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"What is your opinion on B&B PIBS? I bought them at a seemingly bargain price thinking that if the worst came to the worst then they would go the same way as the Northern Rock's and the BOE would step in and honour them. But I have not heard any confirmation of this and the current price seems to reflect that fact that no one expects the coupons to be paid." - Rob Engledow
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Jonathan Eley, online editor, replies:
"Katherine Conway, head of investor relations at Bradford & Bingley, said that while the payment of the coupon on the Pibs was not guaranteed, the official position is that the company still expects to pay out the next coupon (due in January 2009) and did pay out a coupon in October. It's also worth pointing out that Northern Rock has continued to pay coupons on its Pibs, and that historically, these investments have been safe - so far as I can tell, there's never been a default on a subordinated UK bank bond and there's never been a forced redemption either.
"However, you are correct in saying that the Pibs - or perpeptual subordinated bonds as they're known these days - are now being priced as distressed assets, trading at just 18.5p - and the lack of clear information from the Treasury is not helping.
"And you are by no means alone in your concerns. The UK Shareholders Association has also pointed out that holders of B&B Pibs seem to have been singled out for particularly shabby treatment at the hands of Whitehall. There is an very well thought out explanation of the issues involved at the UKSA website, which I recommend you read.
See also Rug pulled from Bradford & Bingley Pibs
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