W Upgraded to P-2(low) by S&P Following Parent Merger; DBRS Stands Pat

February 28th, 2017

Enbridge Inc. has announced:

the completion today of the previously announced stock-for-stock merger transaction (the Transaction) to acquire all of the outstanding common stock of Spectra Energy Corp (NYSE:SE) (Spectra Energy).

This led Standard & Poor’s to announce:

  • •On Feb. 27, 2017, Enbridge Inc. announced the completion of its merger with Spectra Energy Corp. in a share-exchange transaction.
  • •With the merger’s completion, Spectra subsidiary Westcoast Energy Inc. will become a wholly owned subsidiary of Enbridge Inc.
  • •We view Westcoast as a core subsidiary of Enbridge, so we are raising our ratings on Westcoast, including our long-term corporate credit rating to ‘BBB+’ from ‘BBB’.
  • •We removed the ratings from CreditWatch, where they were placed with positive implications Sept. 6, 2016.
  • •The stable outlook on Westcoast reflects the outlook on ultimate parent Enbridge.


S&P Global Ratings today said it raised its ratings on Westcoast Energy Inc., including its long-term corporate credit and senior unsecured debt ratings on the company to ‘BBB+’ from ‘BBB’. S&P Global Ratings removed the ratings from CreditWatch, where they were placed with positive implications Sept. 6, 2016. The outlook is stable.

Enbridge Inc. has announced its merger with Spectra Energy Corp., under which Spectra and all its subsidiaries, including Westcoast, will merge with Enbridge at the closing of this share-exchange transaction.

The stable outlook on Westcoast reflects the outlook on parent Enbridge,
because we view Westcoast to be a core subsidiary under our criteria, so have
linked the ratings and outlooks on the two.

The stable outlook on Enbridge reflects our view that the transaction with Spectra will not result in material asset dispositions that do not repay debt, or changes in proposed financing for the combined capital program that increase the proportion of debt. In addition, we expect that the planned capital program will occur on time and budget, and that the financing plans will maintain adjusted funds from operations (AFFO)-to-debt at the low end of the significant financial risk profile category at about 14%.

The new S&P rating for the Westcoast preferreds, W.PR.H, W.PR.J, W.PR.K and W.PR.M, is now P-2(low), up a notch (but an important notch!) from P-3(high).

DBRS commented on the merger:

DBRS continues to believe that the merger does not have any impact on the credit quality of Spectra and its DBRS-rated subsidiaries as no changes are currently contemplated to Spectra, its subsidiaries and counterparties, as a result of the Transaction. As a result, the stand-alone credit profiles of Spectra and its DBRS-rated subsidiaries remain unchanged.

With respect to Enbridge, DBRS confirmed all ratings:

DBRS Limited (DBRS) has today confirmed the following ratings of Enbridge Inc. (ENB) and removed them from Under Review with Developing Implications where they were placed on September 6, 2016. The trends are Stable:

— ENB, Issuer Rating of BBB (high)
— ENB, Medium-Term Notes & Unsecured Debentures rated BBB (high)
— ENB, Cumulative Redeemable Preferred Shares rated Pfd-3 (high)
— ENB, Commercial Paper rated R-2 (high)

With respect to financial risk profile, DBRS expects ENB to meet its key target metrics of 15% funds from operations (FFO) to debt and five times debt-to-EBITDA, likely in late 2018 or early 2019. DBRS notes the combined entity’s substantial medium-term capex program and consequently expects near-term pressure on ENB’s credit metrics to continue. DBRS expects the recovery in key credit metrics (on both consolidated and non-consolidated bases) at the combined entity to be faster than previously expected from ENB on a stand-alone basis. This expectation is consistent with a number of key DBRS assumptions, including the migration of the combined entity’s common dividend payout ratio toward the low end of the 50% to 60% range over the medium term, the achievement of expected run-rate synergies and estimated tax savings, and that there is no increase in structural subordination at the ENB level from currently contemplated levels.

The Stable trends incorporate DBRS’s expectation that any incremental investments in new projects will be consistent with maintaining a strong overall business risk profile and medium-term improvement in key credit metrics. Changes to any of these and other key assumptions would cause DBRS to revisit the current ratings and/or trends.

