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Rubicon Associates is headed by a Chartered Financial Analyst charter holder with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in... More
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  • RBS - Preferred Tender Announced 13 comments
    Mar 25, 2010 1:11 PM | about stocks: RBS

    Well, the RBS liability management plan has finally ben announced.  Perhaps I will comment on t later, but for now I want to adress the preferreds and Tier 1 instruments.

    Firstly, the documnet can be found here:

    Here is a summary:

    As you can see, the prices have pulled within 2-5% of the tender offer.  Hopefully, this trade has worked out for folks.  Later, I will determine increase relative to yesterday's price (yes, even the unemployed analyst has things to do).

    Any colr/thoughts is always appreciated.

    Disclosure: Long RBS L and NW C

    Stocks: RBS
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Comments (13)
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  • kotika98
    , contributor
    Comments (284) | Send Message
    thanks this is very useful table. this what this website should be about, not the political and goldbug forum it has become.
    26 Mar 2010, 11:12 AM Reply Like
  • yrosey
    , contributor
    Comments (2) | Send Message
    Hi, I have a number of RBSPRL. I note you consider them cummulative but the Tender Offer disclosure lists them as non- cummulative. I would like to keep some because of the dividend- what do you think the chances are that RBS will stop paying the dividend, and how do you think this tender offer will affect the purchase price? I don't mind keeping them for the long haul- is this a good idea? Thank you B.M.
    18 Apr 2010, 04:57 PM Reply Like
  • Rubicon Associates
    , contributor
    Comments (2140) | Send Message
    Author’s reply » The L's are not cum, they are must pays (as long as there is distributable profits). They can't defer the div unless they do not have distributable profits. They fall low enough in the waterfall, that the amount left for their tender will be small. I own them and continue to hold them due to the appreciation potential and the cash they throw off.
    19 Apr 2010, 11:40 PM Reply Like
  • yrosey
    , contributor
    Comments (2) | Send Message
    Hi again,
    I am looking for alternatives to the RBS preferred shares, also with good dividends. Any suggestions? Thanks again.
    18 Apr 2010, 05:01 PM Reply Like
  • Rubicon Associates
    , contributor
    Comments (2140) | Send Message
    Author’s reply » BAC and Citi have some decent yield (I look at the new Citi Js and Citi Vs and KRB Es for BAC). There are some REITs out there, but preferreds have run in (as has everything). Personally, I still like the RBS story on the must pays (reiterate I am long RBS L and NW C (old natwest), but there is risk in the position. A real high beta trade could be the NBG prefs (real high beta, emphatically).
    20 Apr 2010, 11:24 AM Reply Like
  • ShahS
    , contributor
    Comment (1) | Send Message
    What should be done with RBS.S? Should we take tender offer at $14 (original price $25) or continue to hold and earn high dividend? What are the risks with holding for long term?
    19 Apr 2010, 08:01 PM Reply Like
  • Rubicon Associates
    , contributor
    Comments (2140) | Send Message
    Author’s reply » There will be no divvie for a while. The PV could be interesting (assuming they begin to pay after 2 yrs), but I might swap into the RBS Ls or RBS Hs (actually leaning to the Hs, personally - might swap my Ls into Hs and pick up 65bps yield, just hate to put 3 bucks into the trade). I am not sure if this would be a wash "sale" for tax purposes (would love to hear an opinion on this).
    20 Apr 2010, 11:41 AM Reply Like
  • smslaw
    , contributor
    Comment (1) | Send Message
    As far as I can tell from reading the tender offer materials, RBS-F, which I hold, is not included in the preferreds for which dividend payments will be suspended. Do you know why dividends for some are being suspended and others are not? Obviously, the subtantial dividend is the only factor keeping the price at around $20. Thanks.
    20 Apr 2010, 03:55 PM Reply Like
  • vmaninc
    , contributor
    Comment (1) | Send Message
    i have RBS-M & N....seems like i have no choice but to sell...very high on the priority level....what's your take?
    21 Apr 2010, 07:25 AM Reply Like
  • jw161
    , contributor
    Comment (1) | Send Message
    I have RBS Q, bought at 25. Will it ever return to that level or should I take the loss and sell at 14?
    22 Apr 2010, 04:28 PM Reply Like
  • Peter_S
    , contributor
    Comments (7) | Send Message
    Was thinking of taking a(nother) "punt" at RBS preferreds with the expectation RBS will indeed recommence dividends in two years. If RBS recommences dividends on common shares will be closed "window" be shorter than two years maybe?


    Most Series are now trading in excess of the Tender prices. Do we know why this is? Are other investors now seeing the potential for capital gain or are the buyers simply RBS under the tender? I'm confused!
    25 Apr 2010, 04:10 PM Reply Like
  • bwarner
    , contributor
    Comment (1) | Send Message
    What I don't understand in the RBS I-IV are Trust Preferreds, meaning there is an intercompany debt obligation that they can't default or suffer cross-acceleration/def... on their other debt. In addition, they are pari passu with the non-cumulative preferreds meaning if RBS pays a dividend on one, it pays a dividend on all. The Trust Preferred can't sit on cash in the trust and must distribute the cash in the form of dividends. Net-Net, there is proviso that says they cut off the dividend unless "legally obligated", so my thinking is they will need to keep paying the dividend. Where am I off on my logic and understanding?
    27 Apr 2010, 01:18 AM Reply Like
  • nick38
    , contributor
    Comments (2) | Send Message
    I am former holder of Pr-l sold at 16.25 sustaining a considerable loss. My logic in selling was that L was so far down the waterfall that they probably wouldn't be bought by RBS that combined with their stated intent to cut the dividend (if possible) I got scared and hit the exit. A major consideration in selling was my belief that the bank is controlled by a socialist government and generally socialists believe taking from the rich and giving to the poor is "good". Most holder of RBS preferred would be considered "Rich". Today RBS-L is less than $14.00 and weak.
    7 May 2010, 12:33 PM Reply Like
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