Lloyds prices 13.5 billion rights issue at 37p

Lloyds' cash call, the world's largest to date, is part of a bumper 22.5 billion pound capital-raising effort intended to allow the bank to escape a costly UK government-backed insurance scheme for bad debts set up earlier this year.

The bank said on Tuesday it would offer 36.5 billion new shares, which will represent just over 57 percent of the bank's enlarged share capital after the rights issue is completed.

Analysts had expected a price of around 35p, a discount of 42 percent to the theoretical ex-rights price (TERP), based on the Friday's closing price.

Lloyds earlier this month set a floor of 15p for the fully underwritten issue, saying it would be priced at the higher of either 15p or a 38-42 percent discount to the ex-rights price.

It said on Tuesday the discount to TERP was 38.6 percent, at the lighter end of the range.

As part of the capital raising, Lloyds is also swapping existing debt into contingent or "top up" capital, which converts into common equity during a period of financial strain to shore up a bank's capital position.

It said on Monday demand was strong, with offers of 12.5 billion pounds from investors received for an 8.78 billion bond exchange, allowing the bank to raise the maximum 8.5 billion in contingent core tier 1 and core tier 1 capital.

(Reporting by Clara Ferreira-Marques)