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Lloyds Bank sets bondholder meetings to consider interest basis change
By Wendy Van Sickle
Columbus, Ohio, Jan. 6 – Lloyds Bank plc said it set Feb. 6 meetings for holders of three series of floating-rate covered bonds to consider extraordinary resolutions.
The bonds include the £1.25 billion series 2011-5 fixed rate covered bonds due February 2029; the £1.25 billion series 2012-4 fixed rate covered bonds due March 2025; the £1.24 billion series 2012-16 fixed rate covered bonds due March 2027; and the £500 million series 2015-2 fixed rate covered bonds due March 2022.
For each series, the issuer is seeking to amend the notes in order to implement a change in interest basis to the Sterling Overnight Index Average (Sonia) from Libor.
U.K. Financial Conduct Authority announced it will no longer persuade or compel banks to submit rates for the calculation of the Libor benchmark after the end of 2021. In addition, the Bank of England and the FCA mandated a working group to promote a broad-based transition to the Sonia over the next four years across sterling bond, loan and derivative markets, so that Sonia will be the primary sterling interest rate benchmark by the end of 2021.
In order to implement the change, the interest rate for the bonds will continue to be a floating rate and will be the Libor vs. Sonia interpolated basis plus a margin, which will be 175 basis points for the 2011-5 bonds, 270 bps for the 2012-4 bonds, 195 bps for the 2012-6 bonds and 32.8 bps for the 2015-2 bonds.
The Libor vs. Sonia interpolated basis is the number of basis points as calculated by the solicitation agent on Feb. 6 by means of linear interpolation to the relevant final maturity date of the applicable Libor vs. Sonia basis.
The solicitation agent is Lloyds Bank Corporate Markets plc (+44 20 7158 1726 or liability.management@lloydsbanking.com).
Lucid Issuer Services Ltd. (+44 20 7704 0880 or lloydsbank@lucid-is.com) is the tabulation agent.
Lloyds is a bank and financial services group based in London.
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