Yet another fine old preferred security will shortly be leaving us.
In a press release dated November 22, Transalta announced:
TransAlta Corporation (TSX: TA; NYSE: TAC) today announced it will redeem all of its 7.75% Preferred Securities (the “7.75% Preferred Securities”), which have an aggregate principal amount of $175,000,000, on Jan. 2, 2007 (the “Redemption Date”). The redemption will be funded with short-term debt and is expected to reduce interest costs.
I’ll just bet that’s the expectation! By more than 3% absolute, I’d guess or $5-million-plus annually!
It has been a long time since this paper was investment-grade … DBRS downgraded it from Pfd-2(low)y (the “y” meaning “hybrid”) to Pfd-3(high)y on December 12, 2002, but for a little while it was a fine trader. It will be missed, and it will be a long time before investment grade paper pays 7.75% again!