Lloyd’s said it has met with a “positive response from a wide range of quality institutional investors” following its “road show ” to explain the terms for its proposed issue of £500 million ($991.6 million) of Tier 1 subordinated debt (See IJ web site June 7). The offering is in fact “oversubscribed.”
Chief Executive, Richard Ward commented: “The appetite we have seen for this transaction is testament to the high regard in which Lloyd’s is held by the financial markets. Its timing is ideal, coming as it does off the back of our strong financial performance in 2006, the recent Equitas deal and the upgrade of our credit ratings by both Standard & Poor’s and Fitch.
“It will enable us to simultaneously repay over £300 million [$595 million] of loans from our syndicates and further strengthen the Central Fund. The efficiency of Lloyd’s capital structure is widely recognized and this transaction serves to make that even more attractive to our members.”
The issue will consist of a single tranche, denominated in sterling, and will carry a coupon of 7.421 percent, being 184 basis points over the reference gilt. The debt will be perpetual, having no stated maturity date and will be callable from June 2017.
An application has been made to list the issue on the London Stock Exchange. Settlement will occur on 21st June 2007.
The debt has been assigned credit ratings of “A-” (stable outlook) by Standard and Poor’s, “A-” (stable outlook) by Fitch and “bbb” (positive outlook) by A.M. Best.
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