Lloyds bank optimistic about fundraising
The cumulative £22.5 billion fund raising currently under away at Lloyds bank is apparently going fairly well with news that the debt for equity swap has received a very favourable response from tier 1 and tier 2 debt holders. In effect they are being given the chance to convert their debt into "contingent capital" which could carry a coupon of up to 10% per annum. Such has been the interest for the debt for equity swap that Lloyds bank is looking at possibly adding a further £1.5 billion to this particular area of refinancing.
The favourable response to the fundraising, split between a rights issue and a debt for equity swap, has surprised many in the market and the share price of Lloyds bank moved higher today. Slowly but surely it appears as though the bank is addressing various problems which have held it back over the last few months. Additional capital and a refinancing of existing debt were two major issues which were clouding the future prospects of Lloyds bank but hopefully the clouds will disappear once the fundraising is complete.
However, those who believe that Lloyds bank will return to "the Lloyds bank of old" in the short to medium term may be disappointed because this is a very different animal and a company which is still under pressure from the UK government and the EU commission.
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