The underwriters unloaded all (? Well, I don’t know for sure. But a big chunk, anyway!) of their unsold inventory of TD.PR.P today; 819,021 shares (of a 10-million share issue) traded in a range of 24.00-23, closing at 24.10-13, 12×11. I am advised that the blow-out price was $24.00.
I don’t get it. Who, except maybe for those willing to pay up-up-UP for the privilege of buying a big piece, would be willing to buy it at $24.00? Let’s look at a recent comparable – the same comparable I wrote about when I reported on the opening day: TD.PR.O.
All I can really do is repeat the following from my previous post:
Yields are basically comparable, although the TD issue looks expensive even on this basis. So:
- If yields go up and prices go down, old & new will return about the same.
- If yields are unchanged, old and new will return about the same.
- If yields go down, the new issues will get called away just as things start to get fun, while the old issues will rack up big gains.
Doesn’t anybody do scenario analysis any more?
If I repeat myself often enough, maybe enough people will listen that we’ll start seeing more preferred shares issued that actually have a concession to market … or maybe I’ll just be dismissed as a crank. You can never be sure…