Aimia: Substantial Issuer Bid for AIM.PR.A, AIM.PR.B, AIM.PR.C, Common

November 22nd, 2019

Aimia Inc. has announced:

that its Board of Directors (the “Board”) has approved concurrent but separate substantial issuer bids to repurchase for cancellation (i) up to $62.5 million of its common shares at a fixed price of $4.25 per share, (ii) up to $31.25 million of its Cumulative Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) and its Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”), each at a fixed price of $17.20 per share, and (iii) up to $31.25 million of its Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Preferred Shares”, and collectively with the Series 1 Preferred Shares and the Series 2 Preferred Shares, the “Preferred Shares”) at a fixed price of $19.00 per share. On November 15, 2019, the last full trading day before the date of this press release, the closing price of the common shares on the Toronto Stock Exchange was $3.63.

Holders of Preferred Shares of record at the close of business on December 24, 2019, will be entitled to receive the dividends declared by the Board on October 28, 2019, regardless of whether such holder deposits Preferred Shares pursuant to the substantial issuer bids with respect to the Preferred Shares (collectively, the “Preferred Share Offers”). Such dividends are payable on December 31, 2019. The purchase prices offered for Preferred Shares pursuant to the Preferred Share Offers take into account and reflect the fact that such dividends will be paid on Preferred Shares. As such, holders of Preferred Shares should take into consideration the total consideration provided to holders of Preferred Shares under the Preferred Share Offers (as well as the dividends payable on December 31, 2019) when comparing to the current trading prices of the Preferred Shares.

  Issuer Bid Offer
Price
Q4 Declared
Dividends
Total
Consideration
TSX Closing
Price on
Nov. 15, 2019
Series 1 Preferred Shares $17.2000 $0.2813 $17.4813 $17.73
Series 2 Preferred Shares $17.2000 $0.3395 $17.5395 $18.00
Series 3 Preferred Shares $19.0000 $0.3757 $19.3757 $19.83

If fully taken up, the substantial issuer bids with respect to the common shares (the “Common Share Offer” and, together with the Preferred Share Offers, the “Offers”) would result in the company returning up to a further $125 million to common and preferred shareholders (the “Aggregate Offer Amount”). The Offers are intended to provide all of the company’s shareholders with optionality and a choice regarding liquidity through transactions designed to be accretive and value-enhancing. Further, the Preferred Share Offers, if fully or substantially subscribed, would reduce the company’s cash financing costs associated with preferred share dividend payments and related Part VI.1 tax.

Details of the Offers

Each of the Preferred Share Offers expires on December 27, 2019, at 10:00 p.m. ET and the Common Share Offer expires on December 30, 2019, at 5:00 p.m. ET, unless extended or withdrawn in accordance with applicable securities laws. Any of the Offers may be varied and/or extended independently of the other Offers (including potentially increasing the size of one or more Offers with the goal of affording shareholders the opportunity to receive up to the Aggregate Offer Amount), and none of the Offers is conditional either on any of the other Offers or on any minimum number of shares being tendered.

Based on publicly available information, as of November 15, 2019, Mittleman Investment Management, LLC beneficially owned, directly or indirectly, or exercised control or direction over, 25.1 million common shares, representing approximately 23.1% of the issued and outstanding number of such shares. Mittleman Investment Management, LLC has advised Aimia that it does not currently intend to participate in the Common Share Offer.

Further details of the Offers, including instructions for tendering shares, will be included in the formal offers to purchase and issuer bid circulars, letters of transmittal, notices of guaranteed delivery and other related documents for each of the Offers (with the Preferred Share Offers to be set forth in a single issuer bid circular) (collectively, the “Offer Documents”). The Offer Documents are expected to be mailed to shareholders, filed with the applicable Canadian securities regulatory authorities and made available without charge on SEDAR at www.sedar.com, as well as being posted on the Corporation’s website at www.aimia.com, on or about November 19, 2019.

Aimia has engaged BMO Capital Markets to act as financial advisor and dealer manager and AST Trust Company (Canada) to act as depositary for the Offers. Any questions or requests for information regarding the Offers may also be directed to the dealer manager or the depositary.

