GBA.PR.A Downgraded by DBRS

DBRS has announced:

has today downgraded the Preferred Shares issued by GlobalBanc Advantaged 8 Split Corp. (the Company) from Pfd-2 to Pfd-3 (high) with a Stable trend.

Based on the most recent dividends paid by its underlying companies, the Bank Portfolio can generate enough yield to pay the fixed preferred distributions and other annual expenses. However, changes in dividend policy by any of the banks included in the Bank Portfolio could cause a potential grind on the NAV.

Since inception, the NAV has dropped from about $19 to $14.29 per share (as of January 10, 2008), a decline of nearly 25%. As a result, the current downside protection available to the Preferred Shareholders is approximately 30%. The decline in NAV can be attributed to the Bank Portfolio’s 100% concentration in the international banking industry. In general, the valuations of the common shares of international banks have experienced significant volatility over the last few months due to credit concerns and large writedowns.

The downgrade of the Preferred Shares is based on the lower level of asset coverage available to cover the Preferred Shares principal.

As previously announced, this issue is not tracked by HIMIPref™.

2 Responses to “GBA.PR.A Downgraded by DBRS”

  1. […] The DBRS mass review of financial splits was discussed on March 19. This action follows a downgrade from Pfd-2 on 2008-1-16. That was […]

  2. […] Pfd-4(high) on April 17. Anybody feeling like swearing at the Credit Rating Agencies? It was rated Pfd-2 until January 17, 2008 … that’s fast, eh? Pfd-2 (reasonable investment grade) to Pfd-5 (deep junk) in less […]

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