February 11, 2021

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S&P has weighed in on the MFC LRCNs discussed yesterday:

S&P Global Ratings said today it assigned its ‘BBB+’ issue-level rating to Manulife Financial Corp.’s (MFC; A/Stable/–) Canadian dollar-denominated limited recourse capital notes.

The notes are subordinated obligations, not callable in the first five years, and have a 60-year maturity. At the same time, MFC will issue an equivalent amount of perpetual preferred shares, also not callable within the first five years, that offer a typical features of preferred shares including subordination to senior obligations and dividend payments payable at MFC’s discretion. The preferred shares will be held in a dedicated trust and the trustee will provide a revocable waiver for all dividends while the shares remain in the trust. We have assigned the same ‘BBB+’ issue-level rating to the preferred shares.

While the notes do not explicitly allow MFC to defer or cancel any payments of interest or principal, the sole recourse the noteholders have for any nonpayment or any event of default is their proportional part of the preferred shares held in the trust. MFC could decide at any point to stop payment on the notes, trigger the delivery of the preferred shares to the noteholders, simultaneously cancel the preferred shares’ dividends, and suffer no negative consequences thereafter. This, in our view, effectively renders the payments on the notes cancelable at MFC’s discretion.

The ‘BBB+’ ratings for both the notes and the preferred shares are two notches below MFC’s issuer credit rating, incorporating a deduction of one notch, reflecting subordination of the issuances; and a deduction of an additional notch, reflecting optional coupon and dividend cancelability.

We have assigned the equity content of the notes and the preferred shares as intermediate, because we view their features as contributing to MFC’s loss-absorption capacity. In addition, the notes and the preferred shares are only redeemable after five years, with no additional incentive to call either at that date. Therefore, the notes’ and preferred shares’ longevity is also a factor in our evaluation of their intermediate equity content.

We do not expect the issuance of the notes to materially change MFC’s financial leverage or fixed-charge coverage because we anticipate the company will use the proceeds mostly to fund upcoming maturities and redemptions. Since the preferred shares are held in trust solely for the purpose of potential recourse to the noteholders, we will exclude them from any capital, leverage, and coverage calculations while the shares remain in the trust.

TXPR closed at 645.98, up 0.68% on the day. Volume today was 5.49-million, by far the highest daily volume in the past 20 trading days, well ahead of second-place February 3 with 3.87-million.

CPD closed at 12.90, up 1.02% on the day. Volume was 59,103, perhaps a little below the median of the past 20 trading days.

ZPR closed at 10.45, up 0.97% on the day. Volume of 433,493 was second-highest of the past 20 trading days, behind only February 4.

