SLF.PR.G To Reset To 1.825%

Sun Life Financial Inc. has announced:

the applicable dividend rates for its Class A Non-Cumulative Rate Reset Preferred Shares Series 8R (the “Series 8R Shares”) and Class A Non-Cumulative Floating Rate Preferred Shares Series 9QR (the “Series 9QR Shares”).

With respect to any Series 8R Shares that remain outstanding after June 30, 2020, commencing as of such date, holders thereof will be entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Sun Life and subject to the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on June 30, 2020 to but excluding June 30, 2025 will be 1.825% per annum or $0.114063 per share per quarter, being equal to the sum of the Government of Canada Yield, as defined in the terms of the Series 8R Shares, on Monday, June 1, 2020 plus 1.41%, as determined in accordance with the terms of the Series 8R Shares.

With respect to any Series 9QR Shares that remain outstanding after June 30, 2020, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Sun Life and subject to the Insurance Companies Act (Canada), based on a dividend rate equal to the sum of the T-Bill Rate, as defined in the terms of the Series 9QR Shares, plus 1.41% (calculated on the basis of the actual number of days elapsed in such Quarterly Floating Rate Period divided by 365 days), subject to certain adjustments in accordance with the terms of the Series 9QR Shares. The dividend rate for the period commencing on June 30, 2020 to but excluding September 30, 2020 will be equal to 1.665% per annum or $0.104918 per share, as determined in accordance with the terms of the Series 9QR Shares.

Beneficial owners of Series 8R Shares and Series 9QR Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 5:00 p.m. (ET) on Monday, June 15, 2020.

SLF.PR.G was issued as a FixedReset, 4.35%+141, announced 2010-5-13 and commenced trading 2010-5-25. It reset to 2.275% effective 2015-6-30, which triggered a 50% conversion to the FloatingReset SLF.PR.J. I recommended against conversion. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

SLF.PR.J is a FloatingReset, Bills+141, that arose from a 50% conversion from the FixedReset SLF.PR.G. It commenced trading 2015-6-30.

3 Responses to “SLF.PR.G To Reset To 1.825%”

  1. dodoi says:

    James, any recommendation if we should to switch J or back to G? I own some Js and wondering how long it would take for the 3 months GOC (about 0.18%) to surpass 0.41%. And another question if I may. Since I am a little lazy, do not own so many Js I have wondered if there is a threshold where switching to fixed/floated from floated/fixed, sell them, and buy again its pair would be worth it?

  2. pugwash says:

    I am also interested in any guidance on this J or G question. Still learning to fish after all these years so forgive the naive question.

    If interest rates start to climb over the next five years I guess Js are better since they will respond faster rather than waiting for the reset in 5 years and the reverse is true?

    Otherwise if interest rates stay the same then it is a market parity question?

  3. jiHymas says:

    As has been often noted, quote quality has declined precipitously since the start of the Panicdemic; I am unwilling to put my name on an analysis that relies on these data.

    I suggest that interested parties who want such an analysis anyway refer to the last such analysis prior to the downturn and use the reasoning, theory and calculator included there.

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