Royal Bank has announced a new issue of perpetual preferred shares, Series AC. The issue size is smaller than their previous issues, only 8 million shares ($200-million p.v.)
Pays $1.15 p.a., quarterly. Initial dividend (if declared) $0.362329 payable Feb 24, 2007, based on a closing date of Nov 1, 2006.
Redemption Schedule is:
- Nov 24, 2011 – Nov 23, 2012 : $26.00
- Nov 24, 2012 – Nov 23, 2013 : $25.75
- Nov 24, 2013 – Nov 23, 2014 : $25.50
- Nov 24, 2014 – Nov 23, 2015 : $25.25
- On and after Nov 24, 2015 : $25.00
DBRS rates Royal preferreds as Pfd-1. The information I have indicates this issue is rated Pfd-1(low), but I suspect that this is a misprint – especially since there is at least one other obvious misprint in the term sheet I have.
I will calculate a preliminary valuation of these shares later today.
Update : The new issue (in the table as RY.PR.?) looks quite reasonable:
| Curve Price Components (Taxable Curve) | |||
| Issue | RY.PR.A | RY.PR.B | RY.PR.? |
| Dividend | $1.1125 | $1.1750 | $1.1500 |
| Price due to base-rate | 23.01 | 23.90 | 23.39 |
| Price due to short-term | 0.09 | 0.09 | 0.09 |
| Price due to long-term | 0.54 | 0.56 | 0.52 |
| Price due to error | -0.03 | -0.03 | 0 |
| Intrinsic Value | 23.61 | 24.52 | 24.00 |
| Liquidity | 1.45 | 1.51 | ~1.45 |
| Total Value (rounding) | 25.06 | 26.02 | 25.45 |
[…] The volume – and the price drop, it returned -0.3497% on the day – may have been due to players making room for the new issue. Why not, provided you can trade cheaply? RY.PR.B has a pre-tax YTW of 4.54% based on a closing bid of $25.65 and a call 2015-9-23 at $25.00 … which still makes it better yielding than some of those with higher volume today! This goes ex-dividend tomorrow, Tuesday, October 24, A.D. 2006, so be careful! […]
[…] At these levels the issue looks quite attractive! The dividend of $1.1125 represents a current yield of 4.63% on a price of $24.00, and it’s OK to use current yield on a discounted perp! This yields exceeds the issue yield of the new Royal Bank Issue, which I quite liked. […]
[…] The new Royal Bank 4.6% perpetuals were off to a good start today, trading 239,875 shares in a range of 25.15-25 to close at $25.16-18, 3×13. […]