This is 2 days in a row that preferreds have achieved double digit gains. The realization that the dividends are considered safe will continue to gradually drive up the prices to the near term target of 12% yield is achived.
The common stock has also bounced nicely off it's all time lows set last week and agian posted a nice >market gain.
Go RBS...... good luck in your trading and investments.......
While the target of 12% is based on the new preferred issue, old preferreds yielding 12% would still be trading at little more than 50% of par. How much of a premium is a potential 70-100% gain at redemption worth relative to the new issue?
The govt pref shares will always be worth the same. They just recieve 12% until they are paid back. So, they wont make the capital gain on the stock like us regular holders, just the dividend payments. Their investment in the common shares is where they can make some $$$ back for the taxpayers if it goes above 65.5 pence.