LLOYDS Banking Group launched a rare 30-year senior sterling bond yesterday, capitalising on the upbeat tone of the credit markets and on demand from pension funds and insurers for long-dated sterling assets.
The bond deal is the bank’s first ever sterling issue with a 30-year maturity, an official with the bank said.
Initial guidance on the bond was at UK gilts plus around 250 basis points.
“There is natural demand from UK pension funds and insurers because they have long-duration liabilities such as annuities,” said one financial sector analyst at a UK-based asset manager.
Lloyds has done relatively few senior bond deals this year, but this month has joined in a rush by European banks to raise cash via the bond markets.
Banks have seized the chance to tap cash-rich investors and take advantage of positive sentiment towards credit versus equities due to fears of a fresh economic slowdown.
At the start of September, for example, Lloyds raised £1.04bn with a five year senior bond at a spread of 200 basis points over mid-swaps.
The managing banks on the 30-year deal are Lloyds, Barclays and HSB.