Bradford and Bingley Default

mystic_trev

The bank will skip payments due in either June or July on 50 million pounds of 11.625 percent perpetual bonds, 125 million pounds of 6.625 percent notes maturing 2023 and 150 million pounds of floating-rate bonds due 2054, according to three separate statements sent after the market closed yesterday.

Subordinated bonds have tumbled on concern governments will force financial institutions that received bailouts to defer bond interest payments to protect taxpayers. The U.K. changed rules in February to allow the Bingley, England-based bank to defer interest on its debt.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aoywFndTOFYY

tomterm8

generali, I agree with you, but the British govt explicitly excluded bradford and bingley subordinated notes from its guarantees when B&B was nationalised.

From B&B website

Subordinated or other hybrid capital instruments are not covered by the Guarantee Arrangements. This includes:

• Perpetual Subordinated Bonds;
• Perpetual Preferred Securities; and
• Dated and Undated subordinated bonds issued under Bradford & Bingley’s Euro Medium Term Note Programme.

baby_boomer

The U.K. changed rules in February to allow the Bingley, England-based bank to defer interest on its debt.

I doubt this is true.

The original terms and conditions of the PIBS allowed for default on interest payments.

purch

Either way, if I can nail 10-15% off a property I am viewing tomorrow I may be buying!

If what you are hoping for happens, the price of property will be the least of your worries.

purch

the British govt explicitly excluded bradford and bingley subordinated notes from its guarantees when B&B was nationalised

And they also changed a number of the T&C's on this paper too, including what constitutes a default.

http://www.opsi.gov.uk/si/si2008/pdf/uksi_20082546_en.pdf

Generali

tomterm8 wrote: »

generali, I agree with you, but the British govt explicitly excluded bradford and bingley subordinated notes from its guarantees when B&B was nationalised.

From B&B website

Ok, this is mezzanine debt. Still perception is all.

Savers' funds beyond the Government guarantee should have been treated in much the same way as mezzanine debt AIUI.

What do holders of this debt think about it now? What will they think about holding paper that allows the UK Government to exit bank positions in some sort of structured way rather than in a straight forward sale of equity?

MissMoneypenny

chupov wrote: »

did chucky miss a payment one one of his BTL's?

Do the Wilson's still have BTL mortgages with B&B?
http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=455442&in_page_id=56
October 2008

"But in the same week Bradford & Bingley went to the wall, the Wilsons - once the bank's most cherished customers - decided to start selling their portfolio.

'We are not going broke,' says Fergus. 'We are not a penny behind in our loan payments. I think we are reasonably safe. If we go under, everybody is going under.'"

chucky

mbga9pgf wrote: »

Either way, if I can nail 10-15% off a property I am viewing tomorrow I may be buying! (needs work though).

FTSE is flat - no real movement 0.3% up
GBP/USD is normal - 0.4% movement down

another non-impact story - good luck with the 10% to 15% off

mbga9pgf

chucky wrote: »

FTSE is flat - no real movement 0.3% up
GBP/USD is normal - 0.4% movement down

another non-impact story - good luck with the 10% to 15% off

Well, have to wait and see. If they dont accept, we have at least another 12, possibly 24 months of falls then stagnation. If they are interested then bonza. if not, no great shakes.

Oh, its probate, I have secured lending, no chain and can complete in 2 weeks, so say what you like, but it certainly is possible in my mind.

If what you are hoping for happens, the price of property will be the least of your worries.

want to remind me exactly what it is I am wishing for?

tomterm8

Generali wrote: »

Ok, this is mezzanine debt. Still perception is all.

Savers' funds beyond the Government guarantee should have been treated in much the same way as mezzanine debt AIUI.

What do holders of this debt think about it now? What will they think about holding paper that allows the UK Government to exit bank positions in some sort of structured way rather than in a straight forward sale of equity?

I don't think it looks good, that's for sure, but then i was always of the opinion they should have acknowledged B&B was insolvent, and put it through a special resolution regime (i.e. bankruptcy).

I don't really think the bond holders incurred before 2008 really had a leg to stand on, because the company was insolvent. They should have taken their haircut, and been given equity in return.

As it is, a lot of these complications stem from the lie that they took on a going concern, and seemed to guarantee all debt and savers deposits.