Corporate Bonds -What have I missed

philbur

Newbie
1 0
Hello, My journey has brought me here in the hope that I can improve my limited understanding of the corporate bond market.

Two bonds from the same company have similar redemption dates and prices but with widely different interest rates. Why would I invest in the bond with the lower rate? What am I missing?

For example:

Lloyds Banking Group plc
GBP | XS0459091079 | B4Y23N3
12.750%
10 August 2020
104.500

compared to

Lloyds Banking Group plc
GBP | XS0459093364 | B5LJY75
7.869%
25 August 2020
104.000

I'm hoping some of you trading savvy members can point me in the right direction.

Thanks for any help.

Phil:)
 

A Dashing Blade

Experienced member
1,373 170
Hmmmmmmmm

The 12.75's are annual 30/360 vs semi-annual (act/act) for the 7.869's

moodys have them as Baa3 vs Ba1
S&P's ratings are BBB vs BB-
Fitch have them both at BBB+


But,

1) only £57.2m issued vs £596.65m
2) these are both examples of those issues that were recently subject to a High Court ruling


see
http://www.theguardian.com/business/2015/dec/10/lloyds-bond-buy-back-could-save-bank-1bn-over-five-years
http://www.independent.co.uk/news/business/news/regulator-urged-to-bring-lloyds-to-heel-over-1bn-bond-payments-a6770461.html
http://www.telegraph.co.uk/finance/personalfinance/investing/bonds/12037723/Lloyds-wins-appeal-over-attempts-to-buy-back-high-interest-bonds.html

and

https://www.fixedincomeinvestor.co.uk/x/analysis.html?type=bond-of-the-week&cat=analysis-comment&y=2015&aid=1340


Google the isin & " issue document" if you want to delve into the serious small print