EFTA02481473

From: Richard Kahn < la> Sent: Tuesday, November 10, 2015 9:25 PM To: jeffrey E. Subject: Re: Royal Bank of Scotland 7.64% Fixed-to-Float Pfd Trade executed at 105.00 vs 105.25 on RBS Fixed to Float =refferred Yield to =all now 4.8104% vs 4.6871% Richard Kahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 Begin =orwarded message: From: "Atlas, Andrew S" Subject: Trade Confirm RE: Royal Bank of =cotland 7.64% Fixed-to-Float Pfd Date: November 10, 2015 at 4:19:30 PM EST To: Richard Kahn < Rich, Good News to =eport. Southern =rust Company bought 5,000,000 Royal Bank of Scotland 7.64% "rixed-to-Float Pfds for 105. Yield to 9/29/2017 Call = 4.8104% Current Yield = =.2761 EFTA_R1_01597871 EFTA02481473 Was a battle, but well =orth it. Thanks again, Andrew Andrew S. Atlas Financial Advisor Equity Sales/Middle Markets =roup Morgan Stanley Wealth Management Midtown =anhattan Complex 1290 Avenue of the Americas, 12th Floor = New York, NY 10104 <=cliv> On Nov 9, 2015, at 4:27 PM, jeffrey E. <jeevacation@gmail.com> wrote: 5 million On Mon, Nov 9, 2015 at 10:25 PM, =ichard Kahn wrote: thought this =as interesting as it would yield foreign interest income please advise thank you Richard Kahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 2 EFTA_R1_01597872 EFTA02481474 Begin forwarded message: From: =/b>"Atlas, Andrew 5" 4 » Subject: =/b>Royal Bank of =cotland 7.64% Fixed-to-Float Pfd Date: =/b>November 9, 2015 at 4:03:19 PM =ST To: =/b>"Richard Kahn Rich, Here's an attractive Yield to Call opportunity that I =anted to show Southern Trust Company. I've attached a =till relevant Morgan Stanley note from earlier this year. Details: Royal Bank of Scotland 7.64% Fixed-to-Float Preferred =hares RBS=7.64% Perpetual Issuer: Royal Bk Scotland Grp Plc Par=Value: =1,000 Security Type: Preferred Stock QDI/DRD =ligible Yes = Yes Cumulative: =on-Cumulative Rating: B1 / B+ 3 EFTA_R1_01597873 EFTA02481475 Coupon =Details): =.64% to 9/30/2017; Then US 3M Libor +232bp, resets Quarterly &nb=p; =nbsp; &n=sp; Next Call Date: 9/30/2017, Quarterly thereafter Maturity: =nbsp; &n=sp; Perpetual Net==rice: &n=sp; &nbs=; 105.25 Current =ield: &n=sp; 7.2589% Yield to Next =all: =.6871% Some of Morgan Stanley's highlights: 1. They fundamentally like the credit and this is one of the =ost liquid and highest yielding legacy securities (old-style Ails) 2. They expect the bond to get called at first call because: 8lith=p; &=bsp; &nb=p; = i. RBS=has excess Tier 1 capital and RBS is issuing AT1 which is further =ncreasing this excess &nb=p; &=bsp; &nb=p; = ii. The=7.64s are expensive. RBS does not get a tax benefit so the coupon =s 1.2x higher for the issuer than the headline coupon•. &nb=p; = &=bsp; &nb=p; iii. The=7.64s are only callable every 10 years so missing the opportunity in =017 reduces all flexibility for the issuer when it loses all capital value from end-2021. 3. They think that the 7.64s could get tendered for or exchanged =t favorable terms, but are happy with the carry they offer even if they =re not. * =ote the back end of 3m1+232 grossed up for tax is closer to 3m1+300 for =he issuer. &nb=p; &=bsp; &nb=p; Please treat all price levels as subject to market =vailability. let me know if you have any questions. 4 EFTA_R1_01597874 EFTA02481476 Speak soon, Andrew Andrew S. Atlas Financial Advisor Equity Sales/Middle Markets Group Morgan Stanley Wealth Management Midtown Manhattan =omplex 1290 Avenue of the Americas, 12th Floor = New York, NY 10104 Tel/Direct: + Important Notice =o Recipients: Please do not use e-mail to request, authorize or effect the purchase or sale of any =ecurity or commodity. Unfortunately, we cannot execute such instructions provided =n e-mail. Thank you. The sender of this =-mail is an employee of Morgan Stanley Smith Barney LLC ("Morgan Stanley"). If you have =eceived this communication in error, please destroy all electronic and paper =opies and notify the sender immediately. Erroneous transmission is not intended to =aive confidentiality or privilege. Morgan Stanley reserves the right, =o the extent permitted under applicable law, to monitor electronic =ommunications. 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