February 27, 2017

February 28th, 2017
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 -0.5404 % 2,058.7
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.5404 % 3,777.6
Floater 3.67 % 3.90 % 56,412 17.57 4 -0.5404 % 2,177.1
OpRet 0.00 % 0.00 % 0 0.00 0 0.0393 % 2,997.2
SplitShare 4.72 % 4.11 % 58,093 0.77 4 0.0393 % 3,579.2
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0393 % 2,792.7
Perpetual-Premium 5.41 % -5.66 % 68,384 0.09 16 -0.1314 % 2,738.8
Perpetual-Discount 5.16 % 5.17 % 99,513 15.03 22 -0.2186 % 2,913.0
FixedReset 4.43 % 4.02 % 228,548 6.77 97 -0.1309 % 2,329.1
Deemed-Retractible 5.01 % 0.54 % 133,783 0.16 31 0.0920 % 2,854.3
FloatingReset 2.49 % 3.11 % 50,845 4.65 9 -0.5171 % 2,465.0
Performance Highlights
Issue Index Change Notes
TRP.PR.H FloatingReset -2.66 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 12.82
Evaluated at bid price : 12.82
Bid-YTW : 3.42 %
BNS.PR.Y FixedReset -1.46 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.20
Bid-YTW : 4.51 %
BAM.PR.B Floater -1.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 12.21
Evaluated at bid price : 12.21
Bid-YTW : 3.91 %
IFC.PR.C FixedReset -1.23 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.70
Bid-YTW : 5.70 %
TRP.PR.B FixedReset -1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 14.52
Evaluated at bid price : 14.52
Bid-YTW : 4.02 %
BAM.PR.C Floater -1.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 12.25
Evaluated at bid price : 12.25
Bid-YTW : 3.90 %
MFC.PR.F FixedReset -1.10 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.33
Bid-YTW : 9.32 %
SLF.PR.G FixedReset -1.04 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.24
Bid-YTW : 8.69 %
GWO.PR.S Deemed-Retractible 2.87 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 25.41
Bid-YTW : 5.16 %
Volume Highlights
Issue Index Shares
Traded
Notes
BIP.PR.D FixedReset 60,456 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 23.17
Evaluated at bid price : 25.05
Bid-YTW : 4.88 %
BAM.PF.I FixedReset 53,291 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-31
Maturity Price : 25.00
Evaluated at bid price : 25.78
Bid-YTW : 4.42 %
BIP.PR.B FixedReset 38,716 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 4.47 %
RY.PR.C Deemed-Retractible 29,500 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-03-29
Maturity Price : 25.00
Evaluated at bid price : 25.24
Bid-YTW : -6.48 %
BNS.PR.O Deemed-Retractible 24,500 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-04-26
Maturity Price : 25.00
Evaluated at bid price : 25.31
Bid-YTW : 0.30 %
TD.PF.A FixedReset 22,200 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 21.63
Evaluated at bid price : 22.05
Bid-YTW : 3.86 %
There were 18 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
SLF.PR.G FixedReset Quote: 16.24 – 16.53
Spot Rate : 0.2900
Average : 0.1831

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.24
Bid-YTW : 8.69 %

ELF.PR.F Perpetual-Discount Quote: 24.31 – 24.64
Spot Rate : 0.3300
Average : 0.2304

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 24.06
Evaluated at bid price : 24.31
Bid-YTW : 5.52 %

IAG.PR.G FixedReset Quote: 23.15 – 23.39
Spot Rate : 0.2400
Average : 0.1505

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.15
Bid-YTW : 5.06 %

RY.PR.P Perpetual-Premium Quote: 25.90 – 26.15
Spot Rate : 0.2500
Average : 0.1810

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2025-02-24
Maturity Price : 25.00
Evaluated at bid price : 25.90
Bid-YTW : 4.74 %

ELF.PR.H Perpetual-Discount Quote: 25.05 – 25.25
Spot Rate : 0.2000
Average : 0.1338

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-27
Maturity Price : 24.76
Evaluated at bid price : 25.05
Bid-YTW : 5.55 %

BMO.PR.Q FixedReset Quote: 21.57 – 21.91
Spot Rate : 0.3400
Average : 0.2746

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.57
Bid-YTW : 5.04 %

Toronto Rock Lacrosse Tickets: Update #3

February 25th, 2017

I have one more pair of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. A decision regarding who gets tickets to the last home game (barring playoffs!) will be made on March 10. I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The third lucky winner, who got the tickets for March 3 against the New England Black Wolves, prefers to remain anonymous. The fourth winner, who will be attending the March 11 game against the Calgary Roughnecks, was Paul Bates.

The remaining ticket giveaway is:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, March 10 … if you want tickets to see the game against the Vancouver Stealth on March 25, contact me on or before that date!

