Lloyd's raises £500m

Lloyd's syndicates will now receive a £335m windfall after the corporation successfully set the terms for the issue of £500m of Tier 1 subordinated debt.

Those syndicates that have paid into the Lloyd’s Central Fund, levied at the rate of 0.75% of capacity, will now be repaid later this year.

Lloyd's said the transaction was met with a positive response from a wide range of quality institutional investors following a three-day road show and was several times oversubscribed.

Chief executive, Richard Ward said:"The appetite we have seen for this transaction is testament to the high regard in which Lloyd's is held by the financial markets. Its timing is ideal, coming as it does off the back of our strong financial performance in 2006, the recent Equitas deal and the upgrade of our credit ratings by both Standard & Poor’s and Fitch.

“The efficiency of Lloyd's capital structure is widely recognised and this transaction serves to make that even more attractive to our members.

Richard Ward, Lloyd's chief executive

“It will enable us to simultaneously repay over £300m of loans from our syndicates and further strengthen the Central Fund. The efficiency of Lloyd's capital structure is widely recognised and this transaction serves to make that even more attractive to our members."

The issue will consist of a single tranche, denominated in sterling, and will carry a coupon of 7.421%, being 184 basis points over the reference gilt. The debt will be perpetual, having no stated maturity date and will be callable from June 2017.

An application has been made to list the issue on the London Stock Exchange. Settlement will occur on 21 June 2007.