UPDATE:Lloyds Banking Group Swaps $760M Bonds For 537M Shares

28th Jun 2010 13:25

(Adds Lloyds comment, details.) By Margot Patrick Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Lloyds Banking Group PLC (LYG) Monday said bondholders have agreed to exchange $760 million in upper Tier 2 bonds for 537.2 million new shares, as part of the bank's effort to cut its debt costs. Analysts estimate the bond exchanges, which were made at a discount to face value, will result in a gain of around GBP200 million for Lloyds, helping lift its core Tier 1 ratio by about 15.5 basis points, to around 8.1%. The exchange represents 41% of the outstanding bonds eligible for the offer. The result of a separate offer involving yen-denominated bonds is expected to be announced later in the week and will likely result in a further gain of around GBP70 million. Lloyds in a statement said the exchange offer was "positively received" by investors and "further enhances the quality of the group's capital base and will lead to the generation of additional profit." As a result of the new shares being issued, the government's stake in Lloyds will drop slightly, to 40.8% from 41.3%. Lloyds shares were up 1 pence at 1220 GMT, at 55 pence. -By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; [email protected] (END) Dow Jones Newswires June 28, 2010 08:25 ET (12:25 GMT)