Archive for the ‘New Issues’ Category

New Issue: EIT Retractible, ROC, Details to Follow

Wednesday, 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”).

New Issue: ALA FixedReset, 5.00%+380M500

Tuesday, February 14th, 2017

AltaGas Ltd. has announced:

that it will issue 8,000,000 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 $200 million on a bought deal basis. The Series K Preferred Shares will be offered to the public through a syndicate of underwriters co-led by CIBC Capital Markets, BMO Capital Markets, National Bank Financial Inc. and Scotiabank.

Holders of the Series K Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend for the initial period ending on but excluding March 31, 2022 (the “Initial Period”) at an annual rate of 5.00%, payable on the last day of March, June, September and December, as and when declared by the Board of Directors of AltaGas. The first quarterly dividend payment is payable on June 30, 2017 and shall be $0.4384 per Series K Preferred Share. The dividend rate will reset on March 31, 2022 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.80%, provided that, in any event, such rate shall not be less than 5.00% per annum. The Series K Preferred Shares are redeemable by AltaGas, at its option, on March 31, 2022 and on March 31 of every fifth year thereafter.

Holders of Series K Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Floating Rate Preferred Shares, Series L (the “Series L Preferred Shares”), subject to certain conditions, on March 31, 2022 and on March 31 every fifth year thereafter. Holders of Series L Preferred Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.80%, as and when declared by the Board of Directors of AltaGas.

The Offering is expected to close on or about February 22, 2017. Net proceeds will be used to reduce existing indebtedness and for general corporate purposes. AltaGas has granted to the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing of the Offering, to purchase up to an additional 2,000,000 Series K Preferred Shares at a price of $25.00 per share.

The Series K Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under AltaGas’ short form base shelf prospectus dated August 10, 2015. The Offering is only being made by way of a prospectus. The prospectus contains important detailed information about the securities being offered. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

They later announced:

that as a result of strong investor demand for its previously announced bought deal offering of Cumulative 5-Year Minimum Rate Reset Redeemable Preferred Shares, Series K (the “Series K Preferred Shares”), the size of the offering has been increased to 12,000,000 shares at a price of $25.00 per Series K Preferred Share (the “Offering”), for aggregate gross proceeds of $300 million. In connection with the increase in the size of the Offering, the previously granted underwriters’ option has been terminated. The syndicate of underwriters is being co-led by CIBC Capital Markets, BMO Capital Markets, National Bank Financial Inc. and Scotiabank.

Andrew Willis of the Globe has some colour on the background:

Executives at capital-hungry companies such as utilities are always conscious of their credit ratings. This is especially true of CEOs and boards at U.S. pipelines: Enron’s meltdown and the near-death experience of the global financial crisis made top-notch ratings a priority. As a result, many U.S. utilities carry relatively little debt. That’s “lazy” in the sense that the company could easily borrow more money, while continuing to be judged as investment grade by the likes of S&P and Moody’s.

While utility executives might care about ratings, the credit market stopped paying much attention last year. In the spring of 2016, borrowing costs began to fall for any investment grade-rated company. At the same time, the spread or gap narrowed between the interest rates paid by a blue-chip double-A-rated borrower and a still-respectable but more leveraged triple B-rated business. And credit markets opened up – massive loans and bond sales were possible.

The most recent and most revealing of these takeovers came from AltaGas, which is buying WGL Holdings in a takeover that has an enterprise value – debt plus equity – of $8.4-billion. To pay for the acquisition, AltaGas rolled out an equity offering that was larger than the company’s market capitalization at the time. AltaGas sold $2.1-billion in stock to a team of banks led by TD Securities, RBC Capital Markets and JPMorgan, and an additional $400-million of equity to the OMERS pension plan. In addition, AltaGas took out a $4.95-billion (U.S.) bridge loan from JPMorgan, TD and RBC.

Implied Volatility analysis indicates that while the new issue is reasonably priced, cheaper alternatives for this name are available with ALA.PR.A and ALA.PR.I:

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New Issue: BPO FixedReset, 5.10%+396M510

Friday, February 10th, 2017

Brookfield Office Properties has announced (but not on their website yet, as far as I can tell given their idiotic, but ever-so-cool website design):

Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners L.P., announced today that it has agreed to issue to a syndicate of underwriters led by Scotiabank, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. for distribution to the public, eight million Cumulative Minimum Rate Reset Class AAA Preference Shares, Series EE (the “Preferred Shares, Series EE”). The Preferred Shares, Series EE will be issued at a price of C$25.00 per share, for aggregate proceeds of C$200 million. Holders of the Preferred Shares, Series EE will be entitled to receive a cumulative quarterly fixed dividend yielding 5.10% annually for the initial period ending March 31, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of (i) the five-year Government of Canada bond yield plus 3.96% and (ii) 5.10%.

