Bond Investor Information

This section provides comprehensive information for bond investors. Our credit ratings can be viewed here.

Loan capital

US Dollar Bonds
The subordinated guaranteed US$ ($73m) bonds have a redemption date of 15 October 2029. The rate of interest payable on the bonds is 8.95%.

Euro Bonds
The subordinated guaranteed Euro bonds (€500m) have a redemption date of 15 October 2019. €200m of the Euro bonds bear interest at a fixed rate of 6.875% until 15 October 2009 and a floating rate thereafter. €300m of the Euro bonds bear interest at a floating rate from the date of issue. The Parent Company has the option to repay the Euro bonds on specific dates from 15 October 2009.

Sterling Perpetual Notes
Subordinated guaranteed perpetual notes have a nominal value of £450m and were issued on 24 July 2004. The notes pay an annual coupon of 8.50% with an option to call the notes, or if not called for the coupon rate to be reset, on 8 December 2014 and every five years thereafter. During 2005, the terms were revised with the effect that their classification under IFRS changed from being equity instruments to debt instruments. In the 2005 financial statements, the reclassification was accounted for as an exchange transaction as the underlying terms of the notes were not substantially impacted by the variation and there were no changes in the holders of the notes immediately before and immediately after the change. During 2006, the International Financial Reporting Interpretations Committee (IFRIC) provided guidance on its understanding of accounting or such a change in terms. The accounting treatment now recognises the impact of the revision of the terms of the notes as if the revision had given rise to a redemption of the equity instrument in exchange or a debt instrument, which is measured at the fair value of the notes at the date of revision.

Sterling Perpetual Bonds
Sterling perpetual bonds were issued under an offer to exchange any or all of the US Dollar Bonds. This exchange improves the regulatory capital position of the Group by replacing the US Dollar Bonds, which do not count as regulatory capital, with an innovative Tier 1 instrument under the FSA’s General Prudential Sourcebook. This exchange is not accounted for as an extinguishment of the original financial liability and a recognition of a new financial instrument because the discounted present value of the cashflows under the terms of the Perpetual Bonds (including fees paid) discounted using the effective interest rate of the US Dollar Bonds is less than 10% different from the discounted present value of the remaining cashflows of the US Dollar Bonds. The carrying value of the US Dollar Bonds at the date of the exchange became the carrying value of the Perpetual Bonds issued in the exchange.

The Sterling Perpetual Bonds were issued on 12 May 2006 and the rate of interest payable is 6.701% of the nominal value. The Group has the option to repay the bonds on specific dates starting 12 July 2017.

All Bonds
The bonds and notes are contractually subordinated to all other creditors of the Parent Company, such that in the event of a winding up, or bankruptcy, they are to be repaid only after the claims of all other creditors have been met.

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