CPX.PR.I Firm on Decent Volume

Capital Power Corporation has announced:

that it has closed its previously announced offering of Cumulative Minimum Rate Reset Preference Shares, Series 9 (the “Series 9 Shares”) at a price of $25.00 per Series 9 Share for aggregate gross proceeds of $150 million on a bought deal basis with a syndicate of underwriters, co-led by TD Securities Inc. and National Bank Financial Inc. The underwriters exercised their option to increase the size of the offering and purchased an additional 1,000,000 Series 9 Shares on the same terms, for additional gross proceeds of $25 million.

The Series 9 Shares will begin trading today on the TSX under the symbol CPX.PR.I.

CPX.PR.I is a FixedReset, 5.75%+412M575, announced July 27. The issue will be tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns. It is rated Pfd-3(low) by DBRS.

The issue traded 641,727 shares today in a tight range of 24.99-04. Vital statistics are:

CPX.PR.I FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-08-09
Maturity Price : 23.15
Evaluated at bid price : 25.00
Bid-YTW : 5.70 %

The new issue remains extraordinarily expensive (as it was on announcement day), according to Implied Volatility analysis:

impvol_cpx_170809
Click for Big

According to this analysis the fair value of the issue is now 23.77, compared to 23.65 on announcement day. Quibblers will remember that this analysis does not assign any value to the minimum rate guarantee.

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