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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Lloyds Banking Group plc    LLOY   GB0008706128

LLOYDS BANKING GROUP PLC

(LLOY)
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Lloyds won't redeem 750m euro CoCo bond amid COVID-19 crisis

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05/22/2020 | 08:17am EDT
People walk past a branch of Lloyds Bank on Oxford Street in London

By Iain Withers and Abhinav Ramnarayan

Lloyds Banking Group told investors on Friday it would not redeem a 750 million euro "CoCo" bond, a move that would have reduced its capital base just as banks face a spike in bad loans during the COVID-19 crisis.

Britain's biggest domestic lender said it would not exercise its call option on the Additional Tier 1 bond - a type of contingent convertible instrument and the riskiest debt banks can issue - on June 27. The bonds will reset to a new fixed coupon until the next call date in June 2025.

Lloyds said it remained strongly capitalised, but added: "As a result of the extraordinary market challenges presented by COVID-19, the group has decided it is prudent to not reduce Tier 1 resources at this time."

Banks have typically repaid such bonds at the first opportunity and issued new debt to replace them. But analysts believe many lenders will now pass up the chance, with Deutsche Bank among the first to do so in March.

Lloyds said it would be "uneconomic" to refinance the paper at the current time. Yields on AT1 debt have risen since early March.

AT1 bonds are designed as a protective layer to ultimately prevent the need for government bailouts in times of trouble. They are perpetual in nature but can be called, typically after five or six years.

Like other major British banks, Lloyds' first quarter profits were heavily dented by provisioning for likely bad loans due to the crisis, with the bank setting aside 1.4 billion pounds.

Lloyds' decision not to call its bond comes a day after a sizeable investor rebellion against the bank's pay plans for top bosses at its annual investor meeting.

(Reporting by Iain Withers and Abhinav Ramnarayan; Editing by Kirsten Donovan)

Stocks mentioned in the article
ChangeLast1st jan.
BASE, INC. 8.37% 3625 End-of-day quote.106.55%
DEUTSCHE BANK AG 6.45% 7.974 Delayed Quote.8.88%
LLOYDS BANKING GROUP PLC 4.69% 32.235 Delayed Quote.-50.62%
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Financials
Sales 2020 15 678 M 19 652 M 19 652 M
Net income 2020 1 143 M 1 432 M 1 432 M
Net Debt 2020 - - -
P/E ratio 2020 21,7x
Yield 2020 3,85%
Capitalization 21 829 M 27 209 M 27 363 M
EV / Sales 2019
Capi. / Sales 2020 1,39x
Nbr of Employees 63 069
Free-Float 99,7%
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 43,16 GBp
Last Close Price 30,86 GBp
Spread / Highest target 124%
Spread / Average Target 39,9%
Spread / Lowest Target -43,6%
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Managers
NameTitle
António Mota De Sousa Horta-Osório Group Chief Executive Officer & Executive Director
Norman Roy Blackwell Chairman
Juan Calafat Colombás Chief Operating Officer & Executive Director
William Leon David Chalmers Chief Financial Officer & Executive Director
John Chambers Group Chief Information Officer
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