Barclays Subordinated Bond 2026

Newbie_John

Thanks for some of the topics about government bonds and how they work - helped a lot.

Now question about: 
Barclays Bank plc (AA18) 5.75% Subordinated Notes 2026 GBP

If it pays coupons every September, if I buy £10k worth of it now (£102.50 buy price) I will get £9750ish of it and I will be paid £575 twice during 18 months.

Apart from the situation that Barclays goes bust, are they any major risks of this fairly high return (10% over 1.5 years)? Also if purchased in ISA.

wmb194

Newbie_John said:

Thanks for some of the topics about government bonds and how they work - helped a lot.

Now question about: 
Barclays Bank plc (AA18) 5.75% Subordinated Notes 2026 GBP

If it pays coupons every September, if I buy £10k worth of it now (£102.50 buy price) I will get £9750ish of it and I will be paid £575 twice during 18 months.

Apart from the situation that Barclays goes bust, are they any major risks of this fairly high return (10% over 1.5 years)? Also if purchased in ISA.

The return will be less than that: you've forgotten that you'll pay accrued interest when you buy them.

https://home.barclays/investor-relations/fixed-income-investors/prospectus-and-documents/capital-securities-tier-2/#dated%20tier%202

Newbie_John

Not sure what it means?

But I understand that my logic is clearly wrong somewhere just want to know where as I found another example:
Lloyds TSB Bank (61MP) 7.625% Notes 22/04/25

Which should pay £762 on £10k investment literally in a month time 😅


Ok sorry, I think I understand - I will pay 50% of interests to the seller.. (as half of the year nearly passed). But when will this happen? Now or in September when I get paid £575?

wmb194

Newbie_John said:

Not sure what it means?

But I understand that my logic is clearly wrong somewhere just want to know where as I found another example:
Lloyds TSB Bank (61MP) 7.625% Notes 22/04/25

Which should pay £762 on £10k investment literally in a month time 😅


Ok sorry, I think I understand - I will pay 50% of interests to the seller.. (as half of the year nearly passed). But when will this happen? Now or in September when I get paid £575?

*interest. When you buy them. For tax purposes you can offset this against the interest payment in September. You've not bought bonds before?

DRS1

Newbie_John said:

Not sure what it means?

But I understand that my logic is clearly wrong somewhere just want to know where as I found another example:
Lloyds TSB Bank (61MP) 7.625% Notes 22/04/25

Which should pay £762 on £10k investment literally in a month time 😅


Ok sorry, I think I understand - I will pay 50% of interests to the seller.. (as half of the year nearly passed). But when will this happen? Now or in September when I get paid £575?

Now - when you buy it.

Oh and what price will Barclays redeem it at?  Less than you pay for it?  So you make a capital loss.

DRS1

 Oh and the Lloyds one pays interest twice a year - so you'd only get half of £762 in April.

Newbie_John

Nope, totally new - trying to understand them

Ok I get the full picture now.

£575 + £575 income = £1150
Minus:
Accrued interests £288
About £250 as the buy price is £102.5
Platform fees

So that literally leaves us with £575 over 1.5 year, and that's less than 4% per year return.