Category: Issue Comments

The Canadian Imperial Bank of Commerce has announced:

its intention to redeem all of its issued and outstanding Non-cumulative Class A Preferred Shares Series 26 (TSX: CM.PR.D), for cash. The redemptions will occur on October 31, 2014. The redemption price is $25.00 per Series 26 share.

The $0.359375 quarterly dividend announced on August 28, 2014 will be the final dividend on the Series 26 shares and will be paid on October 28, 2014, covering the period to October 31, 2014, to shareholders of record on September 29, 2014.

Holders of the Series 26 shares should contact the financial institution, broker or other intermediary through which they hold the shares to confirm how they will receive their redemption proceeds.

CM.PR.D is a NVCC compliant Straight Perpetual, paying 5.75%.

Standard and Poor’s has announced:

• •Brookfield Property Partners L.P. completed its acquisition of former affiliate and large office landlord Brookfield Office Properties Inc.
• •Operating fundamentals have improved for office landlords as the U.S. economy has recovered, employment has strengthened, and new office supply additions have been muted.
• •We are affirming our ‘BBB-‘ corporate credit rating on Brookfield Office and removing all ratings from CreditWatch with developing implications. The outlook is stable.
• •The stable outlook reflects our view that the company’s competitively positioned office portfolio, with improving occupancy, good quality tenants, and below market rents will support leverage and fixed-charge coverage at current levels.

Standard & Poor’s Ratings Services today affirmed its ‘BBB-‘ corporate credit rating on Brookfield Office Properties Inc. (Brookfield Office), ‘BB+’ rating on the company’s unsecured debt, and ‘BB’ rating on its preferred stock. We removed all ratings on the company from CreditWatch, where we placed them with developing implications on Oct. 4, 2013. These actions affect roughly $1.7 billion of rated corporate debt and preferred securities.
…
We would lower ratings if leverage rises to 60%, fixed-charge coverage measures deteriorate to the 1.3x level, or the common dividend is not adequately supported by operations, since these measures would be more reflective of an “aggressive” financial risk profile. An increase in speculative development activity would also pressure ratings.

We don’t see potential for upgrade momentum over the next few years despite the company’s “strong” business risk profile until the financial risk profile is more firmly positioned within the “significant” category. Specifically, we would look for fixed-charge coverage measures above 1.7x, debt to EBITDA of less than 10x, and stronger coverage of the common dividend. The prudent pursuit and financing of the company’s expanding development pipeline would also be an important consideration for ratings improvement.

The “Watch – Developing” status was previously reported on PrefBlog.

The ultimate parent, Brookfield Asset Management, has the following preferred shares outstanding:
FixedResets BAM.PF.A, BAM.PF.B, BAM.PF.E, BAM.PF.F, BAM.PR.R, BAM.PR.T, BAM.PR.X, BAM.PR.Z
Floaters BAM.PR.B, BAM.PR.C, BAM.PR.K
RatchetRate BAM.PR.E
FixedFloater BAM.PR.G
OperatingRetractible BAM.PR.J
Straight Perpetual BAM.PR.M, BAM.PR.N, BAM.PF.C, BAM.PF.D

BPO has the following preferred share issues outstanding:
OperatingRetractible BPO.PR.H, BPO.PR.J, BPO.PR.K,
FixedReset BPO.PR.L, BPO.PR.N, BPO.PR.P, BPO.PR.R, BPO.PR.T,
Floaters BPO.PR.W, BPO.PR.X, BPO.PR.Y

In addition, there are the following split shares dependent upon BPO:
BPS.PR.U, BPS.PR.A, BPS.PR.B and BPS.PR.C

National Bank of Canada has announced:

its intention to redeem all of its issued and outstanding Non-Cumulative Fixed Rate First Preferred Shares Series 16 (the “Preferred Shares Series 16”) on November 15, 2014.

Pursuant to the share conditions, on November 15, 2014, the Bank may, at its option, redeem the Preferred Shares Series 16 at a price equal to $25.00 per share together with all declared and unpaid dividends. The declared dividends payable on November 15, 2014 will be paid in the usual manner to shareholders of record on October 10, 2014.

Since November 15, 2014 is a non-business day, any payments due to shareholders on such date will be made on the first business day following such date, being Monday, November 17, 2014.

A formal notice will be issued to shareholders in accordance with the share conditions.

The Bank recommends shareholders consult with their tax advisors to determine the appropriate treatment and impact of the redemptions.

So there goes another bank-issued DeemedRetractible!