February 24, 2017

February 24th, 2017
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 -0.3079 % 2,069.9
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.3079 % 3,798.2
Floater 3.65 % 3.85 % 55,025 17.68 4 -0.3079 % 2,188.9
OpRet 0.00 % 0.00 % 0 0.00 0 0.1083 % 2,996.0
SplitShare 4.72 % 4.05 % 60,123 0.77 4 0.1083 % 3,577.8
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1083 % 2,791.6
Perpetual-Premium 5.41 % -4.95 % 70,726 0.09 16 0.1316 % 2,742.4
Perpetual-Discount 5.15 % 5.14 % 99,749 15.06 22 0.0971 % 2,919.4
FixedReset 4.42 % 4.03 % 237,065 6.77 97 -0.1541 % 2,332.1
Deemed-Retractible 5.02 % 1.01 % 133,638 0.10 31 -0.1734 % 2,851.7
FloatingReset 2.48 % 3.12 % 51,422 4.65 9 0.1171 % 2,477.8
Performance Highlights
Issue Index Change Notes
GWO.PR.S Deemed-Retractible -3.70 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 5.60 %
IFC.PR.A FixedReset -1.83 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.75
Bid-YTW : 7.32 %
GWO.PR.N FixedReset -1.41 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.40
Bid-YTW : 9.32 %
PWF.PR.A Floater -1.40 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 14.76
Evaluated at bid price : 14.76
Bid-YTW : 3.22 %
BNS.PR.Z FixedReset -1.15 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.34
Bid-YTW : 4.62 %
BAM.PR.X FixedReset -1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 16.37
Evaluated at bid price : 16.37
Bid-YTW : 4.56 %
TRP.PR.H FloatingReset -1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 13.17
Evaluated at bid price : 13.17
Bid-YTW : 3.33 %
SLF.PR.G FixedReset -1.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.41
Bid-YTW : 8.54 %
TRP.PR.A FixedReset 1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 18.66
Evaluated at bid price : 18.66
Bid-YTW : 4.10 %
TRP.PR.F FloatingReset 1.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 17.55
Evaluated at bid price : 17.55
Bid-YTW : 3.41 %
BIP.PR.B FixedReset 1.25 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.88
Bid-YTW : 4.37 %
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.K FixedReset 134,415 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-05-31
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 4.24 %
BIP.PR.C FixedReset 88,896 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.57
Bid-YTW : 4.70 %
NA.PR.W FixedReset 72,079 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 21.52
Evaluated at bid price : 21.90
Bid-YTW : 3.92 %
BIP.PR.D FixedReset 62,857 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 23.16
Evaluated at bid price : 25.00
Bid-YTW : 4.89 %
TD.PF.C FixedReset 47,763 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 21.45
Evaluated at bid price : 21.80
Bid-YTW : 3.93 %
SLF.PR.H FixedReset 46,500 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.95
Bid-YTW : 6.39 %
There were 35 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
GWO.PR.S Deemed-Retractible Quote: 24.70 – 25.80
Spot Rate : 1.1000
Average : 0.6269

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 5.60 %

IFC.PR.A FixedReset Quote: 18.75 – 19.12
Spot Rate : 0.3700
Average : 0.2708

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.75
Bid-YTW : 7.32 %

BMO.PR.Q FixedReset Quote: 21.76 – 22.06
Spot Rate : 0.3000
Average : 0.2030

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.76
Bid-YTW : 4.84 %

BMO.PR.B FixedReset Quote: 25.87 – 26.10
Spot Rate : 0.2300
Average : 0.1416

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-02-25
Maturity Price : 25.00
Evaluated at bid price : 25.87
Bid-YTW : 4.10 %

TRP.PR.B FixedReset Quote: 14.70 – 14.98
Spot Rate : 0.2800
Average : 0.1935

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-24
Maturity Price : 14.70
Evaluated at bid price : 14.70
Bid-YTW : 4.00 %

SLF.PR.D Deemed-Retractible Quote: 22.46 – 22.70
Spot Rate : 0.2400
Average : 0.1595

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.46
Bid-YTW : 6.24 %

ALB.PR.C Upgraded to Pfd-2 by DBRS

February 23rd, 2017

DBRS has announced that it:

has today upgraded the rating on the Class B Preferred Shares, Series 2 (the Series 2 Preferred Shares) issued by Allbanc Split Corp. II (the Company) to Pfd-2 from Pfd-2 (low). In February 2016, the Company offered 687,567 Series 2 Preferred Shares at $25.67 each as part of a share reorganization. The Series 2 Preferred Shares were issued to maintain the leveraged split share structure of the Company so that the number of issued and outstanding Class A Capital Shares is twice the number of issued and outstanding Series 2 Preferred Shares. The maturity date for the Series 2 Preferred Shares is February 28, 2021.

The current yield on the Portfolio shares fully covers the Series 2 Preferred Share dividends, providing dividend coverage of approximately 1.5 times (x). The Class A Capital Shares are expected to receive all excess dividend income after the Series 2 Preferred Share distributions and other expenses of the Company have been paid.

In the past year, the downside protection available to the Series 2 Preferred Shares, although being volatile, has been gradually increasing, reaching approximately 67.7% as of February 16, 2017.

ALB.PR.C is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

February 23, 2017

February 23rd, 2017

Assiduous Reader Adrian2 sends me a link to a discussion of drones in Engineering school:

Among the biggest adopters of drones, and experimenters with them, have been universities. As the director of the University of California system’s Center of Excellence on Unmanned Aircraft System Safety – effectively the drone headquarters of our whole 10-campus system – I have an excellent view of the drone industry’s past, present and future.

Some introductory engineering classes involve students building and flying drones; more advanced students learn about flight dynamics and algorithms that help drones stay aloft.

In recent years, though, our engineering departments are focusing less on building the aircraft and more on improving safety, navigation and ability to carry equipment that allows drones to help with different tasks.

