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Bradford & Bingley to skip bond interest payments

In a move which was not wholly unexpected by the UK investment market, it has been revealed that Bradford & Bingley will miss interest payments of £125 million on its 6.625% subordinated notes, £150 million on a floating rate subordinating note and a further £50 million on an 11.625% perpetual subordinated bond issue. While the earliest maturing of these bonds is not due until 2023 the company has decided to defer interest until a later date.

When you consider the UK government forced a Bill through Parliament in February which altered the terms of outstanding bonds issued by Bradford & Bingley it appeared that plans were afoot to defer the latest interest payments. While these particular payments will need to be paid at some stage in the future so far we have had little confirmation from the UK government, which nationalised the operation, leaving many investors frustrated and disappointed.

For those who followed the Bradford & Bingley story you may recall the company was on the verge of bankruptcy when the UK government stepped in to acquire the company's mortgage book and sold on the retail operations to Santander. This attracted much criticism in the marketplace with taxpayer suggesting that the jewels in the crown had been sold on for a pittance while taxpayers are left with substantial exposure to the buy to let market which has been in trouble for some time.

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