BMO.PR.D Firm On Good Volume

Bank of Montreal has announced:

it has closed its domestic public offering of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 42 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 42”). The offering was underwritten on a bought-deal basis by a syndicate of underwriters led by BMO Capital Markets. Bank of Montreal issued 16 million Preferred Shares Series 42 at a price of $25 per share to raise gross proceeds of $400 million.

The Preferred Shares Series 42 were issued under a prospectus supplement dated June 22, 2017, to the Bank’s short form base shelf prospectus dated April 13, 2016. Such shares will commence trading on the Toronto Stock Exchange today under the ticker symbol BMO.PR.D.

BMO.PR.D is a FixedReset, 4.40%+317, NVCC, announced 2017-6-20. It will be tracked by HIMIPref™ and has been assigned to the FixedResets subindex.

The issue traded 1,276,967 shares today in a range of 24.80-97 before closing at 24.94-95. Vital statistics are:

BMO.PR.D FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-06-29
Maturity Price : 23.13
Evaluated at bid price : 24.94
Bid-YTW : 4.41 %

Implied Volatility for FixedResets analysis shows very little change in relative valuation since the issue was announced:

impvol_bmo_170629
Click for Big

Only nine days ago, the GOC-5 rate was 1.13%, with the analysis showing a spread of 255bp and Implied Volatility of 18%. The theoretical price is now 24.81, compared to the issue-day calculation of 24.84.

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