Holders of Preferred Shares, Series EE will have the right, at their option, to convert their shares into Cumulative Floating Rate Class AAA Preference Shares, Series FF (the “Preferred Shares, Series FF”), subject to certain conditions, on March 31, 2022 and on March 31 every five years thereafter. Holders of Preferred Shares, Series FF will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 3.96%.

The Series EE Shares and Series FF Shares will be fully and unconditionally guaranteed, jointly and severally, as to: (i) the payment of dividends, as and when declared, (ii) the payment of amounts due on redemption, and (iii) the payment of amounts due on the liquidation, dissolution or winding-up of the Corporation, by the following entities: Brookfield Property Partners L.P., Brookfield Property L.P., Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings II Inc., BPY Bermuda Holdings Limited, BPY Bermuda Holdings II Limited, BPY Bermuda Holdings IV Limited and BPY Bermuda Holdings V Limited.

Brookfield Office Properties has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase an additional 2,000,000 Preferred Shares, Series EE at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$250 million.

The Preferred Shares, Series EE will be offered in all provinces of Canada by way of a supplement to Brookfield Office Properties’ existing Canadian short form base shelf prospectus dated August 29, 2016.

The net proceeds of the issue will be used by Brookfield Office Properties for general corporate purposes which may include the redemption of existing preferred shares. The offering is expected to close on or about February 17, 2017.

They later announced:

Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners L.P., announced today that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to eleven million Cumulative Minimum Rate Reset Class AAA Preference Shares, Series EE (the “Preferred Shares, Series EE”). The Preferred Shares, Series EE will be issued at a price of C$25.00 per share, for aggregate proceeds of C$275 million. There will not be an underwriters’ option. The Preferred Shares, Series EE are being offered on a bought deal basis by a syndicate of underwriters led by Scotiabank, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

Holders of the Preferred Shares, Series EE will be entitled to receive a cumulative quarterly fixed dividend yielding 5.10% annually for the initial period ending March 31, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of (i) the five-year Government of Canada bond yield plus 3.96% and (ii) 5.10%.

Holders of Preferred Shares, Series EE will have the right, at their option, to convert their shares into Cumulative Floating Rate Class AAA Preference Shares, Series FF (the “Preferred Shares, Series FF”), subject to certain conditions, on March 31, 2022 and on March 31 every five years thereafter. Holders of Preferred Shares, Series FF will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 3.96%.

The Series EE Shares and Series FF Shares will be fully and unconditionally guaranteed, jointly and severally, as to: (i) the payment of dividends, as and when declared, (ii) the payment of amounts due on redemption, and (iii) the payment of amounts due on the liquidation, dissolution or winding-up of the Corporation, by the following entities: Brookfield Property Partners L.P., Brookfield Property L.P., Brookfield BPY Holdings Inc., Brookfield BPY Retail Holdings II Inc., BPY Bermuda Holdings Limited, BPY Bermuda Holdings II Limited, BPY Bermuda Holdings IV Limited and BPY Bermuda Holdings V Limited.

The Preferred Shares, Series EE will be offered in all provinces of Canada by way of a supplement to Brookfield Office Properties’ existing Canadian short form base shelf prospectus dated August 29, 2016.

The net proceeds of the issue will be used by Brookfield Office Properties for general corporate purposes which may include the redemption of existing preferred shares. The offering is expected to close on or about February 17, 2017.

Implied volatility analysis indicates:

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So according to that, the new issue is a little expensive and should have had a coupon of more like 5.25%, but that depends on how much value you accord the minimum rate guarantee. I value it as zero!

New Issue: BEP FixedReset, 5.00%+382M500

Tuesday, February 7th, 2017

Brookfield Renewable Partners L.P. has announced:

that it has agreed to issue 8,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank for distribution to the public. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000.

