New Issue: ENB FixedReset 4.00%+237

Enbridge has announced:

that it has entered into an agreement with a group of underwriters to sell 12 million cumulative redeemable preference shares, series D (the “Series D Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on November 23, 2011.

The holders of Series D Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.00 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the board of directors of Enbridge, yielding 4.00 per cent per annum, for the initial fixed rate period ending March 1, 2018. The first quarterly dividend payment date is scheduled for March 1, 2012. The dividend rate will reset on March 1, 2018 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.37 per cent. The Series D Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2018 and on March 1 of every fifth year thereafter.

The holders of Series D Preferred Shares will have the right to convert their shares into cumulative redeemable preference shares, series E (the “Series E Preferred Shares”), subject to certain conditions, on March 1, 2018 and on March 1 of every fifth year thereafter. The holders of Series E 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 then 90-day Government of Canada treasury bill rate plus 2.37 per cent.

Enbridge 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 D Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is co-led by TD Securities Inc. RBC Capital Markets and Scotia Capital Inc.

It was super-sized shortly afterwards:

Enbridge Inc. (TSX:ENB)(NYSE:ENB) today announced that as a result of strong investor demand for its previously announced offering of cumulative redeemable preference shares, series D (the “Series D Preferred Shares”), the size of the offering has been increased to 18 million Series D Preferred Shares. The aggregate gross proceeds will now be $450 million.

Update, 2011-11-17: DBRS rates Pfd-2(low).

2 Responses to “New Issue: ENB FixedReset 4.00%+237”

  1. prefhound says:

    Wow! This is really a sellers’ market. Not only does ENB get 6.5 year money for 4%, the assumed reset rate (most likely outlook for renewal) is 5-Year GOC of 1.36% now + 2.37% = 3.75%. This is looking like a perpetual to me.
    The big problem for us real perpetual buyers is that the odds of being called are higher when the issuer can refinance so much cheaper with a different product. We are going to be challenged to maintain 5.3% discount pref yields (security of income) for more than about 5 years before the only thing left is those cursed fixed resets.

  2. […] is a FixedReset, 4.00%+237, announced November 14. The issue traded 1,353,175 shares today in a range of 25.05-20 before closing at 25.10-13, […]

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