FFN.PR.A Downgraded to Pfd-4(high) by DBRS

DBRS Limited has announced that it:

downgraded the rating on the Preferred Shares issued by North American Financial 15 Split Corp. (the Company) to Pfd-4 (high) from Pfd-3 (low).

On February 21, 2019, the Company extended the term of the Preferred Shares for additional five years. The new termination date is December 1, 2024. After December 1, 2019, the Company will have the right to amend the dividend rate on the Preferred Shares for the new five-year term. Any such changes are expected to be announced no later than September 30, 2019.

The Portfolio provides approximately 37% of downside protection to holders of the Preferred Shares as at March 15, 2019. The downside protection experienced a decline in 2018, showing only a slow recovery over the past few months. The Preferred Shares currently pay a fixed cumulative monthly dividend of $0.04583 per Preferred Share, yielding 5.5% annually on their issue price of $10 per share. Holders of the Class A Shares receive regular monthly targeted cash distributions of $0.10 per Class A Share, yielding 8.0% annually on the issue price of $15 per share. No distributions will be paid to Class A Shares if the NAV per unit falls below $15 and no special year-end dividends will be paid if, after such payment, the Portfolio’s NAV is less than $25. The Preferred Share dividend coverage ratio was approximately 0.64 times. The average grind on the Portfolio is expected to be 3.1% annually for the next five years.

The affected issue is FFN.PR.A .

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