Holders of the Series 11 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.00% annually for the initial period ending April 30, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of (i) the 5-year Government of Canada bond yield plus 3.82%, and (ii) 5.00%. The Series 11 Preferred Units are redeemable on April 30, 2022 and on each Series 11 Reclassification Date (as defined below) thereafter.

Holders of the Series 11 Preferred Units will have the right, at their option, to reclassify their Series 11 Preferred Units into Cumulative Floating Rate Reset Class A Preferred Limited Partnership Units, Series 12 (“Series 12 Preferred Units”), subject to certain conditions, on April 30, 2022 and on April 30 every 5 years thereafter (each a “Series 11 Reclassification Date”). Holders of Series 12 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 3.82%.

Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 11 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.

They later announced:

that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 10,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) to be offered on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $250,000,000.

Update, 2017-2-10: Barry Critchley has written a piece about this issue titled Will that be preferred units or preferred shares — they are not quite the same:

Apart from Brookfield, real estate investment trusts have, over the years, also issued rate reset preferred units. In January 2011, Rio-Can REIT made history by becoming the first REIT to issue such a piece of paper. It raised $125 million at 5.25 per cent and redeemed it early last year.

It took at least three years for RioCan to get to the stage where it could issue such a security. Regulatory and unit holder approval as well as securing an advanced tax ruling were all required. Given the time and costs involved, the security is only an option for a few issuers. (RioCan raised $149.50 million from a similar issue in late 2011. That issue is still outstanding though RioCan can redeem next June.)

New Issue: BIP FixedReset, 5.00%+378M500, ROC + Interest

Friday, January 20th, 2017

Brookfield Infrastructure has announced:

that it has agreed to issue 8,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 7 (“Series 7 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc. The Series 7 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000. Holders of the Series 7 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution at a rate of 5.00% annually for the initial period ending March 31, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.78%, and (ii) 5.00%. The Series 7 Preferred Units are redeemable on or after March 31, 2022.

Holders of the Series 7 Preferred Units will have the right, at their option, to reclassify their Series 7 Preferred Units into Cumulative Class A Preferred Limited Partnership Units, Series 8 (“Series 8 Preferred Units”), subject to certain conditions, on March 31, 2022 and on March 31 every five years thereafter. Holders of Series 8 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 3.78%.

Brookfield Infrastructure has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 7 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.

The Series 7 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Infrastructure’s existing short form base shelf prospectus.

Brookfield Infrastructure intends to use the net proceeds of the issue of the Series 7 Preferred Units for investment opportunities, working capital and other general corporate purposes. The offering of Series 7 Preferred Units is expected to close on or about January 26, 2017.

They later announced:

that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to 12,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 7 (“Series 7 Preferred Units”) to be offered on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc. The Series 7 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $300,000,000.

I understand that the Return of Capital percentage of distributions is forecast – but by no means guaranteed! – to be about 50% over the next five years. See the discussion of BIP.PR.A for some sample calculations regarding the implications of this.

Implied Volatility analysis suggests that this issue is expensive:

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However, this conclusion rests to a large degree on the question of how much the minimum reset guarantee is worth. I’m not inclined to assign a particularly high value on it; but others might be more generous.

New Issue: ECN FixedReset, 6.50%+544M650

Thursday, November 24th, 2016

ECN Capital Corp. has announced:

that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, CIBC World Markets, National Bank Financial, RBC Capital Markets and TD Securities. The underwriters have agreed to buy 4,000,000 Cumulative 5-Year Minimum Rate Reset Preferred Shares, Series A (the “Series A Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $100,000,000. The proceeds are expected to be used to originate and finance, directly and indirectly, finance assets and for general corporate purposes.

ECN Capital has granted the underwriters an option to purchase at the offering price up to an additional 2,000,000 Series A Preferred Shares exercisable, in whole or in part, at any time up to 48 hours prior to closing of the offering. Should the option be fully exercised, the total gross proceeds of the Series A Preferred Share offering will be $150,000,000.
The Series A Preferred Shares will be issued to the public at a price of $25.00 per share and holders will be entitled to receive fixed cumulative preferential cash dividends, payable by quarterly installments for an initial period of five years, as and when declared by the Board of Directors of the Corporation, at a rate of $1.625 per share per annum, to yield 6.50% annually. Thereafter, the dividend rate will reset every five years to the sum of the then current 5-Year Government of Canada Bond yield and 5.44%, provided that, in any event, such sum shall not be less than 6.50%. On December 31, 2021, and on December 31 of every fifth year thereafter, the Corporation may redeem the Series A Preferred Shares in whole or in part at par.