For example, researchers are developing navigation systems that don’t rely on GPS satellites. This could help allow drones to navigate autonomously inside buildings, in deep canyons, underground or other places where GPS signals are unavailable or unreliable.

Another research group is working on ways for drones to help detect gas leaks from oil pipelines. With millions of miles of pipelines across the country, that is a monumental task. Attaching methane-sniffing sensors to drones could make it much easier: Autonomous drones could fly the routes of every pipeline nearly constantly, registering the location and volume of leaks, and alerting repair and cleanup crews.

For example, drones with special thermal cameras are allowing researchers to investigate water consumption rates of several varieties of crops in the Sacramento-San Joaquin Delta. The drones’ data collection is so detailed that the scholars can count individual melons, allowing much better estimates of crop yield.

For instance, when monitoring giant sequoias, a team of five to seven people would have to map the area, which would take about a week. A drone flight has been able to replace that work with a two-minute flight. That makes it easier to track how the trees are growing and responding to changes in their environment.

There will be some Assiduous Readers, of course, who hate drones and hate it when I talk about them. For you guys, I recommend Siberian Tigers.

I remember once trying to find a chart showing the federal deficit during the nineties, to buttress a point I was making on social media. I couldn’t find one … so in memory of that wasted hour, here’s a federal deficit chart from Bloomberg:

federaldeficit
Click for Big
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 0.5611 % 2,076.3
FixedFloater 0.00 % 0.00 % 0 0.00 0 0.5611 % 3,809.9
Floater 3.64 % 3.87 % 55,463 17.65 4 0.5611 % 2,195.7
OpRet 0.00 % 0.00 % 0 0.00 0 0.1775 % 2,992.7
SplitShare 4.72 % 4.08 % 62,448 0.78 4 0.1775 % 3,574.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1775 % 2,788.6
Perpetual-Premium 5.41 % -6.50 % 73,431 0.09 16 0.0976 % 2,738.8
Perpetual-Discount 5.16 % 5.14 % 99,235 15.06 22 0.2480 % 2,916.6
FixedReset 4.41 % 4.02 % 231,790 6.78 97 0.1947 % 2,335.7
Deemed-Retractible 5.01 % 0.84 % 135,448 0.10 31 0.3316 % 2,856.7
FloatingReset 2.48 % 3.10 % 51,386 4.66 9 0.2886 % 2,474.9
Performance Highlights
Issue Index Change Notes
CU.PR.C FixedReset -1.30 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 21.60
Evaluated at bid price : 21.96
Bid-YTW : 3.99 %
PWF.PR.P FixedReset -1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 15.56
Evaluated at bid price : 15.56
Bid-YTW : 4.26 %
TRP.PR.G FixedReset -1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 22.62
Evaluated at bid price : 23.46
Bid-YTW : 4.24 %
TRP.PR.D FixedReset 1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 21.54
Evaluated at bid price : 21.92
Bid-YTW : 4.05 %
SLF.PR.D Deemed-Retractible 1.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.63
Bid-YTW : 6.11 %
MFC.PR.N FixedReset 1.13 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.37
Bid-YTW : 5.19 %
MFC.PR.B Deemed-Retractible 1.17 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.28
Bid-YTW : 5.72 %
TRP.PR.E FixedReset 1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 22.36
Evaluated at bid price : 22.82
Bid-YTW : 3.91 %
MFC.PR.M FixedReset 1.23 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.30
Bid-YTW : 5.30 %
TRP.PR.B FixedReset 1.30 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 14.84
Evaluated at bid price : 14.84
Bid-YTW : 4.01 %
BMO.PR.S FixedReset 1.31 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 22.16
Evaluated at bid price : 22.45
Bid-YTW : 3.90 %
BMO.PR.T FixedReset 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 21.58
Evaluated at bid price : 21.99
Bid-YTW : 3.87 %
MFC.PR.C Deemed-Retractible 1.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.50
Bid-YTW : 6.09 %
SLF.PR.C Deemed-Retractible 1.53 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.56
Bid-YTW : 6.16 %
TRP.PR.H FloatingReset 1.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 13.43
Evaluated at bid price : 13.43
Bid-YTW : 3.31 %
BMO.PR.Y FixedReset 1.86 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 22.98
Evaluated at bid price : 24.15
Bid-YTW : 3.88 %
IFC.PR.A FixedReset 1.92 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.10
Bid-YTW : 7.03 %
TRP.PR.C FixedReset 1.96 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 16.16
Evaluated at bid price : 16.16
Bid-YTW : 4.02 %
Volume Highlights
Issue Index Shares
Traded
Notes
MFC.PR.I FixedReset 182,362 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.16
Bid-YTW : 5.11 %
BNS.PR.G FixedReset 153,700 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-07-25
Maturity Price : 25.00
Evaluated at bid price : 26.99
Bid-YTW : 3.66 %
MFC.PR.R FixedReset 150,510 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-19
Maturity Price : 25.00
Evaluated at bid price : 25.60
Bid-YTW : 4.27 %
BAM.PR.T FixedReset 143,975 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 19.47
Evaluated at bid price : 19.47
Bid-YTW : 4.46 %
TRP.PR.K FixedReset 106,005 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-05-31
Maturity Price : 25.00
Evaluated at bid price : 25.81
Bid-YTW : 4.23 %
MFC.PR.H FixedReset 85,278 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.98
Bid-YTW : 4.85 %
There were 38 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
MFC.PR.F FixedReset Quote: 15.42 – 15.75
Spot Rate : 0.3300
Average : 0.1966

