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Investors keen for a slice of Lloyd’s pie

Lloyd’s set the terms for the public issue of £500mn of tier 1 subordinated debt last week. Following a three-day investment road show, the Corporation saw its debt issue several times oversubscribed by institutional investors.

The issue will consist of a single sterling-denominated tranche, carrying a coupon of 7.421 percent. The debt will be callable from June 2017.

Application has been made to list the issue on the London Stock Exchange, with settlement on 21 June.

Lloyd’s CEO, Richard Ward, says that investor appetite for the deal is based on “'our strong financial performance in 2006, the recent Equitas deal and the upgrade of our credit ratings by both Standard & Poor's and Fitch”. 

He continues: “It will enable us to simultaneously repay over £300mn of loans from our syndicates and further strengthen the central fund.”

This is the second time that Lloyd’s has raised subordinated debt, having previously raised approximately £500mn of lower Tier 2 debt in 2004.

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