Free money - Lloyds

[belgarion]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10611690

Will be taking up mine :)

[Dr_Who]

Hey Bel, do you have the timetable for the rights trading?

I am interested.

[belgarion]

Basic details ...

TIMETABLE
* General shareholder meeting Nov 26
* Dealing in nil-paid rights begins Nov 27
* Results of U.S. debt exchange offer Dec 9
* Last date for rights issue acceptance Dec 11
* New ordinary shares begin trading Dec 14

This link will take you too the last weeks worth of announcements ...
http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-home.html?newsSource=ALL&nameCode=lloyds&headlineId=&ftseIndex=&sectorCode=&text=&newsPerPage=20&rbDate=released&preDate=LastWeek

While we were expecting an issue nobody expected it to be so heavily discounted. Given the mess the share register is in they might have lost the mums and dads if they didn't make it worth their while. Even still, there'll be a huge number not taken up which the underwriters will swallow up. Don't who the u/w are yet.

[Dr_Who]

I think there will be sp weakness during the rights trading. This is a huge rights issue and the second one this year. The minority shareholders are not happy at all. They have lost confidence in Lloyds. The public is asking... what else is not being disclosed that can impact Lloyds balance sheet?

I will keep a close eye on i during the rights issue. May pick up some if the price is right.

[peat]

Don't who the u/w are yet.

the British taxpayers
lol.

[loofa]

Certain secutities which are Tier 1 and 2 capital that resulted from the restructuring now have great yields.
It really depends on whether the Pound will stabilise at near current levels.
However some non -taxable gains of 25% over two years are out there and the securities will continue to yield over 12% after that based on the current quoted prices. :p

[loofa]

Certain secutities which are Tier 1 and 2 capital that resulted from the restructuring now have great yields.
It really depends on whether the Pound will stabilise at near current levels.
However some non -taxable gains of 25% over two years are out there and the securities will continue to yield over 12% after that based on the current quoted prices. :p

Since last commenting the items mentioned have already lifted by 11% and the forward yield have reduced to 9.36%.
However the yield on expected final price is equivalent to 11% for the next 21 months.
The good news is that NZ based taxpayers are only paying as if income is 5% under FIF.
Pressures on the pound now appear to be easing..

[belgarion]

Pressures on the pound now appear to be easing..

And as the pound recovers against the NZD our gains increase with it. All good.

[loofa]

Since last commenting the items mentioned have already lifted by 11% and the forward yield have reduced to 9.36%.
However the yield on expected final price is equivalent to 11% for the next 21 months.
The good news is that NZ based taxpayers are only paying as if income is 5% under FIF.
Pressures on the pound now appear to be easing..

Perhaps a little enlightenment on Lloyds would not go amiss.
In September 2008 Lloyds took the misguided step of bidding for HBOS. They were already the most involved major bank with mortgage lending and with HBOS in trouble their bid proved to be the final straw. The total share of the mortgage market by the combined entity was 28% in a falling housing market.
In January 2009 the refinancing included conversion of certain HBOS preference shares at high coupons.
At the bottom the shares reached 33p and after the rights issue of 11/2009 the low was 46p
Alongside this the tier1 issues (some from HBOS conversion of debt) were floundering as low as 38.5p for LLPC and 49p for LLPD giving yields of nearly 25%
Over the subsequent six months the prices almost doubled but were sent reeling again by the very complicated refinancing of 11/09 which was further complicated for these preference shares by an EU ruling that they should shoulder some burden by cancelling dividend for two years.
Prices then fell and discounted future yield by building in the loss of two years income. The effective yield then rose to 13% on a discount yield basis.
Buy time!
We now come to why I have an interest here. The loss of income does not concern me if the price is almost guaranteed to rise to its natural level over that period with an ongoing return of close to 10%. These shares are irredeemable so if Lloyds wants them they have to bid or buy in the market.
Also they remain as T1 capital which put them ahead risk wise of all the other T2 capital that resulted from the refinancing.
The good news that with the recent good trading statement from Lloyds the ordinary share price has risen and the T1 shares have also gone up.

I am not unhappy with a 15% gain on a purchase only a month back and the future income out there in 2012.

[loofa]

An update after a further seven months.
These securities have been the goldmine predicted and even more so have reached the assumed level for mid 2011.
Yield has now gone to 9.65% but even more impressively to get there on nil income, prices have risen by 25%+
With the continuing low interest world the prospective yield has to fall as low as 7.5% and to achieve this price is set for a further 25%+