Lloyd’s said the new bond would make it less reliant on liquidity of members
Heavy investor demand for Lloyd’s of London’s £500m bond issue led the association to lower the interest rates on the bonds after it attracted £1bn from investors.
Yesterday Lloyd’s announced it would offer the 10-year tier two subordinated bonds at 275 basis points above the government bonds interest rate.
It quickly attracted orders in excess of £800bn. Almost £200bn of additional orders flowed in throughout the morning today enabling the association to further reduce the rates to 270 basis points above the government rate.
The pricing was later fixed at 268 basis points.
The deal was handled by Barclays, Citigroup and RBS.
The new bond is expected to offer Lloyd’s a much more stable form of capital and make it less reliant on the liquidity of its members, Citigroup said.
Lloyd’s has 94 syndicates that underwrite insurance and have to contribute to a central fund. That fund has a £3.2bn surplus but could be depleted if its members were no longer able to pay.