Archive for the ‘Issue Comments’ Category

DF.PR.A To Get Bigger

Monday, October 25th, 2021

Quadravest has announced:

Dividend 15 Split Corp. II (the “Company”) is pleased to announce it will undertake an offering of Preferred Shares and Class A Shares of the Company. The offering will be led by National Bank Financial Inc.

The Preferred Shares will be offered at a price of $10.10 per Preferred Share to yield 5.7% on the issue price and the Class A Shares will be offered at a price of $6.45 per Class A Share to yield 18.6% on the issue price.

The closing price on the TSX of each of the Preferred Shares and the Class A Shares on October 22, 2021 was $10.15 and $6.49, respectively.

Since inception of the Company, the aggregate dividends declared on the Preferred Shares have been $7.95 per share and the aggregate dividends declared on the Class A Shares have been $14.00 per share, for a combined total of $21.95 per unit. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed portfolio of dividend yielding common shares which includes each of the 15 Canadian companies listed below:

Bank of Montreal Enbridge Inc. TC Energy
The Bank of Nova Scotia Manulife Financial Corp. TELUS Corporation
BCE Inc. National Bank of Canada Thomson Reuters Corp.
Canadian Imperial Bank of Commerce Royal Bank of Canada The Toronto-Dominion Bank
CI Financial Corp. Sun Life Financial Inc. TransAlta Corporation

The Company’s investment objectives are:

Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of 5.75% annually; and
ii. on or about the termination date, currently December 1, 2024 (subject to further 5 year extensions thereafter and it has been extended in the past), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends currently targeted to be $0.10 per Class A; and
ii. on or about December 1, 2024, to pay the holders of Class A Shares at least the original issue price of those shares.

The sales period of this overnight offering will end at 9:00 a.m. (EST) on October 26, 2021.

So Whole Units are offered at 16.55 and the NAVPU on 2021-10-22 was 15.79. A 4.8% premium isn’t bad business!

PWF.PF.A Soft On Reasonable Volume

Saturday, October 16th, 2021

Power Corporation of Canada and Power Financial Corporation have announced:

the closing of Power Financial’s previously announced offering of 8,000,000 4.50% Non-Cumulative First Preferred Shares, Series 23 in the capital of Power Financial (the “Series 23 Shares”) priced at $25.00 per share for gross proceeds of $200 million. The issue was bought by a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The Series 23 Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “PWF.PF.A”. The net proceeds of this offering will be used by Power Financial for general corporate purposes. Power Financial intends to redeem all of its outstanding $200 million 6.00% Non-Cumulative First Preferred Shares, Series I.

PWF.PF.A is a Straight Perpetual, 4.50%, announced 2021-10-6. It will be tracked by HIMIPref™ and has been assigned to the PerpetualDiscount subindex.

The issue traded 736,260 shares today in a range of 24.65-83 before closing at 24.65-80. Vital statistics are:

PWF.PF.A Perpetual-Discount YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-10-15
Maturity Price : 24.26
Evaluated at bid price : 24.65
Bid-YTW : 4.56 %

RY On Review-Positive At Moody’s

Tuesday, October 12th, 2021

Moody’s Investors Service has announced that it:

has today placed on review for upgrade all long-term ratings and assessments of Royal Bank of Canada (RBC), including the a3 standalone baseline credit assessment (BCA), the Aa2 deposit rating and Counterparty Risk Rating, and the Aa2(cr) Counterparty Risk Assessments. The bank’s Prime-1 short term ratings and Prime-1(cr) short-term Counterparty Risk Assessment were affirmed.

RBC’s strong credit profile reflects its position as a diversified universal bank with leading market shares across many retail products and services in its home market and a growing presence in the US through its California-based private and commercial bank, City National Bank (LT deposits Aa3 stable, BCA a2), which RBC acquired in 2015. RBC’s diversified business mix, which also includes a major commitment to capital markets, and wealth and asset management businesses, has extended the bank’s competitive advantage over many of its peers. This business mix has also produced a sturdy buffer against the greater volatility of RBC’s capital markets activity through various economic cycles. The steady profitability generated by RBC’s businesses enables the bank to consistently reinvest to drive organic business growth as well as develop leading digital customer solutions and capabilities, further supporting its strong competitive position.

RBC’s a3 BCA could be upgraded if Moody’s assesses that the bank will likely continue to demonstrate a resilient operating performance that reflects a superior diversity of business mix relative to many similarly rated global peers, and stability in its risk profile , while maintaining its capital level above 12% tangible common equity as a percentage of risk-weighted assets. A higher BCA would likely lead to a ratings upgrade. The ratings could be confirmed at their existing level should the bank’s earnings and capital base not demonstrate the level of resilience expected by Moody’s when stressed under various scenarios.

