When it comes to LM, it pays to look at the whole picture

13 Mar 2012

Pricing new bond issues can be a delicate affair, and never more so than when a borrower is switching old bonds for new. So the market should not be too quick to judge a hefty rally on the back of a liability management exercise.

When Royal Bank of Scotland’s new tier two securities rallied several points above par on Friday, rival syndicate bankers were quick to stick the boot in. They decried the outperformance, saying the deal was mispriced and the UK bank had handed bond investors cash on a plate.

The ...

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