Question
Halifax 9.375% Perpetual Subordinated Bonds - Hold or sell now and cut my losses?
I bought years ago at £1 and I believe the spread now is 80-98p! I'm not in a hurry, but wish to gather as many opinions as possible before making a decision. Your input would be much appreciated.
To find out the prices I have to phone a broker. Web sites that I have been able to find will only provide this information to professionally registered brokers. Do you know any sites where I can access this information?Answer
Your 9.375% Halifax Perpetual Subordinated Bonds (PSBs), stockmarket reference: HALP, are not due to pay a coupon (i.e. income) until early 2012 due to EU law preventing banks receiving state aid from rewarding holders of shares and debt by paying dividend and coupons respectively.
Lloyds Banking Group (which owns Halifax) offered HALP holders the option to switch into EU friendly Enhanced Capital Notes (ECNs), which allow coupon payments, late last year. Nevertheless, as far as I’m aware your PSBs offer cumulative coupon payments, so you should receive the missed coupons when income payments eventually resume (I’d suggest double checking this with Halifax).
Meanwhile, are they worth holding onto? Provided you don't rely on the income payments then It really depends on your views on what’ll happen to the Lloyds Banking Group (which incorporates HBOS). Provided the bank can survive the downturn and eventually alleviate itself from state aid you should see the price of your PSBs rise handsomely, assuming interest rates and inflation remain fairly low.
Is this likely? In this topsy-turvey world of banking and finance we find ourselves in nothing is certain, but I think it’s more likely than not.
PSBs tend to have a wide bid offer spread because there’s rarely many buyers or seller in the market (i.e. it’s illiquid). The financial crisis has only served to widen spreads on struggling banks, which is why you’d lose about 20% straight away if buy the 9.375% Halifax PSB at present.
Because the PSB market can be so illiquid the most reliable way to get an accurate price is to phone a broker. However the Selftrade website lists mid prices for PSBs and PIBS while the Bestinvest website appears to show the spread for your PSBs.
Good luck whatever you decide to do.
Halifax 9.375% Perpetual Subordinated Bonds - Hold or sell now and cut my losses?
I bought years ago at £1 and I believe the spread now is 80-98p! I'm not in a hurry, but wish to gather as many opinions as possible before making a decision. Your input would be much appreciated.
To find out the prices I have to phone a broker. Web sites that I have been able to find will only provide this information to professionally registered brokers. Do you know any sites where I can access this information?Answer
Your 9.375% Halifax Perpetual Subordinated Bonds (PSBs), stockmarket reference: HALP, are not due to pay a coupon (i.e. income) until early 2012 due to EU law preventing banks receiving state aid from rewarding holders of shares and debt by paying dividend and coupons respectively.
Lloyds Banking Group (which owns Halifax) offered HALP holders the option to switch into EU friendly Enhanced Capital Notes (ECNs), which allow coupon payments, late last year. Nevertheless, as far as I’m aware your PSBs offer cumulative coupon payments, so you should receive the missed coupons when income payments eventually resume (I’d suggest double checking this with Halifax).
Meanwhile, are they worth holding onto? Provided you don't rely on the income payments then It really depends on your views on what’ll happen to the Lloyds Banking Group (which incorporates HBOS). Provided the bank can survive the downturn and eventually alleviate itself from state aid you should see the price of your PSBs rise handsomely, assuming interest rates and inflation remain fairly low.
Is this likely? In this topsy-turvey world of banking and finance we find ourselves in nothing is certain, but I think it’s more likely than not.
PSBs tend to have a wide bid offer spread because there’s rarely many buyers or seller in the market (i.e. it’s illiquid). The financial crisis has only served to widen spreads on struggling banks, which is why you’d lose about 20% straight away if buy the 9.375% Halifax PSB at present.
Because the PSB market can be so illiquid the most reliable way to get an accurate price is to phone a broker. However the Selftrade website lists mid prices for PSBs and PIBS while the Bestinvest website appears to show the spread for your PSBs.
Good luck whatever you decide to do.
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