This has become a very strange company. According to their 19Q3 Financials, they have about $572-million in equity financing cash, near-cash and other investments of about $625-million. The shareholders’ equity of $572-million includes about $316-million in total preferred share capital (see the 2018 financial statements, oddly not available on their website, but which are on SEDAR (which, of course, does not want me to link to them either), via a search for “Aimia Inc. Mar 28 2019 07:17:41 ET Audited annual financial statements – English PDF 951 K”)

So that’s pretty good leverage for the common shareholders, provided through the good graces of the preferred shareholders. And completion in full of the common share tranche of this issuer bid will ratchet up the leverage still further, regardless of the degree of preferred shareholder participation.

November 21, 2019

November 21st, 2019
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 0.0446 % 1,959.7
FixedFloater 0.00 % 0.00 % 0 0.00 0 0.0446 % 3,595.9
Floater 6.17 % 6.32 % 46,278 13.36 4 0.0446 % 2,072.3
OpRet 0.00 % 0.00 % 0 0.00 0 0.2415 % 3,413.1
SplitShare 4.66 % 4.50 % 49,601 3.89 7 0.2415 % 4,076.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2415 % 3,180.2
Perpetual-Premium 5.55 % -19.90 % 45,996 0.09 10 0.0431 % 3,042.2
Perpetual-Discount 5.31 % 5.43 % 69,269 14.73 25 0.0242 % 3,252.4
FixedReset Disc 5.58 % 5.62 % 180,642 14.38 66 0.2291 % 2,105.9
Deemed-Retractible 5.16 % 5.58 % 63,667 7.77 27 0.0842 % 3,204.8
FloatingReset 6.21 % 6.69 % 109,373 12.85 2 -0.2600 % 2,454.4
FixedReset Prem 5.11 % 3.68 % 128,670 1.59 20 0.2639 % 2,624.7
FixedReset Bank Non 1.96 % 4.01 % 74,003 2.13 3 0.2073 % 2,694.5
FixedReset Ins Non 5.44 % 8.02 % 115,149 7.84 22 0.2968 % 2,144.3
Performance Highlights
Issue Index Change Notes
SLF.PR.J FloatingReset -1.49 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.20
Bid-YTW : 10.99 %
BAM.PR.T FixedReset Disc -1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 15.21
Evaluated at bid price : 15.21
Bid-YTW : 6.24 %
BAM.PF.B FixedReset Disc 1.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 18.18
Evaluated at bid price : 18.18
Bid-YTW : 5.87 %
TRP.PR.B FixedReset Disc 1.07 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 11.34
Evaluated at bid price : 11.34
Bid-YTW : 6.12 %
MFC.PR.I FixedReset Ins Non 1.17 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.00
Bid-YTW : 7.79 %
BMO.PR.Y FixedReset Disc 1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 19.06
Evaluated at bid price : 19.06
Bid-YTW : 5.50 %
HSE.PR.G FixedReset Disc 1.38 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 17.66
Evaluated at bid price : 17.66
Bid-YTW : 7.19 %
EMA.PR.C FixedReset Disc 1.42 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 17.85
Evaluated at bid price : 17.85
Bid-YTW : 6.01 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.H FixedReset Disc 126,496 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 17.24
Evaluated at bid price : 17.24
Bid-YTW : 5.41 %
POW.PR.D Perpetual-Discount 122,174 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 22.77
Evaluated at bid price : 23.05
Bid-YTW : 5.48 %
MFC.PR.B Deemed-Retractible 119,520 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.15
Bid-YTW : 6.16 %
TRP.PR.J FixedReset Prem 76,370 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-05-31
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 3.26 %
W.PR.M FixedReset Prem 52,029 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-10-15
Maturity Price : 25.00
Evaluated at bid price : 25.94
Bid-YTW : 3.45 %
TD.PF.D FixedReset Disc 51,241 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 19.17
Evaluated at bid price : 19.17
Bid-YTW : 5.59 %
There were 41 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BAM.PR.T FixedReset Disc Quote: 15.21 – 15.74
Spot Rate : 0.5300
Average : 0.3470

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 15.21
Evaluated at bid price : 15.21
Bid-YTW : 6.24 %

PWF.PR.A Floater Quote: 11.52 – 12.05
Spot Rate : 0.5300
Average : 0.3783

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 11.52
Evaluated at bid price : 11.52
Bid-YTW : 6.05 %

IFC.PR.C FixedReset Ins Non Quote: 17.54 – 18.00
Spot Rate : 0.4600
Average : 0.3182

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.54
Bid-YTW : 8.50 %

HSE.PR.C FixedReset Disc Quote: 16.15 – 16.54
Spot Rate : 0.3900
Average : 0.2652

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 16.15
Evaluated at bid price : 16.15
Bid-YTW : 7.26 %

