PrefBlog

I’ve just issued a press release on this issue … and it’s negative, although not horribly so.

 There’s a huge premium being placed on liquidity nowadays and it would seem that Royal Bank is exploiting it for all it’s worth (and why not?). I’m amazed that they can find enough purchasers to cover all $300-million worth … but the dividend funds are sitting on all kinds of cash and are desperate to put it to work, as far as I can tell.

 My fearless prediction is that this issue will, like RY.PR.A did on April 4, open at about $24.75 – no need to rush to subscribe for this issue! I will then fearlessly predict that the issue will underperform its peers over the next year, as the liquidity premium fades away and the thing starts to be priced in accordance with the overall curve.

 Update And Bump, 2006-7-20 : Well that was a great opening, wasn’t it? They started trading today and closed at 24.30-45 on volume of 41,040 shares. Even worse than I thought … it may have been that the Power Financial new issue with an extra 40bp of coupon got everybody wondering just how much this stuff was worth.

Or it may have been my press release!

This entry was posted on Thursday, July 20th, 2006 at 8:00 pm and is filed under New Issues. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.