The review for upgrade indicates that rating downgrades are unlikely over the next 12-18 months. However, RBC’s a3 BCA could be downgraded if the bank increases risk appetite leading to credit quality deterioration or the bank increased the size of its capital markets operations relative to its retail and commercial banking businesses. A significant further deterioration in the domestic operating environment or any material regulatory, compliance or risk management failures could also lead to a downgrade of the bank’s BCA. A lower BCA would likely lead to a ratings downgrade.

Affected issues are: RY.PR.H, RY.PR.J, RY.PR.M, RY.PR.N, RY.PR.O, RY.PR.P, RY.PR.S and RY.PR.Z .

October PrefLetter Released!

Monday, October 11th, 2021

The October, 2021, edition of PrefLetter has been released and is now available for purchase as the “Previous edition”. Those who subscribe for a full year receive the “Previous edition” as a bonus.

The October edition is somewhat foreshortened, but contains the most critical elements.

PrefLetter may now be purchased by all Canadian residents.

Until further notice, the “Previous Edition” will refer to the October, 2021, issue, while the “Next Edition” will be the November, 2021, issue, scheduled to be prepared as of the close November 12, 2021, and eMailed to subscribers prior to market-opening on November 15.

PrefLetter is intended for long term investors seeking issues to buy-and-hold. At least one recommendation from each of the major preferred share sectors is included and discussed.

Note: My verbosity has grown by such leaps and bounds that it is no longer possible to deliver PrefLetter as an eMail attachment – it’s just too big for my software! Instead, I have sent passwords – click on the link in your eMail and your copy will download.

Note: There have been problems lately with corporate eMail protection systems that substitute “safe” links for the links sent in the eMails; the problem being that the “safe” links do not work and an error is generated by my software. To avoid possible problems and delays, please subscribe through an eMail account that is not “protected” by such software.

Note: The PrefLetter website has a Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter eMails sometimes runs afoul of spam filters. If you have not received your copy within fifteen minutes of a release notice such as this one, please double check your (company’s) spam filtering policy and your spam repository – there are some hints in the post Sympatico Spam Filters out of Control. If it’s not there, contact me and I’ll get you your copy … somehow!

Note: There have been scattered complaints regarding inability to open PrefLetter in Acrobat Reader, despite my practice of including myself on the subscription list and immediately checking the copy received. I have had the occasional difficulty reading US Government documents, which I was able to resolve by downloading and installing the latest version of Adobe Reader. Also, note that so far, all complaints have been from users of Yahoo Mail. Try saving it to disk first, before attempting to open it.

Note: There have been other scattered complaints that double-clicking on the links in the “PrefLetter Download” email results in a message that the password has already been used. I have been able to reproduce this problem in my own eMail software … the problem is double-clicking. What happens is the first click opens the link and the second click finds that the password has already been used and refuses to work properly. So the moral of the story is: Don’t be a dick! Single Click!

Note: Assiduous Reader DG informs me:

In case you have any other Apple users: you need to install a free App from the apple store called “FileApp”. It comes with it’s own tutorial and allows you to download and save a PDF file.

However, Assiduous Reader Adrian informs me in the comments to the January 2015 release:

Some nitpicking for DG:
FileApp costs $1.19 in the Apple Store.

But Adrian2 now advises:

Well, as of now, FileApp is free (again?).

GWO.PR.Y Flat on Good Volume

Friday, October 8th, 2021

Great-West Lifeco Inc. has announced:

the closing of its previously announced offering of 8,000,000 4.50% Non-Cumulative First Preferred Shares, Series Y (the “Series Y Preferred Shares”) for gross proceeds of $200 million. The offering was completed through a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets, Scotiabank, CIBC Capital Markets and TD Securities. The Series Y Preferred Shares will be listed for trading on the Toronto Stock Exchange under the symbol “GWO.PR.Y”.

Vital statistics are:

GWO.PR.Y Insurance-Straight YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-10-08
Maturity Price : 24.59
Evaluated at bid price : 24.98
Bid-YTW : 4.50 %

The issue traded 884,860 shares today in a range of 24.95-45 before closing at 24.98-99.

GWO.PR.Y is a Straight Perpetual, 4.50%, announced 2021-10-1. It is tracked by HIMIPref™ and has been assigned to the Insurance-Straight subindex.

PWF.PR.I To Be Redeemed

Wednesday, October 6th, 2021

Power Corporation of Canada and Power Financial Corporation have announced:

Upon completion of the offering, Power Financial intends to redeem all of its outstanding $200 million First Preferred Shares, Series I.

The offering in the quoted paragraph refers to a today’s announcement of a new issue of 4.50% Straight Perpetuals.

PWF.PR.I is a Straight Perpetual, 6.00%, that commenced trading 2003-3-11. It has been tracked by HIMIPref™ and is assigned to the PerpetualPremium subindex.