MFC.PR.L FixedReset Ins Non Quote: 16.60 – 17.00
Spot Rate : 0.4000
Average : 0.2999

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.60
Bid-YTW : 8.76 %

BIP.PR.A FixedReset Disc Quote: 19.72 – 20.07
Spot Rate : 0.3500
Average : 0.2612

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-21
Maturity Price : 19.72
Evaluated at bid price : 19.72
Bid-YTW : 6.47 %

MFC.PR.M To Reset At 3.8000%

November 21st, 2019

Manulife Financial Corporation has announced:

the applicable dividend rates for its Non-cumulative Rate Reset Class 1 Shares Series 17 (the “Series 17 Preferred Shares”) (TSX: MFC.PR.M) and Non-cumulative Floating Rate Class 1 Shares Series 18 (the “Series 18 Preferred Shares”).

With respect to any Series 17 Preferred Shares that remain outstanding after December 19, 2019, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on December 20, 2019, and ending on December 19, 2024, will be 3.8000% per annum or $0.23750 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at November 20, 2019, plus 2.36%, as determined in accordance with the terms of the Series 17 Preferred Shares.

With respect to any Series 18 Preferred Shares that may be issued on December 19, 2019 in connection with the conversion of the Series 17 Preferred Shares into the Series 18 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the three-month period commencing on December 20, 2019, and ending on March 19, 2020, will be 1.00250% (4.0210% on an annualized basis) or $0.250625 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at November 20, 2019, plus 2.36%, as determined in accordance with the terms of the Series 18 Preferred Shares.

Beneficial owners of Series 17 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Toronto time) on December 4, 2019. The news release announcing such conversion right was issued on November 8, 2019 and can be viewed on SEDAR or Manulife’s website. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, AST Trust Company (Canada), at 1‑800‑783‑9495.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 18 Preferred Shares effective upon conversion. Listing of the Series 18 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 18 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.M is a FixedReset, 3.90%+236, that commenced trading 2014-8-15 after being announced 2014-8-11. Notice of extension was published 2019-11-8. It is tracked by HIMIPref™ and has been assigned to the FixedReset (Insurance non-NVCC) subindex, but will move shortly to the FixedReset (Discount) subindex as the imposition of NVCC rules for insurers can no longer be considered probable.

The most logical way to analyze the question of whether or not to convert is through the theory of Preferred Pairs, for which a calculator is available. Briefly, a Strong Pair is defined as a pair of securities that can be interconverted in the future (e.g., MFC.PR.M and the FloatingReset MFC.PR.S that will exist if enough holders convert). Since they will be interconvertible on this future date, it may be assumed that they will be priced identically on this date (if they aren’t then holders will simply convert en masse to the higher-priced issue). And since they will be priced identically on a given date in the future, any current difference in price must be offset by expectations of an equal and opposite value of dividends to be received in the interim. And since the dividend rate on one element of the pair is both fixed and known, the implied average rate of the other, floating rate, instrument can be determined. Finally, we say, we may compare these average rates and take a view regarding the actual future course of that rate relative to the implied rate, which will provide us with guidance on which element of the pair is likely to outperform the other until the next interconversion date, at which time the process will be repeated.

We can show the break-even rates for each FixedReset / FloatingReset Strong Pair graphically by plotting the implied average 3-month bill rate against the next Exchange Date (which is the date to which the average will be calculated). Inspection of the graph and the overall average break-even rates for extant pairs will provide a guide for estimating the break-even rate for the pair now under consideration assuming, of course, that enough conversions occur so that the pair is in fact created.

pairs_fr_191120
Click for Big

The market has little enthusiasm for floating rate product; the implied rates until the next interconversion are generally well below the current 3-month bill rate as the averages for investment-grade and junk issues are at +0.89% and +1.64%, respectively, after removal of the outlying pair TRP.PR.A / TRP.PR.F from the investment-grade group (which has its next exchange date 2019-12-31). Whatever might be the result of the next few Bank of Canada overnight rate decisions, I suggest that it is unlikely that the average rate over the next five years will be lower than current – but if you disagree, of course, you may interpret the data any way you like.

Since credit quality of each element of the pair is equal to the other element, it should not make any difference whether the pair examined is investment-grade or junk, although we might expect greater variation of implied rates between junk issues on grounds of lower liquidity, and this is just what we see.

