Bank of Scotland is to take a second attempt at converting two hard bullet euro benchmark covered bonds to soft bullets in a consent solicitation next month, after bondholders rejected their conversion in 2015.

On Friday, Bank of Scotland (HBOS) announced bondholder meetings for the holders of its EUR1.25bn issue due June 2019 (ISIN: XS0193640629) and its EUR1.5bn issue due February 2020 (ISIN: XS0212074388).

HBOS converted five covered bonds from hard bullets to soft bullets in the 2015 consent solicitation. However, bondholders voted against the conversion of the 2019 and 2020 issues – the first time such a conversion was rejected by bondholders.

The initial meetings for the two issues will be held on 21 May. The quorum for the meetings will be one or more persons present holding or representing in aggregate not less than two-thirds of the aggregate principal amount outstanding of the relevant covered bonds. If the meeting is inquorate, it will be adjourned.

To be passed, the resolution requires a majority in favour consisting of not less than three-fourths of the persons voting, or a resolution in writing signed by or on behalf of bondholders holding not less than 50%.

Each bondholder who votes in favour of the conversion by an early instruction deadline of 16:00 UK time on 11 May will be eligible for a payment of an amount equal to 0.05% of the principal amount of the relevant bond.

Maureen Schuller, head of financials research at ING, noted that the issuer will soon have to make a reservation for the June 2019 issue under its pre-maturity test.

“At Fitch, this is the case if the final maturity of the bond falls within 12 months and the issuer’s short term rating is F1 or lower, which it currently is,” she said. “At S&P the bond is subject to the pre-maturity test as of six months ahead of its maturity date at a A-1 short term rating.”

Lloyds Bank is the solicitation agent.