The Lemon Fool

Alaric wrote:

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.

That would be one interpretation. In reality BOI wasn't held exclusively by pensioners (I had a tranche for instance and was in my 30s) and secondly the FCA had little or no sway at all over a foreign sovereign power. Mark Taber did a pretty good publicity job though. Nevertheless BOI lived to fight another day.

Holts wrote: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 .

depending on the calculation the theoretical accrued is 2~3 months @ 0.75 per month..so 176.55 seems spot on to me...

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

ChrisNix wrote:

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.

maybe....
I still hold a residual in the Yorkshire 13.5% CoCo's (post tender) ...checked the bid yesterday....well put it this way I will be holding them to maturity in 2025

Hi - what do you guys think of the x2 abbey prefs as an option for the rbs 9? I remeber when these were the best bid prefs in the market during the gfc

im very wary of any lloyds issues post the ecn tender debacle

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.

it could simply be a market maker who is short - post tender will be hard to repo due to reduced size - doesnt want to get bought in by a client

also looks pretty cheap to liquid cocos - and feel they can buy a few due to attention of the tender - buying from retail investors

A couple of thoughts on NWBD (most of which which I've held in my SIPP for over a decade):

i) Why are NWB choosing to make this offer now (at a price higher than ever shown by the market), when there are many forecasts of inflation and market rates rising which (as others have said) will almost certainly lead to lower prices? Surely they would wait for that to happen - unless they know something we don't!

ii) If NWB are quite successful with their reasonable tender price - say 75-90% tendered - the obvious next step for them (at some stage) is to try to clear the rump out. If this can't be achieved with a class vote to retire (given that the loose holders will have already sold), the consequence is most likely an increased tender offer - which, of course, can be pitched generously enough to be 'an offer you can't refuse', as the cost will be so much smaller than now. I REALLY don't want to sell these prefs (they seem part of the family since I retired), but I guess there's a price for everything in the end!

Along with others above, my plan is to defer a decision until the result of the institutional tender on 16 June, hoping that it contains enough information to judge the proportion of shares they have chosen to retain. As long as I can convince myself that there's no danger of retirement (at par?) or default, I'll probably choose to sit tight and continue to enjoy the (almost irreplaceable) income for ever.

I have these in both SIPP and ISA. I have decided to hold in SIPP and sell in ISA.

Reasoning.

There is a lot more In the ISA, I could draw the cash and may want to. Hence there is greater consequence for this turning into an illiquid rump.

There is less in SIPP, I can't easily get at the cash and I always intended to keep them forever as an income source. Does it therefore matter if it turns illiquid? I'm thinking it does not.

ayshfm1 wrote:I have these in both SIPP and ISA. I have decided to hold in SIPP and sell in ISA.

Reasoning.

There is a lot more In the ISA, I could draw the cash and may want to. Hence there is greater consequence for this turning into an illiquid rump.

There is less in SIPP, I can't easily get at the cash and I always intended to keep them forever as an income source. Does it therefore matter if it turns illiquid? I'm thinking it does not.

I am also not very interested in selling at 175. It is difficult to find other investments where the yield is so good and the risk is comparatively low.

I would probably accept an offer at 225, giving a yield of 4%, but even then it would be quite difficult replacing the income with a comparatively low risk.

We have a tiny amount of NWBD (3k shares, roughly) in an unwrapped account that we're selling a few bits in every year to trickle money into our ISAs. I view this as a decent price to exit at, I was toying with ditching everything undated anyway because of inflation, so out without spread or fees suits me just fine.

[Deletion]

rippleog wrote:

ChrisNix wrote:

88V8 wrote:This is where it potentially becomes perilous.

V8

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

maybe....
I still hold a residual in the Yorkshire 13.5% CoCo's (post tender) ...checked the bid yesterday....well put it this way I will be holding them to maturity in 2025

Depends on how many you have as to the liquidity issue. The result of institutional tender will be guide to post tender issue size. That said, if I were an institution I'd tell NatWest Brokers that this price isn't compelling if NatWest wishes to retire the entire issue.

What does the panel think?

Would this not be a bit like an equity placing (only in reverse), where the company (NW) sought input from instutional holders as to what was a fair price to get them interested in tendering??

Only a couple of days left to find out what they actually felt.

It would have been informative if they had structured this without a fixed tender price - so that everyone who wished could offer them at a price that would suit them. NWB could then decide at which level they wished to draw the line to achieve their objective.

I've decided to hold onto them. Rationale:

-Natwest are unlikely to be able to muster a majority of any residual shareholders, to retire the issue.
-I always intended to hold them forever (they are in my SIPP)
-They will AFAIK continue to pay out.
-There is no obvious replacement that I don't already own. Prefs and Pibs occupy the role in my portfolio that Gilts/Treasuries would have, were not the yields/prices of those things so distorted by QE. So it would undermine the point, to sell them then buy conventional equities.

That said news of high institutional takeup may sway me, though probably not.

I am still wondering what to do with my NWBD cash. As ResourceOgre says these prefs were a steady source of reliable income with low correlation to equities and in my case a 18% increase in capital over the time I held them. Does anyone have a view about the companies in the AIC Debt-Structured Finance sector? I am always reluctant to invest in things I don't fully understand but TwentyFour income yields 6% on a 5% discount at the moment. It invests in Asset Backed Securities (ABS) and its own website makes them sound like a good diversifier with a reliable income stream. As I said above I have a chunk of ELLA but maybe the safest thing to do is to have a bigger chunk. I would appreciate any views and to hear what anyone else who sold NWBD has done with the cash.

Still undecided, but has anyone had any tender documents via their broker yet? Nothing from Barclays yet

Halifax sent theirs through June 11th.