If we plug in the current bid price of the MFC.PR.M FixedReset, we may construct the following table showing consistent prices for its soon-may-be-issued FloatingReset counterpart given a variety of Implied Breakeven yields consistent with issues currently trading:

Estimate of FloatingReset MFC.PR.S (received in exchange for MFC.PR.M) Trading Price In Current Conditions
  Assumed FloatingReset
Price if Implied Bill
is equal to
FixedReset Bid Price Spread 1.50% 1.00% 0.50%
MFC.PR.M 17.03 248bp 17.42 16.92 16.43

Based on current market conditions, I suggest that the FloatingResets MFC.PR.S that will result from conversion are likely to trade below the price of their FixedReset counterparts, MFC.PR.M. Therefore, it seems likely that I will recommend that holders of MFC.PR.M continue to hold the issue and not to convert, but I will wait until it’s closer to the December 4 notification deadline before making a final pronouncement. I will note that once the FloatingResets commence trading (if, in fact, they do) it may be a good trade to swap one issue for the other in the market once both elements of each pair are trading and you can – hopefully – do it with a reasonably good take-out in price, rather than doing it through the company on a 1:1 basis. But that, of course, will depend on the prices at that time and your forecast for the path of policy rates over the next five years. There are no guarantees – my recommendation is based on the assumption that current market conditions with respect to the pairs will continue until the FloatingResets commence trading and that the relative pricing of the two new pairs will reflect these conditions.

November 20, 2019

November 20th, 2019

PerpetualDiscounts now yield 5.43%, equivalent to 7.06% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.36%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to 370bp from the 360bp reported November 13.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.3779 % 1,958.8
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.3779 % 3,594.3
Floater 6.17 % 6.33 % 45,304 13.35 4 -0.3779 % 2,071.4
OpRet 0.00 % 0.00 % 0 0.00 0 0.0785 % 3,404.9
SplitShare 4.63 % 4.59 % 47,986 3.85 7 0.0785 % 4,066.2
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0785 % 3,172.6
Perpetual-Premium 5.55 % -20.57 % 46,522 0.09 10 0.1372 % 3,040.9
Perpetual-Discount 5.31 % 5.43 % 70,044 14.73 25 0.0744 % 3,251.6
FixedReset Disc 5.60 % 5.63 % 182,382 14.37 66 -0.1566 % 2,101.1
Deemed-Retractible 5.16 % 5.59 % 63,764 7.77 27 0.0858 % 3,202.1
FloatingReset 6.19 % 6.76 % 108,601 12.77 2 -0.5908 % 2,460.8
FixedReset Prem 5.13 % 3.84 % 119,110 1.60 20 -0.1328 % 2,617.8
FixedReset Bank Non 1.97 % 4.06 % 74,107 2.13 3 0.0000 % 2,689.0
FixedReset Ins Non 5.46 % 8.13 % 121,078 7.84 22 -0.5259 % 2,138.0
Performance Highlights
Issue Index Change Notes
EMA.PR.C FixedReset Disc -1.68 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 17.60
Evaluated at bid price : 17.60
Bid-YTW : 6.10 %
SLF.PR.G FixedReset Ins Non -1.55 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.35
Bid-YTW : 10.48 %
MFC.PR.F FixedReset Ins Non -1.52 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 12.35
Bid-YTW : 11.19 %
IFC.PR.G FixedReset Ins Non -1.50 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.42
Bid-YTW : 8.45 %
BIK.PR.A FixedReset Prem -1.36 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2024-03-31
Maturity Price : 25.00
Evaluated at bid price : 25.40
Bid-YTW : 5.69 %
MFC.PR.K FixedReset Ins Non -1.14 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.32
Bid-YTW : 8.60 %
PWF.PR.A Floater -1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 11.58
Evaluated at bid price : 11.58
Bid-YTW : 6.02 %
TD.PF.D FixedReset Disc -1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 19.00
Evaluated at bid price : 19.00
Bid-YTW : 5.63 %
BIP.PR.F FixedReset Disc -1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 21.89
Evaluated at bid price : 22.30
Bid-YTW : 5.79 %
BAM.PF.A FixedReset Disc -1.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 19.80
Evaluated at bid price : 19.80
Bid-YTW : 5.82 %
CU.PR.C FixedReset Disc 1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 16.62
Evaluated at bid price : 16.62
Bid-YTW : 5.74 %
TD.PF.C FixedReset Disc 1.56 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 16.91
Evaluated at bid price : 16.91
Bid-YTW : 5.56 %
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.F FloatingReset 172,300 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 13.52
Evaluated at bid price : 13.52
Bid-YTW : 6.76 %
TRP.PR.A FixedReset Disc 167,802 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 13.70
Evaluated at bid price : 13.70
Bid-YTW : 6.29 %
BMO.PR.E FixedReset Disc 129,127 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 19.70
Evaluated at bid price : 19.70
Bid-YTW : 5.50 %
TRP.PR.D FixedReset Disc 95,800 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 15.97
Evaluated at bid price : 15.97
Bid-YTW : 6.12 %
BMO.PR.F FixedReset Disc 48,390 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 23.00
Evaluated at bid price : 24.46
Bid-YTW : 5.06 %
IFC.PR.G FixedReset Ins Non 40,200 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.42
Bid-YTW : 8.45 %
There were 40 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
EML.PR.A FixedReset Ins Non Quote: 25.65 – 26.12
Spot Rate : 0.4700
Average : 0.3110

