Co-op bondholders demand more information as bank posts £700m loss Rebecca O'Keeffe, head of investment at Interactive Investor, said investors should be reassured there were no new "nasty surprises" in the results. "Having seen their investments lose 60pc of their value since May, there is not much to cheer about for Co-op Pibs investors," she said. However, the good news today is that there were no new surprises, so the price remains unchanged. If the new chief executive can improve the capital position of the bank then these shares may ultimately prove an attractive option for investors. How Pibs work - and how investors can be caught out Co-op bondholders form action group to fight losses In the results the bank urged bondholders and preference shareholders to accept the terms that were offered in June. About £60m of Pibs are held by members of the public, paying interest annually of between 5.5pc and 13.5pc a year. Pibs are typically owned by pensioners, attracted by the steady guaranteed income. Under the terms of the rescue, the Co-op Group will offer them new bonds and shares instead that will cut the value of their holding by more than half. The harsh terms for the Pibs holders are part of broader arrangement to plug £1bn of the £1.5bn capital hole by restructuring the Co-op's £1.3bn of "junior" debt - the first to suffer losses when a company gets into trouble. Under the deal, the Co-operative Group - the bank's parent - will issue a new £500m bond, paying about 6.5pc annually, to buy out the junior creditors. They will also be given equity in the group. Today, although there was no change in the outlook for Pibs holders, the bank's group chief executive, Euan Sutherland, called on bondholders to approve the firm's restructuring. "We are asking affected bank bondholders and preference shareholders to contribute to a recapitalisation plan that we believe is in the best long-term interests of the stakeholders in the group and the bank," said Mr Sutherland. While I recognise the concerns of affected bank bondholders and preference shareholders we remain confident that under the plan announced we are doing all we can to deliver the best solution for the future of the bank. Experts added there was no guarantee that Pibs holders would accept the large writedowns. Peter Doherty of Tideway Investment Partners said the Co-operative should take a greater hit. "It is not certain that Pibs holders will accept large writedowns without more of the burden being shared by the Co-op itself, but to resist the plan - which still needs to be spelt out in detail - they need to form a coherent group, which isn't easily done," he said. Mr Doherty added that the terms on offer were in marked contrast to those offered by Nationwide, which as reported yesterday is offering bondholders the option of selling their Pibs early. Nationwide has dealt incredibly well with a very material change of approach from the regulators and the proposed offer for Pibs has been well received by investors. Pibs are like corporate bonds in that they pay a set amount of interest yearly and trade on the stock market. However, they are "undated," so there is no maturity date and normally the only way for holders to get their money back is to sell to another investor. They also differ from the type of fixed-term bond sold to savers over the counter because they are not regarded as deposits with the bank or building society that issued them. This means that there is no protection under the state deposit guarantee scheme if the lender goes bust. Fixed-term savings bonds are protected up to the £85,000 limit per person.