Bloomberg News

Lloyds Bank Sells Its Largest Structured Note Since April 2012

February 12, 2013

Lloyds Banking Group Plc sold $14.9 million of 15-year callable step-up notes, its largest structured note offering since April.

The notes, issued Feb. 5, yield 3 percent for the first five years, 3.98 percent through the 10th year, and 4.73 percent after that until maturity, according to a prospectus filed with the U.S. Securities and Exchange Commission. Bank of America Corp. (BAC:US) distributed the securities for a 1.75 percent fee.

On April 24, Lloyds sold $15 million of 15-year callable notes tied to the six-month London interbank offered rate and the Standard & Poor’s 500 Index. The securities yield 7.5 percent annually as long as Libor is from zero to 6 percent and the equity benchmark doesn’t fall below 900, according to a prospectus filed with the SEC. Libor is a rate at which banks say they can borrow in dollars from each other.

Lloyds sold $100 million of structured notes in the U.S. last year, Bloomberg data show. Nicole Sharp, a spokeswoman for the London-based bank, declined to comment.

Banks create structured notes by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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