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-04-17
Maturity Price : 25.00
Evaluated at bid price : 25.65
Bid-YTW : 4.24 %

EMA.PR.C FixedReset Disc Quote: 17.60 – 17.98
Spot Rate : 0.3800
Average : 0.2678

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 17.60
Evaluated at bid price : 17.60
Bid-YTW : 6.10 %

IFC.PR.G FixedReset Ins Non Quote: 18.42 – 18.80
Spot Rate : 0.3800
Average : 0.2694

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.42
Bid-YTW : 8.45 %

PVS.PR.F SplitShare Quote: 25.50 – 25.89
Spot Rate : 0.3900
Average : 0.2885

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2024-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.50
Bid-YTW : 4.59 %

CM.PR.Q FixedReset Disc Quote: 18.11 – 18.39
Spot Rate : 0.2800
Average : 0.1829

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 18.11
Evaluated at bid price : 18.11
Bid-YTW : 5.90 %

BMO.PR.Y FixedReset Disc Quote: 18.83 – 19.15
Spot Rate : 0.3200
Average : 0.2288

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-20
Maturity Price : 18.83
Evaluated at bid price : 18.83
Bid-YTW : 5.56 %

PPL.PR.G : No Conversion To FloatingReset

November 20th, 2019

Pembina Pipeline Corporation has announced (on November 15):

that none of Pembina’s Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 7 (“Series 7 Shares”) (TSX: PPL.PR.G) will be converted into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 8 of Pembina (“Series 8 Shares”) on December 2, 2019.

After taking into account all conversion notices received from holders of its outstanding Series 7 Shares by the November 15, 2019 deadline for the conversion of the Series 7 Shares into Series 8 Shares, less than the 1,000,000 Series 7 Shares required to give effect to conversions into Series 8 Shares were tendered for conversion.

PPL.PR.G is a FixedReset, 4.50%+294, that commenced trading 2014-9-11 after being announced 2014-9-2. The issue resets to 4.380% effective 2019-12-1. It is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

ENB.PF.A : No Conversion To FloatingReset

November 19th, 2019

Enbridge Inc. has announced (on November 18):

that none of its outstanding Cumulative Redeemable Preference Shares, Series 9 (Series 9 Shares) will be converted into Cumulative Redeemable Preference Shares, Series 10 of Enbridge (Series 10 Shares) on December 1, 2019.

After taking into account all conversion notices received from holders of its outstanding Series 9 Shares by the November 18, 2019 deadline for the conversion of the Series 9 Shares into Series 10 Shares, less than the 1,000,000 Series 9 Shares required to give effect to conversions into Series 10 Shares were tendered for conversion.

ENB.PF.A is a FixedReset, 4.40%+266, that commenced trading 2014-3-13 after being announced 2014-3-4. It reset to 4.097% effective 2019-12-1. The issue is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

BMO.PR.W : No Conversion to FloatingReset

November 19th, 2019

Bank of Montreal has announced (on November 14):

that none of its 12 million Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 31 (the “Preferred Shares Series 31”) will be converted on November 25, 2019 into Non-Cumulative Floating Rate Class B Preferred Shares, Series 32 of the Bank (the “Preferred Shares Series 32”).

During the conversion period which ran from October 28, 2019 to November 12, 2019, 69,570 Preferred Shares Series 31 were tendered for conversion into Preferred Shares Series 32, which is less than the minimum 1,000,000 required to give effect to the conversion, as described in the Preferred Shares Series 31 prospectus supplement dated July 23, 2014. As a result, no Preferred Shares Series 32 will be issued on November 25, 2019 and holders of Preferred Shares Series 31 will retain their shares.

