Skipton 6.875 PIBS

Hi
As a new member, I'm not sure if these have been covered here, but wondered what your views were on this?
It seems to be yielding about 8%, (at 83) and has a call in 2017.
I believe the Skipton is managed quite conservatively?

Comments

  • I have these. The call is in 2017. The call rate is 3 month LIBOR + 256 basis points. At the current price of circa 84p and a hypothetical LIBOR rate of around 0.83% the new post-call running yield would be in the region of 4%. However, as I understand it that LIBOR rate is reviewed quarterly post 2017 so if it shoots up then so does your yield.

    What is worth bearing in mind here is the new Basel III rules on regulatory capital definition that were scheduled to begin Jan 2013. Under these new rules any PIBS issues with a renewal after Jan 2010 would be derecognised as regulatory capital, so there is a regulatory incentive to redeem in 2017 if Basel III rules are fully in force, or they would be holding regulatory capital which is valued less and less each year.

    So, apart from the usual credit risk, market risk, interest rate risk and inflation risk these Skipton PIBS are also a speculation on:

    1. Basel III dates and perceived incentive to renew
    2. Future variable LIBOR rates

    They may also "do a Nationwide" and make a market offer for them, which would substitute your future income for a quick capital gain, although to a variable unknown amount.
  • I'm holding some of these and with a Call Date of March 2017 and I am wondering what my options will be!

    F1Hawk, in his March 2013 comments, seems to think that these may be de-recognised as regulatory capital - can anyone update me on this possibility?

    With the current 3 Month LIBOR of 0.70 am I correct in thinking that the post call running yield would be in the order of 3.26% ?
Sign In or Register to comment.