Any of my financial market readers want to comment?
The Pibs, which were issued in 1994 at 100p, are now worth just 20p, having seen their price fall by 65pc from 57p following Northern Rock\’s announcement earlier this week that it would suspend interest payments on various debt securities whose terms and conditions allowed it. The bank said it was exercising its option to suspend interest to shore up its capital position.
If they ever do resume payment on them the accumulated interest must be paid. So, at these prices, an interesting investment….if there is any chance that they will resume payment.
Anyone know the likelihood? Are these perpetual notes simply doomed, or perhaps there is some reason why they will have to start paying again because there\’s a clause that requires them to do so before doing something else?
(Thinking, for example, about some of those old Tsarist bonds that got paid off only because the Soviets wanted to come to the markets?)