Five-year Canada yields were unchanged at 0.49% today.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 0.7018 % 2,122.2
FixedFloater 0.00 % 0.00 % 0 0.00 0 0.7018 % 3,894.1
Floater 4.07 % 4.12 % 55,570 17.13 3 0.7018 % 2,244.2
OpRet 0.00 % 0.00 % 0 0.00 0 0.0536 % 3,642.1
SplitShare 4.69 % 4.36 % 36,451 3.68 8 0.0536 % 4,349.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0536 % 3,393.6
Perpetual-Premium 5.33 % -5.20 % 69,742 0.09 18 0.1063 % 3,249.5
Perpetual-Discount 4.92 % 4.92 % 75,846 15.49 13 0.0747 % 3,772.0
FixedReset Disc 4.70 % 3.74 % 166,883 17.86 56 0.7857 % 2,498.7
Insurance Straight 4.94 % 4.56 % 86,183 4.07 22 0.3794 % 3,636.6
FloatingReset 3.14 % 2.57 % 27,220 20.83 2 7.1845 % 2,197.8
FixedReset Prem 5.12 % 2.73 % 213,592 0.93 20 0.1552 % 2,710.7
FixedReset Bank Non 1.80 % 1.66 % 174,223 0.96 1 0.0000 % 2,892.0
FixedReset Ins Non 4.41 % 3.34 % 107,372 18.34 22 4.5276 % 2,762.2
Performance Highlights
Issue Index Change Notes
BMO.PR.Y FixedReset Disc -3.63 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.25
Evaluated at bid price : 21.25
Bid-YTW : 3.74 %
MFC.PR.H FixedReset Ins Non 1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.93
Evaluated at bid price : 25.11
Bid-YTW : 3.60 %
BIP.PR.A FixedReset Disc 1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.99
Evaluated at bid price : 22.48
Bid-YTW : 4.51 %
BAM.PF.G FixedReset Disc 1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 18.57
Evaluated at bid price : 18.57
Bid-YTW : 4.52 %
BMO.PR.W FixedReset Disc 1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.35
Evaluated at bid price : 21.35
Bid-YTW : 3.42 %
SLF.PR.D Insurance Straight 1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 24.55
Evaluated at bid price : 24.80
Bid-YTW : 4.53 %
BMO.PR.S FixedReset Disc 1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.73
Evaluated at bid price : 22.00
Bid-YTW : 3.37 %
BMO.PR.E FixedReset Disc 1.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.00
Evaluated at bid price : 23.98
Bid-YTW : 3.47 %
BAM.PR.Z FixedReset Disc 1.25 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.25
Evaluated at bid price : 20.25
Bid-YTW : 4.47 %
BMO.PR.T FixedReset Disc 1.32 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.80
Evaluated at bid price : 20.80
Bid-YTW : 3.47 %
BAM.PF.A FixedReset Disc 1.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.85
Evaluated at bid price : 20.85
Bid-YTW : 4.41 %
TRP.PR.E FixedReset Disc 1.42 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 17.15
Evaluated at bid price : 17.15
Bid-YTW : 4.43 %
NA.PR.S FixedReset Disc 1.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.32
Evaluated at bid price : 21.32
Bid-YTW : 3.62 %
BAM.PR.X FixedReset Disc 1.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 13.81
Evaluated at bid price : 13.81
Bid-YTW : 4.25 %
SLF.PR.E Insurance Straight 1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 24.64
Evaluated at bid price : 24.90
Bid-YTW : 4.56 %
TRP.PR.G FixedReset Disc 1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 19.15
Evaluated at bid price : 19.15
Bid-YTW : 4.48 %
TRP.PR.D FixedReset Disc 1.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 17.50
Evaluated at bid price : 17.50
Bid-YTW : 4.38 %
PWF.PR.T FixedReset Disc 1.75 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.35
Evaluated at bid price : 20.35
Bid-YTW : 3.78 %
SLF.PR.C Insurance Straight 1.80 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 24.64
Evaluated at bid price : 24.90
Bid-YTW : 4.51 %
TRP.PR.B FixedReset Disc 2.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 11.18
Evaluated at bid price : 11.18
Bid-YTW : 3.97 %
IAF.PR.G FixedReset Ins Non 2.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 24.13
Evaluated at bid price : 24.50
Bid-YTW : 3.45 %
TRP.PR.A FixedReset Disc 2.25 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 15.02
Evaluated at bid price : 15.02
Bid-YTW : 4.44 %
MFC.PR.I FixedReset Ins Non 2.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.62
Evaluated at bid price : 24.80
Bid-YTW : 3.41 %
MFC.PR.G FixedReset Ins Non 2.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 24.52
Evaluated at bid price : 24.92
Bid-YTW : 3.43 %
MFC.PR.J FixedReset Ins Non 2.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.43
Evaluated at bid price : 23.75
Bid-YTW : 3.46 %
NA.PR.W FixedReset Disc 2.51 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.80
Evaluated at bid price : 20.80
Bid-YTW : 3.56 %
IAF.PR.I FixedReset Ins Non 2.64 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.51
Evaluated at bid price : 24.89
Bid-YTW : 3.34 %
BAM.PR.C Floater 2.92 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 10.59
Evaluated at bid price : 10.59
Bid-YTW : 4.09 %
CU.PR.C FixedReset Disc 2.92 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 19.40
Evaluated at bid price : 19.40
Bid-YTW : 3.77 %