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.42
Bid-YTW : 9.23 %

CU.PR.C FixedReset Quote: 21.96 – 22.32
Spot Rate : 0.3600
Average : 0.2350

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 21.60
Evaluated at bid price : 21.96
Bid-YTW : 3.99 %

PWF.PR.P FixedReset Quote: 15.56 – 15.84
Spot Rate : 0.2800
Average : 0.1730

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 15.56
Evaluated at bid price : 15.56
Bid-YTW : 4.26 %

RY.PR.Z FixedReset Quote: 21.94 – 22.24
Spot Rate : 0.3000
Average : 0.1999

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 21.55
Evaluated at bid price : 21.94
Bid-YTW : 3.86 %

SLF.PR.I FixedReset Quote: 23.60 – 23.88
Spot Rate : 0.2800
Average : 0.1898

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.60
Bid-YTW : 4.78 %

TD.PF.E FixedReset Quote: 24.39 – 24.59
Spot Rate : 0.2000
Average : 0.1254

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-23
Maturity Price : 23.06
Evaluated at bid price : 24.39
Bid-YTW : 3.96 %

MFC.PR.H To Reset At 4.312%

February 23rd, 2017

Manulife Financial Corporation has announced:

the applicable dividend rates for its Non-cumulative Rate Reset Class 1 Shares Series 7 (the “Series 7 Preferred Shares”) (TSX: MFC.PR.H) and Non-cumulative Floating Rate Class 1 Shares Series 8 (the “Series 8 Preferred Shares”).

With respect to any Series 7 Preferred Shares that remain outstanding after March 19, 2017, 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 March 20, 2017, and ending on March 19, 2022, will be 4.31200% per annum or $0.269500 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at February 21, 2017, plus 3.13%, as determined in accordance with the terms of the Series 7 Preferred Shares.

With respect to any Series 8 Preferred Shares that may be issued on March 19, 2017 in connection with the conversion of the Series 7 Preferred Shares into the Series 8 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 March 20, 2017, and ending on June 19, 2017, will be 0.90639% (3.59600% on an annualized basis) or $0.226598 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at February 21, 2017, plus 3.13%, as determined in accordance with the terms of the Series 8 Preferred Shares.

Beneficial owners of Series 7 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 March 6, 2017. The news release announcing such conversion right was issued on February 10, 2017 and can be viewed on SEDAR or Manulife’s website. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, CST Trust Company, at 1‑800-387-0825.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 8 Preferred Shares effective upon conversion. Listing of the Series 8 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 8 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.H is a FixedReset, 4.60%+313, that commenced trading 2012-2-22 after being announced 2012-2-14. The notice of extension was previously reported.

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.H 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).

pairs_fr_170223
Click for Big

The market appears to have a distaste at the moment for floating rate product; most of the implied rates until the next interconversion are lower than the current 3-month bill rate and the averages for investment-grade and junk issues are both well below current market rates, at -0.51% and -0.64%, respectively! 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.H FixedReset, we may construct the following table showing consistent prices for its soon-to-be-issued FloatingReset counterpart given a variety of Implied Breakeven yields consistent with issues currently trading:

Estimate of FloatingReset (received in exchange for MFC.PR.H) Trading Price In Current Conditions
  Assumed FloatingReset
Price if Implied Bill
is equal to
FixedReset Bid Price Spread 0.00% -0.50% -1.00%
MFC.PR.H 23.98 313bp 22.76 22.24 21.73

Based on current market conditions, I suggest that the FloatingResets that will result from conversion are likely to be cheap and trading below the price of their FixedReset counterparts. Therefore, it seems likely that I will recommend that holders of MFC.PR.H continue to hold the issue and not to convert, but I will wait until it’s closer to the March 6 notification deadline before making a final pronouncement. I will note that, given the apparent cheapness of the FloatingResets, it may be a good trade to swap the FixedReset for the FloatingReset in the market once both elements of each pair are trading and you can – presumably, according to this analysis – 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.

Insofar as the relative valuation of MFC.PR.H is concerned, Implied Volatility analysis indicates it’s fairly priced relative to other MFC issues:

impvol_mfc_170223
Click for Big

In fact, the entire series is well-behaved, with the exception of MFC.PR.F, which looks about $1.40 cheap (according to this analysis!).

