The Bank of Nova Scotia has announced:
the applicable dividend rates for its Non-cumulative 5-Year Rate Reset Preferred Shares Series 22 of Scotiabank (the “Preferred Shares Series 22”) and Non-cumulative Floating Rate Preferred Shares Series 23 of Scotiabank (the “Preferred Shares Series 23”).
With respect to any Preferred Shares Series 22 that remain outstanding after January 26, 2014, commencing as of such date, holders thereof will be entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Scotiabank and subject to the Bank Act (Canada). The dividend rate for the five-year period commencing on January 26, 2014 and ending on January 25, 2019 will be 3.830%, being equal to the 5-Year Government of Canada bond yield determined as at December 27, 2013 plus 1.88%, as determined in accordance with the terms of the Preferred Shares Series 22.
With respect to any Preferred Shares Series 23 that may be issued on January 26, 2014, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Scotiabank and subject to the Bank Act (Canada), based on a dividend rate equal to the 90-day Canadian Treasury Bill yield plus 1.88%, on an actual/365 day count basis, subject to certain adjustments in accordance with the terms of the Preferred Shares Series 23. The dividend rate for the period commencing on January 26, 2014 and ending on April 25, 2014 will be equal to 2.782%, as determined in accordance with the terms of the Preferred Shares Series 23.
Beneficial owners of Preferred Shares Series 22 who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to ensure that they meet the deadline to exercise such right, which is 5:00 p.m. (Toronto time) on January 13, 2014.
The extension of BNS.PR.R was previously reported on PrefBlog.
I am making no recommendation as to whether holders of BNS.PR.R should convert or not to the new FloatingReset that will appear on January 25. The five FloatingResets currently outstanding have an average three-month bill breakeven rate of 1.87%; given a current price of 25.33 on BNS.PR.R, this implies a price of 25.24 on the new issue, which is certainly within error. Given a current bill yield of 0.91%, the implication is that the Bank Rate will rise by 200bp over the next five years, assuming a steady rate of increases – this is reasonable. If you have strong views on the future of the Bank Rate, act accordingly (while remembering to ask yourself ‘What if I’m wrong?’) or go with what makes most sense for your portfolio.
This entry was posted on Tuesday, December 31st, 2013 at 10:11 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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BNS.PR.R To Reset At 3.83%
The Bank of Nova Scotia has announced:
The extension of BNS.PR.R was previously reported on PrefBlog.
I am making no recommendation as to whether holders of BNS.PR.R should convert or not to the new FloatingReset that will appear on January 25. The five FloatingResets currently outstanding have an average three-month bill breakeven rate of 1.87%; given a current price of 25.33 on BNS.PR.R, this implies a price of 25.24 on the new issue, which is certainly within error. Given a current bill yield of 0.91%, the implication is that the Bank Rate will rise by 200bp over the next five years, assuming a steady rate of increases – this is reasonable. If you have strong views on the future of the Bank Rate, act accordingly (while remembering to ask yourself ‘What if I’m wrong?’) or go with what makes most sense for your portfolio.
This entry was posted on Tuesday, December 31st, 2013 at 10:11 pm and is filed under Issue Comments. 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.