Update, 2014-10-1: The coupon on NA.PR.L is 4.85%.

There was previously some doubt as to the ticker symbol for the new BCE preferred shares issued in exchange for BAF.PR.E.

However, BCE.PR.Q is, as guessed, the ticker for the new BCE shares which have the same economic terms as BAF.PR.E. The new issue traded 2,200 shares today in a range of 24.60-61 before closing at 25.00-30, 12×6.

The Toronto Stock Exchange has, wonder of wonders, modified its database so that the series denoted by this symbol is indeed “AQ” and that the listing date is now recorded as 2014-9-25.

Regrettably, the dim bulbs at BCE have not yet updated their preferred share information page to reflect the existence of their three new issues.

Each of the new issues, BCE.PR.M, BCE.PR.O and BCE.PR.Q, will be tracked by HIMIPref™. Vital statistics are:

Click for Big

The Toronto-Dominion Bank has announced:

that it will exercise its right to redeem all of its 17 million outstanding Class A First Preferred Shares, Series O (the “Series O Shares”) on October 31, 2014 at the price per share of $25.00, for an aggregate total of approximately $425 million.

On August 28, 2014, the Board of Directors of TD declared quarterly dividends of $0.303125 per Series O Share. These will be the final dividends on the Series O Shares and will be paid in the usual manner on October 31, 2014 to shareholders of record on October 8, 2014, as previously announced. After October 31, 2014, the Series O Shares will cease to be entitled to dividends and the holders of such shares will not be entitled to exercise any right in respect thereof except that of receiving the redemption amount.

Beneficial holders who are not directly the registered holder of Series O Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Instructions with respect to receipt of the redemption amount will be set out in the Letter of Transmittal to be mailed to registered holders of the Series O Shares shortly. Inquiries should be directed to our Registrar and Transfer Agent, CST Trust Company, at 1-800-387-0825 (or in Toronto 416-682-3860).

Update, 2014-10-01: The coupon on TD.PR.O is 4.85%.

Enbridge Inc. has announced:

that it has closed its previously announced public offering of Cumulative Redeemable Preference Shares, Series 15 (the “Series 15 Preferred Shares”) by a syndicate of underwriters led by TD Securities, CIBC World Markets, RBC Capital Markets, and Scotiabank. Enbridge issued 11 million Series 15 Preferred Shares for gross proceeds of C$275 million. The Series 15 Preferred Shares will begin trading on the TSX today under the symbol ENB.PF.G. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

ENB.PF.G is a FixedReset, 4.40%+268, announced September 11. It will be tracked by HIMIPref™ and is assigned to the FixedResets subindex.

The issue traded 815,553 shares today in a range of 24.87-96 before closing at 24.96-97, 50×90. Vital statistics are:

DBRS has announced that it:

has today placed Veresen Inc.’s (Veresen or the Company) Issuer Rating and Senior Unsecured Notes rating of BBB (high) and its Preferred Shares rating of Pfd-3 (high) Under Review with Negative Implications. If the planned acquisition of 50% convertible preferred interest in Ruby pipeline system (Ruby) proceeds as expected, Veresen’s overall business risk profile is expected to weaken and its financial risk profile is expected to deteriorate modestly. As a result, Veresen’s ratings will likely be downgraded by one notch following the completion of the acquisition.
…
DBRS notes that the Acquisition could add a potential layer of uncertainty around re-contracting to the Company’s business risk profile. The average physical throughput on Ruby in the past three years indicates that only 55% of the pipeline capacity is utilized, largely reflecting the weak natural gas pricing environment and competitive landscape. DBRS is of the opinion that Ruby is exposed to re-contracting risk when the majority of contracts (approximately 65%) expire in 2021, as the pipeline’s capacity may not be re-contracted at current tolls, volumes or duration.
…
Veresen plans to initially finance the Acquisition with approximately: 1) $800 million in equity (with a 15% over allotment option), 2) $750 million in debt from new credit facilities and 3) the balance from an existing revolving credit facility. Veresen intends to refinance the acquisition-related borrowings over the course of the next 12 months through various capital market instruments as well as with ongoing proceeds received from equity issued in connection with Veresen’s Premium Dividend and Dividend Reinvestment Plan.
…
Based on a pro forma of the Acquisition, DBRS estimates that the credit metrics will weaken for Veresen (non-consolidated) with cash flow-to-interest at 5.3 times (x) (7.9x in the last 12 months (LTM) Q2 2014), higher debt-to-capital at 38.2% (35.2% at Q2 2014) and weaker cash flow-to-total debt at 26.0% (34.7% LTM Q2 2014). The significant increase in debt also reduces the Company’s financial flexibility and could affect its ability to meet large capital expenditure needs in the future.