Holders will have the right to elect to convert all or any of their Series A Preferred Shares into an equal number of Cumulative Floating Rate Preferred Shares, Series B (the “Series B Preferred Shares”) on December 31, 2021, and on December 31 of every fifth year thereafter. Holders of the Series B Preferred Shares will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of the Corporation, equal to the sum of the then current 3-month Government of Canada Treasury Bill yield and 5.44%. On December 31, 2026 and on December 31, of every fifth year thereafter (a “Series B Redemption Date”), the Corporation may redeem the Series B Preferred Shares in whole or in part at par. On any other date that is not a Series B Redemption Date after December 31, 2021, the Corporation may redeem the Series B Preferred Shares in whole or in part by the payment of $25.50 for each share to be redeemed.

The offering is being made only in the provinces of Canada by means of a prospectus supplement to the Corporation’s base shelf prospectus. The closing date of the offering is expected to be on or about December 2, 2016.

“We see growth opportunities in the North American specialty finance market that we believe can offer very attractive returns for a non-bank participant with sector expertise and an investment-grade balance sheet,” said Steven Hudson, ECN Capital’s CEO. “The proceeds from this Offering bring these growth opportunities closer to hand by adding to the capacity, quality and depth of our current capital structure,” added Mr. Hudson.

ECN Capital was formed when Element Financial Corporation was partitioned into EFN (Element Fleet Management Corp.) and ECN. EFN was quickly upgraded to Pfd-3(high) by DBRS.

This new issue from ECN has been rated Pfd-3(low) by DBRS:

DBRS, Inc. (DBRS) has today assigned a rating of Pfd-3 (low) to the C$100 million Cumulative Five-Year Minimum Reset Preferred Shares, Series A (the Preferred Shares) issued by ECN Capital Corporation (ECN or the Company). The trend on the Preferred Shares is Stable. The proceeds from the Preferred Shares will be included in the general funds of ECN and available for general corporate purposes.

While near-term upward ratings migration is unlikely, over the medium-term, ratings could be positively impacted by a successful execution on the “asset-lite” strategy while maintaining asset quality within expectations and balance sheet leverage at current levels. Sustained earnings expansion that is supported by a more balanced mix of revenues would also be viewed positively by DBRS. A more balanced funding profile and lower asset encumbrance resulting in improved financial flexibility would be viewed favorably. Conversely, a noteworthy increase in leverage, sustained deterioration in operating performance, or indications of miss-steps in the execution of the “asset-lite” strategy evidenced by loss of key customers or operational-related charges could result in negative ratings pressure. Ratings could also be pressured by a material acquisition that DBRS views as outside of ECN’s core verticals and capabilities.

New Issue: ENB FixedReset 5.15%+414M515

Wednesday, November 16th, 2016

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell 20 million Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (the “Series 17 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on or about November 23, 2016.

The holders of Series 17 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.2875 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge. The Series 17 Preferred Shares are expected to yield 5.15 per cent per annum for the initial fixed rate period to, but excluding, March 1, 2022. The first quarterly dividend payment date is scheduled for March 1, 2017. The dividend rate will reset on March 1, 2022 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 4.14 per cent, provided that, in any event, such rate shall not be less than 5.15 per cent per annum. The Series 17 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2022 and on March 1 of every fifth year thereafter.

The holders of Series 17 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 18 (the “Series 18 Preferred Shares”) on March 1, 2022 and on March 1 of every fifth year thereafter, subject to certain conditions. The holders of Series 18 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 4.14 per cent.

Enbridge has granted to the underwriters an option to purchase up to an additional two million Series 17 Preferred Shares at a price of $25.00 per share, exercisable at any time up to 48 hours prior to the closing of the offering.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Company dated August 19, 2016. Proceeds are expected to be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Company and its affiliates.

The syndicate of underwriters is led by TD Securities Inc., CIBC Capital Markets, Scotiabank, and RBC Capital Markets.

They later announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (the “Series 17 Preferred Shares”), the size of the offering has been increased to 30 million from 20 million. The aggregate gross proceeds of the offering will be $750 million with closing expected on or about November 23, 2016.

