RY.PR.H commenced trading today after being announced last week and did better than I had expected, trading 587,260 shares in a range of 24.65-78, closing at 24.69-74, 10×12.
Some comparables:
| RY Perps 4/29 | ||||
| Issue | Quote 4/29 |
Dividend | Curve Price |
Pre-tax Bid-YTW |
| RY.PR.A | 20.01-10 | 1.1125 | 20.32 | 5.57% |
| RY.PR.B | 20.80-88 | 1.1750 | 21.37 | 5.66% |
| RY.PR.C | 20.22-29 | 1.15 | 20.88 | 5.70% |
| RY.PR.D | 19.90-19 | 1.125 | 20.46 | 5.67% |
| RY.PR.E | 19.85-90 | 1.125 | 20.44 | 5.68% |
| RY.PR.F | 19.71-84 | 1.1125 | 20.24 | 5.66% |
| RY.PR.G | 19.88-99 | 1.125 | 20.45 | 5.67% |
| RY.PR.W | 21.88-17 | 1.225 | 22.17 | 5.61% |
| RY.PR.H | 24.69-74 | 1.4125 | 24.59 | 5.75% |
Note that “Curve Price” is a static calculation – it assumes that the yield curve will not change in the future. Convexity effects decrease the value of near-par-by-curve-price issues
Those comparing prices with those on announcement date should recall that RY went ex-dividend on April 22, the day after announcement. Cynics might speculate that the announcement of the new issue was actually timed in this manner, to make the calculated current yields of the extant issues lower than otherwise, which would make the calculated current yield of the new issue at issue price look relatively better … so it’s a good thing that PrefBlog readers aren’t cynics, isn’t it?
“Cynics might speculate that the announcement of the new issue was actually timed in this manner, to make the calculated current yields of the extant issues lower than otherwise, which would make the calculated current yield of the new issue at issue price look relatively better … so it’s a good thing that PrefBlog readers aren’t cynics, isn’t it?”
—————–
As some assiduous readers probably suspect, madequota is a cynic. The only thing madequota is more cynical about [outside of his normal day in, day out cynicism (sp?)], is his cynical attitude towards RBC, and their fund managers’ trading practices.
Having said that, here’s what I think about Mr. Hymas’ theory: I hope he’s 100% right, and that this timing/relative yield thing actually did go down in the ivory towers of RBC. why? because it would demonstrate that . . . finally . . . there’s a Canadian issuer that seems to care about the amount of money it tosses out when it goes to market with new paper. I know, I know . . . they will do what’s best for them, not what’s best for the market.
But in this case, coming out with a 5.65 pref when all around are delighted to flog 5.8 and 6.0 coupons, sends a clear signal to the market that this paper actually has some value, and that maybe the issuer intends on continuing to pay the stated dividend; maybe even redeem the stuff someday. Kinda makes the ABCP-free mental giants over at TD look a little . . . well . . . foolish. As for National . . . well, who cares . . . they’re not big 5, so what they do, and at what price, is hardly consequential to the market as a whole.
Bottom line for me is the same as it was 5 minutes after Kaspu put up his “hear it comes” heads up on issue day . . . this is good for the market, and RBC should be commended on their frugal, if not calculated, thinking.
Now I will return to my regular campaign of insulting their fund managers.
madequota
p.s. I hope readers took the advice of holding off on the IPO, and waiting for opening day to buy.
… sends a clear signal to the market that …
Signal, schmignal.
I didn’t buy any because they don’t want to pay me enough.
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