Veresen is the proud issuer of VSN.PR.A and VSN.PR.C, both FixedResets currently rated Pfd-3(high).

BCE Inc. has announced:

the successful completion of the initial phase of BCE’s offers to purchase all outstanding Bell Aliant publicly held common shares and to exchange all outstanding Bell Aliant preferred shares.

CST Trust Company, the depository for the offers, reported that, as of 5:00 pm Eastern on September 19, 2014, a total of 103,486,954 Bell Aliant common shares, representing approximately 81.2% of the outstanding publicly held common shares, had been validly tendered to BCE’s offer and not withdrawn. BCE has taken up and expects to pay for such shares on September 24, 2014, at which time pro-ration information related to the cash and share alternatives will be available at BCE.ca/Investors/shareholder-info/bell-aliant-privatization.

As all conditions of the common share offer have been satisfied, and all regulatory approvals have been received, BCE’s privatization of Bell Aliant is expected to close on or about October 31, 2014.

CST Trust Company also reported that, as of 5:00 pm Eastern on September 19, 2014, a total of 18,388,857 preferred shares of Bell Aliant Preferred Equity Inc. (TSX: BAF) (Prefco), representing approximately 72.7% of the outstanding preferred shares, had been validly tendered to BCE’s offer and not withdrawn. As all conditions of the preferred share offer have been satisfied, the BCE preferred shares exchanged for tendered Prefco preferred shares are expected to be issued on September 24, 2014 and to commence trading on the Toronto Stock Exchange at the open of trading on the next day.
…
BCE also intends to effect, and will hold sufficient votes to approve (at a meeting of Prefco shareholders to be held on October 31, 2014), a subsequent acquisition transaction to acquire the remaining preferred shares.

Update, 2014-9-25 : Last quoted line added to post 2014-9-25

As discussed on PrefBlog when the offer was announced:

Affected issues are:

• BAF.PR.A, FixedReset, 4.85%+209, commenced trading 2011-3-15
• BAF.PR.C, FixedReset, 4.55%+309, commenced trading 2011-12-7
• BAF.PR.E, FixedReset, 4.25%+264, commenced trading 2013-2-14

These issues will be nicely complementary to BCE.PR.K, A FixedReset, 4.15%+188, which commenced trading July 5, 2011 with a ridiculous re-opening 2011-12-12.

I don’t have the new tickers yet, but I’ll report ’em when I got ’em.

Implied volatility of the series shows an extraordinarily good fit:

Click for Big

Fortis Inc. has announced:

that it has closed its public offering (the “Offering”) of Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M (“Series M First Preference Shares”) underwritten by a syndicate of underwriters led by Scotiabank and RBC Capital Markets. Fortis issued 24,000,000 Series M First Preference Shares at a price of $25.00 per share for aggregate gross proceeds to the Corporation of $600,000,000.

The net proceeds of the Offering will be used to repay a portion of the amounts borrowed by Fortis under its acquisition credit facility in connection with the acquisition of UNS Energy Corporation completed on August 15, 2014.

The Series M First Preference Shares were offered by way of a short form prospectus of Fortis dated September 11, 2014 and will commence trading today on the Toronto Stock Exchange under the symbol FTS.PR.M.

Fortis is the largest investor-owned distribution utility in Canada, with total assets approaching $25 billion and fiscal 2013 revenue exceeding $4 billion. Its regulated utilities account for approximately 93% of total assets and serve more than 3 million customers across Canada and in the United States and the Caribbean. Fortis owns non-regulated hydroelectric generation assets in Canada, Belize and Upstate New York. The Corporation’s non-utility investments are comprised of hotels and commercial real estate in Canada.

Additional information about the Corporation can be accessed at www.fortisinc.com or www.sedar.com.

FTS.PR.M is a FixedReset, 4.10%+248, announced and supersized 2014-9-3. The issue will be tracked by HIMIPref™ and has been assigned to the FixedResets subindex.

The issue traded a massive 2,113,711 shares today (consolidated exchanges) in a range of 24.98-12 before closing at 25.10-11, 9×150. Vital statistics are:

Implied Volatility analysis suggests that FTS.PR.M is cheap relative to other Fortis FixedResets, with a theoretical price of 25.97 … but remember that this conclusion is not necessarily applicable with respect to other issuers! It could just as easily be that the lower-spread FTS issues are expensive relative to the universe!

Click for Big