t=29685

My picks are for income, some of the capital performance has been lacklustre, but like you I am retired and I'm just here for the income, so.... those I topped up today were BIPS, HFEL, NCYF. I also stuck a toe in SEQI, and I additionally hold ASEI, BERI, CTY, JCH, JETI, LWDB, MAJE, MCT, MRCH, MUT and SHRS.
Some of them are not currently at great yields, but all way better than 1%.

V8

GoSeigen
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Re: Preference shares -- keeping it simple

#420523

Postby GoSeigen » June 18th, 2021, 3:46 pm

GoSeigen wrote:
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


Laughton, invested all my NWBD proceeds in MBSP this morning at 36p, immediately after the Supreme Court judgement was handed down. At the current price of 44p bid I estimate there is a 5-year yield of 25%pa compound on the back of the result (MBSR similar). These are still VERY cheap if you can find any stock.

GS

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Re: Preference shares -- keeping it simple

#421673

Postby Zow1 » June 23rd, 2021, 5:23 pm

i am having an argument with my broker re: the recent NWBD tender offer, please help me check i am not going crazy !

By NatWest's definition in their tender offer an 'institutional holder' is one who holds more than £100k NOMINAL of the NWBD,
not one who holds more than £100k VALUE of NWBD (which at a price of £1.75 would mean a nominal of greater than 57142 or so).

Right ?

Thanks in advance

ayshfm1
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Re: Preference shares -- keeping it simple

#421688

Postby ayshfm1 » June 23rd, 2021, 6:29 pm

An "Institutional Holder" means a Securityholder (a) who holds £100,000 or more in aggregate liquidation preference or principal amount (as applicable) of the Securities of the relevant Series (b) whose ordinary activities involve that person buying, selling, subscribing for or underwriting instruments such as the Securities for the purposes of a business carried on by that person and/or (c) who it is reasonable to expect will carry on the activities described in (b) above for the purposes of a business carried on by that person.

Your understanding aligns with mine. I'd be interested to know how the broker reaches a different conclusion.

Laughton
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Re: Preference shares -- keeping it simple

#423156

Postby Laughton » June 28th, 2021, 2:28 pm

And the final results are:-

https://www.londonstockexchange.com/new ... r/15035739

I guess we don't know what the split is between institutional and no-institutional holdings but looks like it could even be a lower take up by private holders.

Maybe Natwest need to do their sums again if they really want to scoop up all or a meningful number of these (I speak only about the 9% version as those I hold and am interested in).

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Re: Preference shares -- keeping it simple

#423181

Postby JohnEdwards » June 28th, 2021, 4:23 pm

Laughton wrote:
Maybe NatWest need to do their sums again if they really want to scoop up all or a meaningful number of these (I speak only about the 9% version as those I hold and am interested in).


I imagine that NatWest will be pretty disappointed with this outcome - assuming that they wouldn't have launched the offer unless they wanted to tidy up their balance sheet. In any event, it surely gives them a strong indication of the outcome of any class vote to redeem the remainder!
So we can just carry on enjoying the income for ever and give due consideration if they come up with a (much) better offer - I'd probably give it serious thought at £3, but of course in a rising interest rate environment (when the share price may have fallen), they might see an opportunity to come in lower. I suspect that the vast majority of remaining holders intend to keep them until they die!

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Re: Preference shares -- keeping it simple

#423641

Postby rippleog » June 30th, 2021, 8:56 am

hiriskpaul wrote:
rippleog wrote:
Kirkie001 wrote: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?


market makers...as the "clean" tender price will probably be at 176.85

Could be, but I am not sure how you got to 176.85. NWBD next pays on 16/10/21, 183 days after the payment on 16/04/21. The institutional offer accrues until 17/06/21, ie 62 days after the 16/04/21, so the accrued works out at 4.5*62/183 = 1.52p, total 176.52p. That is a slither under the market price, so if my sums are right someone out there is prepared to buy and not tender. Maybe that is someone who thinks they can approach the issuer after the tender date and obtain a higher price (a risky thing to do IMHO), or someone who is prepared to hold indefinitely*. The latter seems the most likely conclusion to me.

* Or someone who will have a go at selling to NatWest, but is prepared to hold indefinitiely if that doesn't work out.



so I sold some of my holding in the market at 176.517...but I tendered some of my wife's holding @ 175....but no accrued !
Have I mis-read the tender offer document ?