New Issue: MFC FixedReset, 4.85%+383

Tuesday, November 15th, 2016

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”). Manulife will issue 14 million Series 23 Preferred Shares priced at $25 per share to raise gross proceeds of $350 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. Manulife has also granted the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing, to purchase up to an additional 2 million Series 23 Preferred Shares at the same offering price. The gross proceeds raised under the offering will be $400 million should this option be exercised in full. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.

Holders of the Series 23 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.85 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.83 per cent.

Holders of Series 23 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Floating Rate Class 1 Shares Series 24 (“Series 24 Preferred Shares”), subject to certain conditions, on March 19, 2022 and on March 19 every five years thereafter. Holders of the Series 24 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.83 per cent.

Manulife intends to use the net proceeds from the offering for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”), the size of the offering has been increased to 19 million shares. The gross proceeds of the offering will now be $475 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.

Manulife intends to use the net proceeds from the offering for general corporate purposes.

Implied Volatility analysis suggests that the issue is actually a little rich compared to its peers:

impVol_MFC_161114
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New Issue: TRP FixedReset, 4.90%+385M490, Monster!

Tuesday, November 15th, 2016

TransCanada Corporation has announced:

that it will issue 20 million cumulative redeemable minimum rate reset first preferred shares, series 15 (the “Series 15 Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $500 million on a bought deal basis to a syndicate of underwriters in Canada led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

The holders of Series 15 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.2250 per share, payable quarterly on the last business day of February, May, August and November, as and when declared by the board of directors of TransCanada. The Series 15 Preferred Shares will yield 4.90 per cent per annum for the initial fixed rate period ending May 31, 2022 with the first dividend payment date scheduled for February 28, 2017. The dividend rate will reset on May 31, 2022 and on the last business day of May in every fifth year thereafter to a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.85 per cent, provided that, in any event, such rate shall not be less than 4.90 per cent per annum. The Series 15 Preferred Shares are redeemable by TransCanada, at its option, on May 31, 2022 and on the last business day of May in every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 15 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 16 (the “Series 16 Preferred Shares”), subject to certain conditions, on May 31, 2022 and on the last business day of May in every fifth year thereafter. The holders of Series 16 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of TransCanada, at an annualized rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.85 per cent.

TransCanada has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million Series 15 Preferred Shares at a price of $25.00 per share.

The anticipated closing date is November 21, 2016. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

The Series 15 Preferred Shares will be offered to the public in Canada pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under TransCanada’s short form base shelf prospectus dated December 23, 2015. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable minimum rate reset first preferred shares, series 15 (the “Series 15 Preferred Shares”), the size of the offering has been increased to 40 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds of the offering will now be $1.0 billion. The syndicate of underwriters is led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

The anticipated closing date is November 21, 2016. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

Surprisingly, this issue looks a shade expensive when the TRP series is subjected to Implied Volatility analysis:

impVol_TRP_161114A
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However, there will be those who say that the presence of the minimum reset guarantee more than offsets the $0.25 richness of the issue price.

New Issue: BAM FixedReset, 4.80%+385M480

Friday, November 11th, 2016

Brookfield Asset Management Inc. has announced:

that it has agreed to issue 10,000,000 Class A Preferred Shares, Series 46 on a bought deal basis to a syndicate of underwriters led by TD Securities Inc. and Scotiabank for distribution to the public. The Preferred Shares, Series 46 will be issued at a price of C$25.00 per share, for gross proceeds of C$250,000,000. Holders of the Preferred Shares, Series 46 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.80% annually for the initial period ending March 31, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.85% and (ii) 4.80%.

Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 46 which, if exercised, would increase the gross offering size to C$300,000,000. The Preferred Shares, Series 46 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 46 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 46 for general corporate purposes. The offering of Preferred Shares, Series 46 is expected to close on or about November 18, 2016.

As is usually the case for the BAM series, Implied Volatility analysis yields a mess:

impVol_BAM_161110
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Update, 2016-11-14: They later announced:

that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 12,000,000 Class A Preferred Shares, Series 46. The Preferred Shares, Series 46 will be issued at a price of C$25.00 per share, for gross proceeds of C$300,000,000. The Preferred Shares, Series 46 are being issued on a bought deal basis to a syndicate of underwriters led by TD Securities Inc. and Scotiabank for distribution to the public.

The Preferred Shares, Series 46 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 46 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 46 for general corporate purposes. The offering of Preferred Shares, Series 46 is expected to close on or about November 18, 2016.