SLF.PR.I FixedReset Ins Non 3.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.42
Evaluated at bid price : 24.00
Bid-YTW : 3.37 %
BAM.PR.T FixedReset Disc 3.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 16.25
Evaluated at bid price : 16.25
Bid-YTW : 4.42 %
TRP.PR.C FixedReset Disc 3.47 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 11.92
Evaluated at bid price : 11.92
Bid-YTW : 4.29 %
MFC.PR.Q FixedReset Ins Non 3.68 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.06
Evaluated at bid price : 23.95
Bid-YTW : 3.34 %
IFC.PR.G FixedReset Ins Non 4.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.38
Evaluated at bid price : 22.79
Bid-YTW : 3.58 %
IFC.PR.C FixedReset Ins Non 4.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.82
Evaluated at bid price : 22.30
Bid-YTW : 3.53 %
IFC.PR.A FixedReset Ins Non 4.85 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 17.30
Evaluated at bid price : 17.30
Bid-YTW : 3.39 %
PWF.PR.P FixedReset Disc 5.95 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 13.90
Evaluated at bid price : 13.90
Bid-YTW : 3.78 %
MFC.PR.K FixedReset Ins Non 7.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.26
Evaluated at bid price : 22.65
Bid-YTW : 3.23 %
SLF.PR.H FixedReset Ins Non 7.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.55
Evaluated at bid price : 20.55
Bid-YTW : 3.28 %
MFC.PR.M FixedReset Ins Non 8.63 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.14
Evaluated at bid price : 22.65
Bid-YTW : 3.34 %
MFC.PR.N FixedReset Ins Non 9.56 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.07
Evaluated at bid price : 22.57
Bid-YTW : 3.28 %
MFC.PR.L FixedReset Ins Non 9.83 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.36
Evaluated at bid price : 21.67
Bid-YTW : 3.28 %
SLF.PR.G FixedReset Ins Non 10.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 15.15
Evaluated at bid price : 15.15
Bid-YTW : 3.14 %
GWO.PR.N FixedReset Ins Non 12.50 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 14.40
Evaluated at bid price : 14.40
Bid-YTW : 3.12 %
SLF.PR.J FloatingReset 14.62 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 14.50
Evaluated at bid price : 14.50
Bid-YTW : 2.57 %
MFC.PR.F FixedReset Ins Non 14.97 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 15.82
Evaluated at bid price : 15.82
Bid-YTW : 3.04 %
Volume Highlights
Issue Index Shares
Traded
Notes
BNS.PR.G FixedReset Prem 1,314,100 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-07-25
Maturity Price : 25.00
Evaluated at bid price : 25.37
Bid-YTW : 2.73 %
MFC.PR.F FixedReset Ins Non 480,225 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 15.82
Evaluated at bid price : 15.82
Bid-YTW : 3.04 %
TD.PF.D FixedReset Disc 340,823 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.47
Evaluated at bid price : 23.30
Bid-YTW : 3.45 %
SLF.PR.H FixedReset Ins Non 240,940 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.55
Evaluated at bid price : 20.55
Bid-YTW : 3.28 %
MFC.PR.M FixedReset Ins Non 176,930 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.14
Evaluated at bid price : 22.65
Bid-YTW : 3.34 %
MFC.PR.K FixedReset Ins Non 149,924 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.26
Evaluated at bid price : 22.65
Bid-YTW : 3.23 %
SLF.PR.B Insurance Straight 108,500 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-03-13
Maturity Price : 25.00
Evaluated at bid price : 25.21
Bid-YTW : 1.29 %
CM.PR.R FixedReset Disc 100,650 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 23.76
Evaluated at bid price : 25.05
Bid-YTW : 3.84 %
There were 50 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BMO.PR.Y FixedReset Disc Quote: 21.25 – 22.85
Spot Rate : 1.6000
Average : 0.9658

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 21.25
Evaluated at bid price : 21.25
Bid-YTW : 3.74 %

TRP.PR.E FixedReset Disc Quote: 17.15 – 18.55
Spot Rate : 1.4000
Average : 0.8419

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 17.15
Evaluated at bid price : 17.15
Bid-YTW : 4.43 %

RY.PR.J FixedReset Disc Quote: 22.70 – 23.56
Spot Rate : 0.8600
Average : 0.5139

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 22.14
Evaluated at bid price : 22.70
Bid-YTW : 3.51 %

BAM.PR.Z FixedReset Disc Quote: 20.25 – 21.00
Spot Rate : 0.7500
Average : 0.4486

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 20.25
Evaluated at bid price : 20.25
Bid-YTW : 4.47 %

BAM.PR.R FixedReset Disc Quote: 15.62 – 16.45
Spot Rate : 0.8300
Average : 0.5388

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 15.62
Evaluated at bid price : 15.62
Bid-YTW : 4.53 %

SLF.PR.J FloatingReset Quote: 14.50 – 15.30
Spot Rate : 0.8000
Average : 0.5671

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2051-02-11
Maturity Price : 14.50
Evaluated at bid price : 14.50
Bid-YTW : 2.57 %

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