February 22, 2017

February 23rd, 2017

Here’s a switch! Pricing went nuts on some sub-debt because it was called on its pretend-maturity!

Goldman Sachs Group Inc. handed a surprise gift to bondholders in Canada this week by redeeming debt sooner than investors had expected, and some money managers are betting that other banks will follow its lead.

The New York-based bank said Tuesday that it was redeeming all of its C$500 million ($380 million) in subordinated notes maturing in April 2022 for a price equal to principal plus accrued interest. The bonds jumped by about 1.76 cents to as much as 100.376 cents on the news. The move was unexpected after JPMorgan Chase & Co. opted not to call similar bonds last year, said Mark Carpani, a portfolio manager at Ridgewood Capital Asset Management.

goldmansubdebtcall
Click for Big
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 0.7211 % 2,064.7
FixedFloater 0.00 % 0.00 % 0 0.00 0 0.7211 % 3,788.6
Floater 3.66 % 3.89 % 55,943 17.60 4 0.7211 % 2,183.4
OpRet 0.00 % 0.00 % 0 0.00 0 0.0197 % 2,987.4
SplitShare 4.73 % 4.12 % 61,290 0.78 4 0.0197 % 3,567.6
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0197 % 2,783.6
Perpetual-Premium 5.42 % -4.40 % 74,333 0.09 16 -0.0829 % 2,736.1
Perpetual-Discount 5.17 % 5.16 % 100,195 15.03 22 0.0821 % 2,909.3
FixedReset 4.42 % 4.04 % 234,953 6.78 97 0.4163 % 2,331.2
Deemed-Retractible 5.02 % 1.65 % 132,763 0.11 31 0.1067 % 2,847.2
FloatingReset 2.49 % 3.17 % 53,287 4.66 9 -0.1867 % 2,467.8
Performance Highlights
Issue Index Change Notes
BMO.PR.Y FixedReset -1.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.77
Evaluated at bid price : 23.71
Bid-YTW : 3.97 %
NA.PR.S FixedReset 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.34
Evaluated at bid price : 22.70
Bid-YTW : 3.93 %
BMO.PR.T FixedReset 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.38
Evaluated at bid price : 21.70
Bid-YTW : 3.93 %
CU.PR.I FixedReset 1.08 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-01
Maturity Price : 25.00
Evaluated at bid price : 27.21
Bid-YTW : 2.04 %
BIP.PR.A FixedReset 1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.54
Evaluated at bid price : 23.25
Bid-YTW : 5.02 %
BAM.PF.E FixedReset 1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.41
Evaluated at bid price : 22.97
Bid-YTW : 4.13 %
TD.PF.B FixedReset 1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.46
Evaluated at bid price : 21.81
Bid-YTW : 3.94 %
TD.PF.C FixedReset 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.35
Evaluated at bid price : 21.66
Bid-YTW : 3.95 %
RY.PR.J FixedReset 1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.64
Evaluated at bid price : 23.40
Bid-YTW : 4.03 %
TRP.PR.B FixedReset 1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 14.65
Evaluated at bid price : 14.65
Bid-YTW : 4.06 %
BMO.PR.W FixedReset 1.26 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.36
Evaluated at bid price : 21.67
Bid-YTW : 3.91 %
BAM.PF.B FixedReset 1.30 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.32
Evaluated at bid price : 22.61
Bid-YTW : 4.23 %
MFC.PR.F FixedReset 1.32 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.40
Bid-YTW : 9.24 %
TRP.PR.C FixedReset 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 15.85
Evaluated at bid price : 15.85
Bid-YTW : 4.09 %
RY.PR.Z FixedReset 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.50
Evaluated at bid price : 21.87
Bid-YTW : 3.87 %
TRP.PR.E FixedReset 1.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.18
Evaluated at bid price : 22.55
Bid-YTW : 3.96 %
TRP.PR.G FixedReset 1.45 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.75
Evaluated at bid price : 23.73
Bid-YTW : 4.18 %
FTS.PR.M FixedReset 1.48 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.21
Evaluated at bid price : 22.60
Bid-YTW : 4.04 %
CM.PR.O FixedReset 1.60 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.99
Evaluated at bid price : 22.25
Bid-YTW : 3.94 %
CM.PR.P FixedReset 1.68 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.45
Evaluated at bid price : 21.80
Bid-YTW : 3.92 %
RY.PR.H FixedReset 1.72 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 21.54
Evaluated at bid price : 21.93
Bid-YTW : 3.91 %
MFC.PR.J FixedReset 1.72 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.10
Bid-YTW : 4.90 %
SLF.PR.H FixedReset 2.04 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.00
Bid-YTW : 6.35 %
HSE.PR.A FixedReset 2.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 16.15
Evaluated at bid price : 16.15
Bid-YTW : 4.31 %
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.K FixedReset 218,891 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-05-31
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 4.23 %
MFC.PR.R FixedReset 102,898 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-19
Maturity Price : 25.00
Evaluated at bid price : 25.65
Bid-YTW : 4.22 %
HSE.PR.G FixedReset 100,256 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 23.06
Evaluated at bid price : 24.30
Bid-YTW : 4.75 %
BAM.PF.I FixedReset 85,092 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-31
Maturity Price : 25.00
Evaluated at bid price : 25.81
Bid-YTW : 4.38 %
BAM.PF.H FixedReset 83,940 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.40
Bid-YTW : 3.65 %
BAM.PF.A FixedReset 66,673 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 23.43
Evaluated at bid price : 23.83
Bid-YTW : 4.28 %
There were 72 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
GWO.PR.N FixedReset Quote: 15.54 – 16.95
Spot Rate : 1.4100
Average : 0.8647