The Preferred Shares Series 31 are currently listed on the Toronto Stock Exchange under the symbol BMO.PR.W. As previously announced on October 28, 2019, the dividend rate for the five-year period commencing on November 25, 2019, and ending on November 24, 2024, will be 3.851%.

BMO.PR.W is a FixedReset, 3.80%+222, that commenced trading 2014-7-30 after being announced 2014-7-22. Notice of extension was given 2019-9-27. BMO.PR.W will reset at 3.851% effective November 25, 2019. I recommended against conversion. It is tracked by HIMIPref™ and has been assigned to the FixedReset – Discount subindex.

AZP.PR.B / AZP.PR.C To Be Extended

November 19th, 2019

Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd. have announced (on November 14):

that, in accordance with Preferred Equity’s Articles of Incorporation, as amended, the dividend rate on Preferred Equity’s outstanding Cumulative Rate Reset Preferred Shares, Series 2 (the “Series 2 Shares”), will be reset on December 31, 2019.

The new dividend rate for Series 2 Shares will be calculated on November 29, 2019, using a fixed dividend rate (the “Fixed Dividend Rate”), which will equal the sum of the Canadian Government five-year bond yield as of that date plus 4.18%.

Such Fixed Dividend Rate will commence with the March 31, 2020 dividend payment to the holders of the Series 2 Shares and continue through the December 31, 2024 dividend payment to the holders of the Series 2 Shares, at which time such Fixed Dividend Rate will again be reset.

The dividend rate for the Cumulative Floating Rate Preferred Shares, Series 3 (the “Series 3 Shares”) will be calculated on November 29, 2019 and will equal the sum of the Canadian Government 90-day Treasury Bill yield (using the three-month average results) plus 4.18%. Such dividend rate will be effective with the March 31, 2020 dividend payment to the holders of the Series 3 Shares. The Series 3 Shares dividend rate is reset each quarter.

On December 31, 2019 and again on December 31 of every fifth year thereafter, the holders of Series 2 Shares have the right to convert their Series 2 Shares, on a one-for-one basis, into Series 3 Shares and the holders of Series 3 Shares have the right to convert their Series 3 Shares, on a one-for-one basis, into Series 2 Shares.

Holders of Series 2 Shares or Series 3 Shares who wish to convert such securities to Series 3 Shares or Series 2 Shares, respectively, should contact the financial institution, broker or other intermediary through which they hold the Series 2 Shares or Series 3 Shares to exercise this conversion privilege. Notice of the exercise of the conversion privilege (an “Election Notice”) must be received by Preferred Equity not earlier than December 1, 2019 and not later than 5:00 p.m. (Toronto time) on December 16, 2019.

Automatic Conversion and Restrictions on Conversion

Series 2 Shares

If, after giving effect to all Election Notices, there would remain outstanding less than 1 million Series 2 Shares, then all remaining outstanding Series 2 Shares will automatically convert into Series 3 Shares, on a one-for-one basis on December 31, 2019. Holders of the Series 2 Shares will not be permitted to convert their Series 2 Shares into Series 3 Shares if, after giving effect to all Election Notices, there would be outstanding less than 1 million Series 3 Shares.

Series 3 Shares

If, after giving effect to all Election Notices, there would remain outstanding less than 1 million Series 3 Shares, then all remaining outstanding Series 3 Shares will automatically convert into Series 2 Shares, on a one-for-one basis on December 31, 2019. Holders of the Series 3 Shares will not be permitted to convert their Series 3 Shares into Series 2 Shares if, after giving effect to all Election Notices, there would be outstanding less than 1 million Series 2 Shares.

Inquiries should be directed to Preferred Equity’s registrar and transfer agent, Computershare Investor Services Inc., at 1-800-564-6253.

AZP.PR.B used to be CZP.PR.B, which used to be EPP.PR.B, and throughout these changes was a FixedReset, 7.00%+418, which commenced trading 2009-11-2 after being announced 2009-10-13. You can’t tell your players without a programme! Notice of extension was provided in November, 2014, and it reset to 5.57% effective 2014-12-31. I recommended in favour of conversion and the conversion rate was 42%.

AZP.PR.C resulted from the partial conversion of AZP.PR.B and commenced trading 2014-12-31.

I will have more to say once the reset dividend rate is known.