88V8
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Re: Preference shares -- keeping it simple

#423668

Postby 88V8 » June 30th, 2021, 9:58 am

rippleog wrote:....I tendered some of my wife's holding @ 175....but no accrued !
Have I mis-read the tender offer document ?

In respect of any Securities accepted for purchase, the Issuer will also pay an amount equal to any accrued and unpaid interest (in the case of the Subordinated Notes) or accrued and unpaid dividends (in the case of the Preference Shares) on the relevant Securities from, and including, the interest payment date or dividend payment date for the Securities immediately preceding the relevant Settlement Date up to, but excluding, the relevant Settlement Date.
it says...

So you should get the accrued.

V8

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Re: Preference shares -- keeping it simple

#423673

Postby Padders72 » June 30th, 2021, 10:19 am

JohnEdwards wrote:
Laughton wrote:
Maybe NatWest need to do their sums again if they really want to scoop up all or a meaningful number of these (I speak only about the 9% version as those I hold and am interested in).


I imagine that NatWest will be pretty disappointed with this outcome - assuming that they wouldn't have launched the offer unless they wanted to tidy up their balance sheet. In any event, it surely gives them a strong indication of the outcome of any class vote to redeem the remainder!
So we can just carry on enjoying the income for ever and give due consideration if they come up with a (much) better offer - I'd probably give it serious thought at £3, but of course in a rising interest rate environment (when the share price may have fallen), they might see an opportunity to come in lower. I suspect that the vast majority of remaining holders intend to keep them until they die!


I think the majority would have been tendered and the tiny rump voted out of existence long before the £3 level was approached. I would have thought a £2 offer would have scooped up the vast majority of NWBD and as you say inflation is only going one way meaning a 175p offer may in hindsight look generous in a year or two. Just my 2p worth obv!

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Re: Preference shares -- keeping it simple

#423707

Postby hiriskpaul » June 30th, 2021, 12:31 pm

Padders72 wrote:
JohnEdwards wrote:
Laughton wrote:
Maybe NatWest need to do their sums again if they really want to scoop up all or a meaningful number of these (I speak only about the 9% version as those I hold and am interested in).


I imagine that NatWest will be pretty disappointed with this outcome - assuming that they wouldn't have launched the offer unless they wanted to tidy up their balance sheet. In any event, it surely gives them a strong indication of the outcome of any class vote to redeem the remainder!
So we can just carry on enjoying the income for ever and give due consideration if they come up with a (much) better offer - I'd probably give it serious thought at £3, but of course in a rising interest rate environment (when the share price may have fallen), they might see an opportunity to come in lower. I suspect that the vast majority of remaining holders intend to keep them until they die!


I think the majority would have been tendered and the tiny rump voted out of existence long before the £3 level was approached. I would have thought a £2 offer would have scooped up the vast majority of NWBD and as you say inflation is only going one way meaning a 175p offer may in hindsight look generous in a year or two. Just my 2p worth obv!

If they had offered 180 I would probably have tendered the lot.

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Re: Preference shares -- keeping it simple

#423715

Postby Laughton » June 30th, 2021, 12:52 pm

If they had offered 180 I would probably have tendered the lot.


Don't say that - they might be listening.

£2 sounds a lot fairer to me.

Inflation? Yes, maybe, but quite a bit of incentive for the powers that be to keep interest rates low

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Re: Preference shares -- keeping it simple

#423801

Postby JohnEdwards » June 30th, 2021, 6:47 pm

hiriskpaul wrote:
Padders72 wrote:
JohnEdwards wrote:
I imagine that NatWest will be pretty disappointed with this outcome - assuming that they wouldn't have launched the offer unless they wanted to tidy up their balance sheet. In any event, it surely gives them a strong indication of the outcome of any class vote to redeem the remainder!
So we can just carry on enjoying the income for ever and give due consideration if they come up with a (much) better offer - I'd probably give it serious thought at £3, but of course in a rising interest rate environment (when the share price may have fallen), they might see an opportunity to come in lower. I suspect that the vast majority of remaining holders intend to keep them until they die!


I think the majority would have been tendered and the tiny rump voted out of existence long before the £3 level was approached. I would have thought a £2 offer would have scooped up the vast majority of NWBD and as you say inflation is only going one way meaning a 175p offer may in hindsight look generous in a year or two. Just my 2p worth obv!

If they had offered 180 I would probably have tendered the lot.

I really can't see why you'd go for 180 and not 175. Even £2 would not attract me.
Could someone explain how the tiny rump could be voted out of existence after a successful higher tender? Surely all the remaining holders would vote against.


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