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.54
Bid-YTW : 9.18 %

FTS.PR.M FixedReset Quote: 22.60 – 23.05
Spot Rate : 0.4500
Average : 0.2754

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.21
Evaluated at bid price : 22.60
Bid-YTW : 4.04 %

MFC.PR.M FixedReset Quote: 22.03 – 22.50
Spot Rate : 0.4700
Average : 0.3160

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.03
Bid-YTW : 5.48 %

IFC.PR.C FixedReset Quote: 21.70 – 22.14
Spot Rate : 0.4400
Average : 0.2875

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.70
Bid-YTW : 5.69 %

BMO.PR.Y FixedReset Quote: 23.71 – 24.19
Spot Rate : 0.4800
Average : 0.3372

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 22.77
Evaluated at bid price : 23.71
Bid-YTW : 3.97 %

PWF.PR.E Perpetual-Premium Quote: 25.32 – 25.68
Spot Rate : 0.3600
Average : 0.2188

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-03-24
Maturity Price : 25.00
Evaluated at bid price : 25.32
Bid-YTW : -6.08 %

ALA.PR.K Firm On Excellent Volume

February 23rd, 2017

AltaGas Ltd. has announced:

that it has closed its previously announced public offering of 12,000,000 Cumulative 5-Year Minimum Rate Reset Redeemable Preferred Shares, Series K (the “Series K Preferred Shares”), at a price of $25.00 per Series K Preferred Share (the “Offering”) for aggregate gross proceeds of $300 million.

The Offering was first announced on February 13, 2017 when AltaGas entered into an agreement with a syndicate of underwriters co-led by CIBC Capital Markets, BMO Capital Markets, National Bank Financial Inc. and Scotiabank.

Net proceeds will be used to reduce existing indebtedness and for general corporate purposes.

The Series K Preferred Shares will commence trading today on the Toronto Stock Exchange (“TSX”) under the symbol ALA.PR.K.

ALA.PR.K is a FixedReset, 5.00%+380M500, announced 2017-2-13. It will be tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

The issue traded 1,402,187 shares today in a range of 25.01-10 before closing at 25.09-11, 6×10. Vital statistics are:

ALA.PR.K FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-22
Maturity Price : 23.18
Evaluated at bid price : 25.09
Bid-YTW : 4.90 %

Implied Volatility analysis indicates that while the new issue is reasonably a little cheap, a cheaper alternative for this name is available with ALA.PR.A:

impvol_ala_170222
Click for Big

New Issue: EIT Retractible, ROC, Details to Follow

February 22nd, 2017

Canoe EIT Income Fund has announced:

that it has filed and obtained a receipt for a preliminary short form prospectus in respect of a potential offering of Cumulative Redeemable Series 1 Preferred Units (the “Series 1 Preferred Units”) at a price of $25.00 per Series 1 Preferred Unit (the “Offering”). The Series 1 Preferred Units will be offered to the public through a syndicate of underwriters led by Scotiabank and RBC Capital Markets which also includes BMO Capital Markets, CIBC Capital Markets, National Bank Financial Inc., TD Securities Inc., Canaccord Genuity Corp., Industrial Alliance Securities Inc. and Manulife Securities Incorporated. Canoe Financial LP, the manager of the Fund, believes that successful completion of the Offering will provide the Fund with longer-term fixed rate capital at an attractive all in cost of financing. The additional capital will be used to take advantage of attractive investment opportunities, and is also expected to ensure the sustainability of the Fund by increasing the earning capacity of the Units. The Series 1 Preferred Units are provisionally rated Pfd – 2 (high) by Dominion Bond Rating Service Limited.

The Fund’s regular monthly distribution of $0.10 per unit for unitholders of EIT.UN units remains unchanged. The Fund has maintained the $0.10 per unit monthly distribution since August 2009, through varying market conditions.

The Fund’s annual voluntary redemption feature for unitholders of EIT.UN units remains unchanged. Once a date has been set for the 2017 annual redemption, the Fund will issue a news release with the details.

A preliminary short form prospectus containing important information relating to the Series 1 Preferred Units has been filed with securities commissions or similar authorities in all provinces and territories of Canada. The preliminary short form prospectus is still subject to completion or amendment. Copies of the preliminary short form prospectus may be obtained from your registered financial advisor using the contact information for such advisor, or from representatives of the underwriters listed above. There will not be any sale or any acceptance of an offer to buy the Series 1 Preferred Units until a receipt for the final short form prospectus has been issued.

