As readers of my earlier post may have expected, LBS.PR.A had a very strong opening day, with 1,671,290 shares trading and closing at 10.55-59.
There may be more to come, as the following HIMIPref™ analysis indicates:
| Curve Price Analysis of LBS.PR.A | ||
| Component | Taxable Curve | Non-taxable Curve |
| Base-Rate | 10.35 | 10.26 |
| Short-Term | 0.13 | 0.56 |
| Long-Term | 0.33 | 0.01 |
| Split-Share | -0.26 | -0.32 |
| Retractible | 0.34 | 0.44 |
| Credit Spread (2) | -0.08 | -0.11 |
| Error | -0.01 | 0.00 |
| Intrinsic Price | 10.80 | 10.84 |
| Liquidity | 0.23 | 0.25 |
| Total Curve Price | 11.03 | 11.09 |
The estimate for the liquidity value is, as with all new issues, a little dicey – especially for a split-share issue, there is no guarantee that a huge liquidity premium will be sustained in the long run … in fact, there is a strong possibility of the opposite! But with an intrinsic value in the neighborhood of $10.80, it would appear there’s still some value left in the issue.
For those interested in more traditional measures, the pre-tax YTW of this issue is 4.34%, with a modified duration of 5.97, both measurements based on a maturity on 2013-11-29.
The issue has been added to the HIMIPref™ database with a security code of A47800, replacing the pre-issue code of P50004. It has also been added to the SplitShare Index.
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