Jury out on wider appeal for Lloyds' new hybrids
* Lloyds' investors likely to accept new bonds
* Regulators, index providers support them
* ABI wants them out of Merrill indexes
By Jane Merriman and Alex Chambers
LONDON, Nov 11 (Reuters) - Lloyds (LLOY.L: Quote, Profile, Research) looks set to get investor support for a hybrid bond exchange into 7.5 billion pounds of new enhanced capital notes (ECN) but it is not clear how much wider appeal these new securities will command.
That wider appeal could be enhanced not just by the outlook of current investors in Lloyds' Tier 1 and upper Tier 2 bonds -- and the performance of the transaction -- but whether there will be continued regulatory approval for existing hybrids.
The bonds convert into equity under certain circumstances, hence their alternative name of contingent convertibles/capital.
"I guess there are enough carrots and sticks to make sure this should be a successful transaction," said Oliver Judd, financials analyst at Aviva. Continued...
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