November 19, 2019

November 19th, 2019
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.3764 % 1,966.2
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.3764 % 3,607.9
Floater 6.15 % 6.30 % 47,139 13.40 4 -0.3764 % 2,079.3
OpRet 0.00 % 0.00 % 0 0.00 0 -0.1399 % 3,402.2
SplitShare 4.63 % 4.62 % 48,293 3.85 7 -0.1399 % 4,063.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.1399 % 3,170.1
Perpetual-Premium 5.56 % -18.60 % 48,440 0.09 10 0.0274 % 3,036.7
Perpetual-Discount 5.32 % 5.43 % 69,995 14.74 25 -0.0208 % 3,249.1
FixedReset Disc 5.59 % 5.62 % 180,578 14.43 66 -0.1531 % 2,104.4
Deemed-Retractible 5.16 % 5.61 % 64,257 7.77 27 0.0219 % 3,199.3
FloatingReset 6.16 % 6.72 % 100,543 12.81 2 0.7440 % 2,475.4
FixedReset Prem 5.12 % 3.79 % 120,476 1.60 20 -0.0312 % 2,621.3
FixedReset Bank Non 1.97 % 4.18 % 74,798 2.13 3 -0.2069 % 2,689.0
FixedReset Ins Non 5.43 % 8.00 % 111,490 7.86 22 -0.0967 % 2,149.3
Performance Highlights
Issue Index Change Notes
TD.PF.C FixedReset Disc -2.46 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.65
Evaluated at bid price : 16.65
Bid-YTW : 5.64 %
HSE.PR.E FixedReset Disc -2.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 17.65
Evaluated at bid price : 17.65
Bid-YTW : 7.25 %
CU.PR.C FixedReset Disc -2.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.45
Evaluated at bid price : 16.45
Bid-YTW : 5.80 %
HSE.PR.A FixedReset Disc -1.76 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 11.16
Evaluated at bid price : 11.16
Bid-YTW : 7.10 %
PWF.PR.A Floater -1.60 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 11.71
Evaluated at bid price : 11.71
Bid-YTW : 5.95 %
GWO.PR.N FixedReset Ins Non -1.24 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.53
Bid-YTW : 10.04 %
EIT.PR.A SplitShare -1.13 % YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2024-03-14
Maturity Price : 25.00
Evaluated at bid price : 25.46
Bid-YTW : 4.57 %
BAM.PR.T FixedReset Disc -1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 15.38
Evaluated at bid price : 15.38
Bid-YTW : 6.17 %
HSE.PR.G FixedReset Disc -1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 17.39
Evaluated at bid price : 17.39
Bid-YTW : 7.30 %
BAM.PR.R FixedReset Disc -1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 15.22
Evaluated at bid price : 15.22
Bid-YTW : 6.17 %
HSE.PR.C FixedReset Disc -1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.34
Evaluated at bid price : 16.34
Bid-YTW : 7.18 %
IFC.PR.C FixedReset Ins Non 1.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.70
Bid-YTW : 8.37 %
TRP.PR.A FixedReset Disc 1.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 13.75
Evaluated at bid price : 13.75
Bid-YTW : 6.27 %
TD.PF.E FixedReset Disc 1.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 19.45
Evaluated at bid price : 19.45
Bid-YTW : 5.59 %
Volume Highlights
Issue Index Shares
Traded
Notes
PWF.PR.S Perpetual-Discount 178,600 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 22.13
Evaluated at bid price : 22.13
Bid-YTW : 5.48 %
TD.PF.M FixedReset Disc 121,893 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 23.04
Evaluated at bid price : 24.60
Bid-YTW : 5.09 %
TRP.PR.D FixedReset Disc 116,721 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.04
Evaluated at bid price : 16.04
Bid-YTW : 6.09 %
BMO.PR.D FixedReset Disc 94,578 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 21.20
Evaluated at bid price : 21.20
Bid-YTW : 5.46 %
RY.PR.H FixedReset Disc 73,897 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 17.26
Evaluated at bid price : 17.26
Bid-YTW : 5.40 %
EMA.PR.E Perpetual-Discount 65,978 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 21.05
Evaluated at bid price : 21.05
Bid-YTW : 5.38 %
There were 48 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
TD.PF.C FixedReset Disc Quote: 16.65 – 17.00
Spot Rate : 0.3500
Average : 0.2146

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.65
Evaluated at bid price : 16.65
Bid-YTW : 5.64 %

