DBRS has announced that it:
has today upgraded the rating on the Preferred Securities issued by Brookfield Soundvest Split Trust (the Trust) to Pfd-5 (high) from Pfd-5.
In March 2005, the Trust raised gross proceeds of $180 million by issuing 7.2 million Preferred Securities (at $10 each) and an equal number of Capital Units (at $15 each). On March 27, 2015, unitholders of the Trust voted to extend the term of the fund by five years. The new maturity is March 31, 2020.
Based on the latest Portfolio’s yield, the Preferred Securities distribution coverage ratio is approximately 0.4 times. The insufficient amount of Portfolio dividends to cover Preferred Security distributions is projected to create an average annual grind on the Portfolio of approximately 3.3% in the next three years.
As at March 2, 2017, the downside protection available to the Preferred Securities was approximately 17.4%, which represents a gain of about 10% compared to the downside protection amount recorded a year ago. The downside protection has exhibited relative stability in the past four months, settling in the high-teens figures. Nevertheless, it remains subject to volatility, as it depends on the value of underlying securities of the Portfolio. The amount of downside protection and projected grind until the expected end of the term warrant an upgrade of the rating on the Preferred Securities issued by the Trust to Pfd-5 (high).
Assiduous Readers will remember that BSD.PR.A adopted some pretty dubious tactics while getting their term extension, has awful performance and suspended redemptions during the Credit Crunch without giving a reason.