RY.PR.W, RY.PR.A, RY.PR.C, RY.PR.E, RY.PR.F & RY.PR.G To Be Redeemed

Royal Bank of Canada has announced:

its intention, subject to the approval of the Office of the Superintendent of Financial Institutions (OSFI), to redeem all of its issued and outstanding Non-Cumulative First Preferred Shares, Series W (Series W Shares), Non-Cumulative First Preferred Shares, Series AA (Series AA Shares), Non-Cumulative First Preferred Shares, Series AC (Series AC Shares), Non-Cumulative First Preferred Shares, Series AE (Series AE Shares), Non-Cumulative First Preferred Shares, Series AF (Series AF Shares), and Non-Cumulative First Preferred Shares, Series AG (Series AG Shares) on October 1, 2020, for cash at a redemption price per Series W, Series AA, Series AC, Series AE, Series AF, and Series AG share, respectively, of $25.00, together with all declared and unpaid dividends.

In addition, the Bank has also declared a 38-day dividend of $0.127534 per Series W share, $0.115822 per Series AA share, $0.119726 per Series AC share, $0.117123 per Series AE share, $0.115822 per Series AF share and $0.117123 per Series AG share covering the period from August 24, 2020 (the date of the last dividend payment), up to but excluding the redemption date of October 1, 2020. This results in a total amount of $25.127534 per Series W share, $25.115822 per Series AA share, $25.119726 per Series AC share, $25.117123 per Series AE share, $25.115822 per Series AF share and $25.117123 per Series AG share, to be paid upon surrender of the Series W shares, Series AA shares, Series AC shares, Series AE shares, Series AF shares, and Series AG shares.

There are 12,000,000 Series W shares outstanding, representing $300 million of capital; 12,000,000 Series AA shares outstanding, representing $300 million of capital; 8,000,000 Series AC shares outstanding, representing $200 million of capital; 10,000,000 Series AE shares outstanding, representing $250 million of capital; 8,000,000 Series AF shares outstanding, representing $200 million of capital and 10,000,000 Series AG shares outstanding, representing $250 million of capital. The redemptions will be financed out of the general corporate funds of Royal Bank of Canada.

RY.PR.W is something of an oddity, as it has a conversion to common provision similar to the ones which were used by CIBC to qualify as NVCC by assigning the right to pull the trigger to OSFI. For this reason the shares were not rated by DBRS. I’m glad that ambiguity has now been resolved!

None of the other issues, RY.PR.A, RY.PR.C, RY.PR.E, RY.PR.F or RY.PR.G, are NVCC-compliant and redemption has been expected for some time. I imagine that this mass redemption was the purpose of the Royal Bank LRCN issue, although they have carefully avoided saying so.

Thanks to Assiduous Reader Tim for bringing this to my attention.

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