PrefBlog

FixedResets and new issuers got some ink in the Globe:

BCE Inc. (BCE-T38.220.230.61%), which has long history with these shares, is one of the latest firms to tap into this demand, closing a $345-million offering on Tuesday. These shares pay a fixed yield of 4.15 per cent for the first five years, and then investors have the choice to either take a rate equal to the Government of Canada 5-year yield plus 1.88 per cent, or a floating three-month T-bill rate plus 1.88 per cent.

Yet BCE isn’t alone. Intact Financial also just sold $225-million of these securities, as did Canaccord Financial. These two issues were a bit more surprising because both deals were the first time these firms offered this type of security.

Still, it makes a lot of sense. Much like Intact and Canaccord, firms such as GMP Capital and Bell Alliant also recently sold their first issue of rate reset preferred shares. If sales continue to be strong, don’t be surprised if more first-time issuers jump on the bandwagon.

Moody’s says Portugal is junk after a four-notch downgrade:

Moody’s Investors Service on Tuesday cut Portugal’s credit rating by four levels to Ba2, two notches into junk territory, saying there is great risk the country will need a second round of official financing before it can return to capital markets.

It was a mixed day on the Canadian preferred share market, with PerpetualDiscounts down 4bp, FixedResets winning 15bp and DeemedRetractibles gaining 5bp. Volatility was muted. Volume was average and dominated by FixedResets – perhaps due to portfolio reshuffling with the closing of the BCE.PR.K new issue.

This entry was posted on Wednesday, July 6th, 2011 at 12:28 am and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.