The preliminary prospectus is on SEDAR, but Canadian Regulatory Authorities have determined in their infinite wisdom that nasty investor scum may not link directly to it. Instead, one must search for “Canoe EIT Income Fund Feb 17 2017 16:18:30 ET Preliminary short form prospectus – English PDF 335 K”

The investment objectives of the Fund are to maximize monthly distributions relative to risk and maximize Net Asset Value, while maintaining and expanding a diversified investment portfolio, primarily through acquiring, investing, holding, transferring, disposing of or otherwise dealing with or in equity and debt securities of corporations, partnerships, or other issuers and such other investments as the Manager may determine in its sole discretion from time to time. The investment objectives set forth above may be achieved through direct acquisitions, investments or, at the election of the Manager, through “exchange offers” or rights offerings completed by the Fund from time to time.

Set out below are the tax classifications of the historical distributions of the Fund (which were $0.10 per Unit per month for the entire period presented) for the past five years and the Manager expects the Series 1 Preferred Units to have a similar distribution breakdown:
% 2015 2014 2013 2012 2011
Capital gain 60.92% 59.89% 32.73% 32.82%
Actual amount of eligible dividends 9.29% 5.33% 18.18% 32.25% 16.73%
Actual amount of ineligible dividends
Foreign income, net of tax 17.28%
Other income 1.49%
Return of Capital(1) 29.79% 34.78% 49.09% 66.26% 33.17%
Total 100.00% 100.00% 100.00% 100.00% 100.00%

(1) Includes warrants from 2012-2016


Certain Provisions of the Series 1 Preferred Units

Distributions

Series 1 Preferred Unitholders will be entitled to receive quarterly cumulative preferential cash distributions on the 15th day of March, June, September and December of each year at a rate of ●% per annum of the issue price of a Series 1 Preferred Unit ($● per Series 1 Preferred Unit per annum or $● per Series 1 Preferred Unit per quarter), less any tax required by law to be deducted therefrom. The initial distribution, if declared, will be payable on June 15, 2017 and will be $● per Series 1 Preferred Unit, assuming a closing date of ●, 2017. Distributions in any given period may consist of net income, net capital gains and/or returns of capital. The Fund’s income and net taxable gains for the purposes of the Tax Act will be allocated to the holders of Units and Series 1 Preferred Units in the same proportion as the distributions received by such holders. See “Principal Canadian Federal Income Tax Considerations”.

Redemption at the Option of the Fund

Prior to March 15, 2022, the Fund may not redeem any Series 1 Preferred Units. On or after March 15, 2022, the Fund may give notice in writing not less than 30 days nor more than 60 days prior to the applicable redemption date of its intention to redeem for cash the Series 1 Preferred Units in whole or in part, at the Fund’s option, at a price per Series 1 Preferred Unit equal to $25.75 if redeemed on or after March 15, 2022, but before March 15, 2023; $25.50 if redeemed on or after March 15, 2023, but before March 15, 2024; and $25.00 thereafter, together, in each case, with all accrued and unpaid distributions up to but excluding the date fixed for redemption and less any tax required by law to be deducted therefrom.

If less than all outstanding Series 1 Preferred Units are at any time to be redeemed, the particular Series 1 Preferred Units to be redeemed will be selected on a pro rata basis (disregarding fractions) or in such other manner as the Trustee in its discretion may, by resolution, determine.

Retraction by Series 1 Preferred Unitholders

Prior to March 15, 2024, a Series 1 Preferred Unitholder may not require the Fund to retract any Series 1 Preferred Units. Subject to the provisions of any equity securities of the Fund ranking prior to or pari passu with the Series 1 Preferred Units, and to the provisions described under “− Restrictions on Distributions and Retirement and Issue of Series 1 Preferred Units”, a Series 1 Preferred Unitholder may require the Fund to retract such Series 1 Preferred Units (by delivering notice to the Manager of the intention to have Series 1 Preferred Units retracted not less than 30 days prior to the applicable retraction date) on or after March 15, 2024 for a cash price of $25.00, together with any accrued and unpaid distributions up to but excluding the date of retraction and less any tax required by law to be deducted therefrom.

Purchase for Cancellation

Subject to applicable law, including the requirements in NI 81-102, the provisions of any equity securities of the Fund ranking prior to or pari passu with the Series 1 Preferred Units, and to the provisions described under “− Restrictions on Distributions and Retirement and Issue of Series 1 Preferred Units”, the Fund may at any time purchase for cancellation the whole or any part of the Series 1 Preferred Units outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which, in the opinion of the Manager of the Fund, such Series 1 Preferred Units are obtainable.

Rating

The Series 1 Preferred Units are provisionally rated Pfd-2(high) by Dominion Bond Rating Service Limited (“DBRS”).