LONDON, May 22 (Reuters) - Lloyds Banking Group told investors on Friday it would not redeem a 750 million euro ($817.58 million) contingent convertible (CoCo) bond as it seeks to keep its balance sheet strong in the face of the COVID-19 crisis.
Britain’s biggest domestic lender said it would not exercise its call option on the Additional Tier 1 bond - a type of CoCo instrument - on June 27 and that the bonds would reset to a new fixed coupon until the next option call date on June 27 2025.
Lloyd said it remained strongly capitalised, but added: “As a result of the extraordinary market challenges presented by Covid-19, the group has decided it is prudent to not reduce Tier 1 resources at this time.” ($1 = 0.9173 euros) (Reporting by Iain Withers, Editing by Abhinav Ramnarayan)
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.