Lloyds Banking Group Plc (LLOY) junior bonds rose after the partially state-owned U.K. lender exercised an option to redeem 1 billion euros ($1.3 billion) of notes.
Morgan Stanley analysts said yesterday they were “surprised” that Lloyds redeemed the bonds, the lender’s first such move since 2009. They said that, while “cautious” about Lloyds’s more junior Tier 1 securities, they recommended buying its outstanding lower Tier 2 bonds.
The price of the 5.625 percent lower Tier 2 notes that Lloyds will redeem at face value on March 5 jumped to 99.6 cents on the euro as of 8:25 a.m. in London, from 96.9 at the end of last week, according to prices compiled by Bloomberg. The lender’s 750 million euros of 4.375 percent senior subordinated notes due 2019 with a call next year jumped to 97.4 from 94.6.
Lloyds’s sterling-denominated bonds with calls also rose. Its 750 million pounds ($1.1 billion) of senior subordinated notes due 2020 with a redemption option five years before that increased to 102.6 from 100.8, Bloomberg prices show.
Lloyds, Britain’s biggest mortgage lender, reported a full- year loss of 1.43 billion pounds today after setting aside money to compensate customers wrongly sold loan insurance.
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