Bond Investor Information

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

Loan capital

	2010 £m	2009 £m	2008 £m	2007 £m	2006 £m
Subordinated guaranteed US$ bonds	14	14	15	11	37
Subordinated guaranteed Euro bond	-	-	481	365	335
Subordinated guaranteed Sterling perpetual bonds	320	315	310	305	301
Subordinated guaranteed Sterling perpetual notes	489	497	505	513	519
Subordinated guaranteed Sterling dated notes	492	491	-	-	-
	1,315	1,317	1,311	1,194	1,192

US Dollar Bonds

The subordinated guaranteed US$24m bonds have a redemption date of 15 October 2029. The rate of interest payable on the bonds is 8.95%.

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, or if not called, for the coupon to be reset quarterly.

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 for 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 Dated Notes

New subordinated guaranteed sterling bonds were issued on 20 May 2009. The bonds have a nominal value of £500m and bear interest at a fixed rate of 9.375% until 20 May 2039. The Group has the option to repay the bonds, or if not called, for the coupon to be reset on 20 May 2019 and every five years thereafter.

Euro Dated Bonds

The subordinated guaranteed Euro bond was called on 15 October 2009. No bonds are outstanding.

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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Bond Investor Information

Loan capital

US Dollar Bonds

Sterling Perpetual Bonds

Sterling Perpetual Notes

Sterling Dated Notes

Euro Dated Bonds

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