GDV.PR.A To Get Bigger

Tuesday, October 5th, 2021

Brompton Group has announced:

Global Dividend Growth Split Corp. (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Wednesday, October 6, 2021. The offering is expected to close on or about October 13, 2021 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $12.25 per Class A Share for a distribution rate of 9.8% on the issue price, and the Preferred Shares will be offered at a price of $10.05 per Preferred Share for a yield to maturity of 4.9%. The closing price on the TSX for each of the Class A Shares and Preferred Shares on October 4, 2021 was $12.51 and $10.50, respectively. The Class A Share and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (“Unit”) (calculated as at October 4, 2021), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering. The offering is being led by RBC Capital Markets.

The Company invests in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Brompton Funds Limited (the “Manager”). In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least $10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions and to provide the opportunity for capital appreciation through exposure to the Portfolio.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.125 per Preferred Share, and to return the original issue price to holders of Preferred Shares on June 30, 2026.

So whole units are offered for a total of 22.30 per Unit, while the October 4 NAVPU is 20.86; a premium of 6.90%. What a glorious business this is!

FTN.PR.A : Dividend Remains at 6.75% until 2022-11-30

Monday, October 4th, 2021

Quadravest has announced:

Financial 15 Split Corp. (the “Company”) is pleased to announce the Preferred Share dividend rate for the fiscal year beginning December 1, 2021. Monthly payments to the FTN.PR.A Preferred Share will be maintained at $0.05625 per Share for an annual yield of 6.75% on their $10 redemption value. This represents no change from the current rate.

The Company invests in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal National Bank of Canada Bank of America Corp.
The Bank of Nova Scotia Manulife Financial Corporation Citigroup Inc.
Canadian Imperial Bank of Commerce Sun Life Financial Services of Canada Inc. Goldman SachsGroup Inc.
Royal Bank of Canada Great-West Lifeco Inc. JP Morgan Chase & Co.
The Toronto-Dominion Bank CI Financial Corp. Wells Fargo & Co.

The initial temporary increase in dividend was announced last year.

FFN.PR.A : Dividend Remains at 6.75% until 2022-11-30

Monday, October 4th, 2021

On September 23, 2020, Quadravest announced:

North American Financial 15 Split Corp. (the “Company”) is pleased to announce the Preferred Share dividend rate for the fiscal year beginning December 1, 2020. Monthlypayments to the FFN.PR.A Preferred Share will be $0.05625 per Share for an annual yield of 6.75% on their $10 redemption value. This is an increase of one and a quarter percent over the current rate.

The Company invests in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal National Bank of Canada Bank of America Corp.
The Bank of Nova Scotia Manulife Financial Corporation Citigroup Inc.
Canadian Imperial Bank of Commerce Sun Life Financial Services of Canada
Inc.
Goldman Sachs Group Inc.
Royal / of Canada Great-West Lifeco Inc. JP Morgan Chase & Co.
The Toronto-Dominion Bank CI Financial Corp. Wells Fargo & Co.

They have further announced (on 2021-10-1):

North American Financial 15 Split Corp. (the “Company”) is pleased to announce the Preferred Share dividend rate for the fiscal year beginning December 1, 2021. Monthly payments to the FFN.PR.A Preferred Share will be maintained at $0.05625 per Share for an annual yield of 6.75% on their $10 redemption value. This represents no
change from the current rate.

The Company invests in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal National Bank of Canada Bank of America Corp.
The Bank of Nova Scotia Manulife Financial Corporation Citigroup Inc.
Canadian Imperial Bank of Commerce Sun Life Financial Services of Canada Inc. Goldman Sachs Group Inc.
Royal Bank of Canada Great-West Lifeco Inc. JP Morgan Chase & Co.
The Toronto-Dominion Bank CI Financial Corp. Wells Fargo & Co.

TD.PF.H To Be Redeemed

Monday, October 4th, 2021

The Toronto-Dominion Bank has announced (on September 24):

that it will exercise its right to redeem all of its 40,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class A First Preferred Shares, Series 14 (Non-Viability Contingent Capital) (the “Series 14 Shares”) on October 31, 2021 at the price of $25.00 per Series 14 Share for an aggregate total of approximately $1 billion.

On August 26, 2021, TD announced that dividends of $0.303125 per Series 14 Share had been declared. These will be the final dividends on the Series 14 Shares, and will be paid in the usual manner on October 31, 2021 to shareholders of record on October 8, 2021, as previously announced. After October 31, 2021, the Series 14 Shares will cease to be entitled to dividends and the only remaining rights of holders of such shares will be to receive payment of the redemption amount.

Beneficial holders who are not directly the registered holder of Series 14 Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Inquiries should be directed to our Registrar and Transfer Agent, AST Trust Company (Canada), at 1-800-387-0825 (or in Toronto 416-682-3860).

TD.PF.H is a FixedReset, 4.85%+412, NVCC, that commenced trading 2016-9-29 after being announced 2016-8-29. It is a monster issue, the largest in the market, with 40-million shares (=$1-billion p.v.) outstanding.