Lloyd’s £500m Subordinate Debt Issue

by Gill Montia

Story link: Lloyd’s £500m Subordinate Debt Issue

Lloyd’s is making a return to the debt markets and has been successful in setting terms for £500m of Tier 1 subordinated debt issue.

As a result, Lloyd’s syndicates that have paid into the Lloyd’s Central Fund, levied at the rate of 0.75% of capacity, will receive a £335m windfall later this year. The move, which follows a strong financial performance by Lloyds in 2006, has met with a positive response from a number of major institutional investors.

It is expected to give flexibility and liquidity to Lloyd’s, strengthen its central assets and reduce the cost of mutuality to Lloyd’s members. It will also enable Lloyds to repay over £300m of loans from its syndicates.

An application has been made for the issue to be listed on the London Stock Exchange. It will be denominated in sterling and will consist of a single tranche. The debt will be perpetual, have no stated maturity date, and will be callable from June 2017.