Daily Business Report

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UK's Metro Bank Teeters after Bond Sale Fails. Shares Collapsed 95% Posted: 30 Sep 2019 06:18 AM PDT Hedge-fund manager Steven Cohen and Michael Bloomberg are among those ruing the day they bought the crushed shares of the UK bank touted as a "bargain"... Even by its own recent standards, Metro Bank has had a torrid week. On Monday, shares of the British retail bank tumbled 5%, on Tuesday, 25%, on Wednesday, 5%, and on Thursday, 4.5%, before staging a brief comeback in the final hours of trading on Friday, to end the week 35% lower. By Friday morning, it was the second most-shorted stock on the FTSE all shares index, behind the collapsed travel & vacation-giant Thomas Cook. The main trigger for this week's rout was the bank's failure on Monday to raise a much-needed £250 million by issuing non-preferred bonds that deeply skeptical investors spurned. Despite trying to lure buyers with an interest rate of 7.5%, double the rate of similar offerings, Metro only attracted £175 million worth of orders, prompting the embattled lender to pull the plug on the bond sale. "Failure to get enough support for a product that is yielding 7.5% is quite remarkable when you consider how investors are struggling to find generous levels of income in the current market," said Russ Mould, the investment director of AJ Bell. "It suggests that investors don't trust the bank or they believe the 7.5% yield is simply not high enough to compensate for the risks of owning such a product." Read the entire article

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