EIT.PR.A SplitShare Quote: 25.46 – 25.96
Spot Rate : 0.5000
Average : 0.3768

YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2024-03-14
Maturity Price : 25.00
Evaluated at bid price : 25.46
Bid-YTW : 4.57 %

CU.PR.C FixedReset Disc Quote: 16.45 – 16.88
Spot Rate : 0.4300
Average : 0.3261

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 16.45
Evaluated at bid price : 16.45
Bid-YTW : 5.80 %

TD.PF.L FixedReset Disc Quote: 23.96 – 24.18
Spot Rate : 0.2200
Average : 0.1299

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 22.80
Evaluated at bid price : 23.96
Bid-YTW : 5.04 %

CU.PR.I FixedReset Prem Quote: 25.33 – 25.63
Spot Rate : 0.3000
Average : 0.2125

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-01
Maturity Price : 25.00
Evaluated at bid price : 25.33
Bid-YTW : 3.05 %

BAM.PF.C Perpetual-Discount Quote: 21.91 – 22.18
Spot Rate : 0.2700
Average : 0.1830

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-11-19
Maturity Price : 21.91
Evaluated at bid price : 21.91
Bid-YTW : 5.63 %

+

MFC.PR.M To Be Extended

November 19th, 2019

Manulife Financial Corporation has announced (on November 8):

that it does not intend to exercise its right to redeem all or any of its currently outstanding 14,000,000 Non-cumulative Rate Reset Class 1 Shares Series 17 (the “Series 17 Preferred Shares”) (TSX: MFC.PR.M) on December 19, 2019. As a result, subject to certain conditions described in the prospectus supplement dated August 11, 2014 relating to the issuance of the Series 17 Preferred Shares (the “Prospectus”), the holders of the Series 17 Preferred Shares have the right, at their option, to convert all or part of their Series 17 Preferred Shares on a one-for-one basis into Non-cumulative Floating Rate Class 1 Shares Series 18 of Manulife (the “Series 18 Preferred Shares”) on December 19, 2019. A formal notice of the right to convert Series 17 Preferred Shares into Series 18 Preferred Shares will be sent to the registered holders of the Series 17 Preferred Shares in accordance with the share conditions of the Series 17 Preferred Shares. Holders of Series 17 Preferred Shares are not required to elect to convert all or any part of their Series 17 Preferred Shares into Series 18 Preferred Shares. Holders who do not exercise their right to convert their Series 17 Preferred Shares into Series 18 Preferred Shares on such date will retain their Series 17 Preferred Shares, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after December 4, 2019, Manulife determines that there would be less than 1,000,000 Series 17 Preferred Shares outstanding on December 19, 2019, then all remaining Series 17 Preferred Shares will automatically be converted into an equal number of Series 18 Preferred Shares on December 19, 2019, and (ii) alternatively, if, after December 4, 2019, Manulife determines that there would be less than 1,000,000 Series 18 Preferred Shares outstanding on December 19, 2019, then no Series 17 Preferred Shares will be converted into Series 18 Preferred Shares. In either case, Manulife will give written notice to that effect to any registered holders of Series 17 Preferred Shares affected by the preceding minimums on or before December 11, 2019.

The dividend rate applicable to the Series 17 Preferred Shares for the 5-year period commencing on December 20, 2019, and ending on December 19, 2024, and the dividend rate applicable to the Series 18 Preferred Shares for the 3-month period commencing on December 20, 2019, and ending on March 19, 2020, will be determined and announced by way of a news release on November 20, 2019. Manulife will also give written notice of these dividend rates to the registered holders of Series 17 Preferred Shares.

Beneficial owners of Series 17 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Toronto time) on December 4, 2019. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, AST Trust Company (Canada), at 1-800-783-9495.

Subject to certain conditions described in the Prospectus, Manulife may redeem the Series 17 Preferred Shares, in whole or in part, on December 19, 2024 and on December 19 every five years thereafter and may redeem the Series 18 Preferred Shares, in whole or in part, after December 19, 2019.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 18 Preferred Shares effective upon conversion. Listing of the Series 18 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 18 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.M is a FixedReset, 3.90%+236, that commenced trading 2014-8-15 after being announced 2014-8-11. It is tracked by HIMIPref™ and has been assigned to the FixedReset (Insurance non-NVCC) subindex, but will move shortly to the FixedReset (Discount) subindex as the imposition of NVCC rules for insurers can no longer be considered probable.

I will have more to say one the reset rate has been determined November 20.