Category: Issue Comments

Issue Comments

IS.PR.A Settles Firm On Excellent Volume

Geez, it’s been a long time since I reported the first day of trading for a new issue!

Further to the information in the post Infrastructure Dividend Split Corp., Maybe?, Middlefield has announced (but not yet on their website):

Infrastructure Dividend Split Corp. (the “Company”), is pleased to announce that the Company has completed its initial public offering of 5,264,370 preferred shares for total gross proceeds of $52,643,700. The class A and preferred shares are listed on the Toronto Stock Exchange under the symbols IS and IS.PR.A, respectively.

The Company invests in a diversified, actively managed portfolio of dividend-paying securities of issuers operating in the infrastructure sector. The investment strategy of the Company is to initially invest in a portfolio of approximately 15 dividend-paying issuers operating in the infrastructure sector that Middlefield Capital Corporation (the “Advisor”), the investment advisor of the Company, believes offers investors the potential for both income through attractive dividend yields and capital appreciation and that it believes are undervalued and well-positioned to benefit from the Advisor’s outlook for a gradual reduction in interest rates, the continuation of global decarbonization, and favourable demographics (such as a growing middle class and urbanization).

The Company’s investment objectives for the:

Class A shares are to provide holders with:

(i) non-cumulative monthly cash distributions; and
(ii) the opportunity for capital appreciation through exposure to the portfolio

Preferred shares are to:

(i) provide holders with fixed cumulative preferential quarterly cash distributions; and
(ii) return the original issue price of $10.00 to holders upon maturity

The initial target distribution yield for the class A shares is 10.0% per annum based on the notional $15 issue price (or $0.125 per month or $1.50 per annum). On May 1, 2024, the Company announced that the first distribution on Class A shares will be payable to shareholders of record as at May 10th, 2024, and payable on or about May 15th, 2024.

The initial target distribution yield for the preferred shares is 7.2% per annum based on the original subscription price (or $0.18 per quarter or $0.72 per annum).

The syndicate of agents was co-led by CIBC Capital Markets, RBC Capital Markets, and Scotiabank, and included Canaccord Genuity Corp., National Bank Financial Inc., Hampton Securities Limited, BMO Capital Markets, iA Private Wealth Inc., Raymond James Ltd., Manulife Wealth Incorporated, Echelon Wealth Partners Inc., Wellington-Altus Private Wealth Inc., Desjardins Securities Inc. and Research Capital Corporation.

For further information, please visit our website at www.middlefield.com or contact Nancy Tham in our Sales and Marketing Department at 1.888.890.1868.

Fifty-two million is a nice size for a start-up SplitShare preferred, so it’s now been added to HIMIPref™

The prospectus is available on the fund’s main web page:

The Company intends that an equal number of Preferred Shares and Class A Shares will be outstanding at all material times. Following completion of the Offering, the Company may undertake further offerings of Preferred Shares or Class A Shares in order that an equal number of Preferred Shares and Class A Shares is outstanding at all material times.
…
The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions and to return $10.00 to holders on April 30, 2029 (the “Maturity Date”), subject to extension for successive terms of up to five years each as determined by the Company’s board of directors (the “Board of Directors”). The quarterly cash distribution until April 30, 2029 will be $0.18 per Preferred Share $0.72 per annum), representing a yield of 7.2% per annum on the issue price of $10.00 per Preferred Share.
…
Holders of record of Preferred Shares on the last business day of each of April, July, October and January will be entitled to receive fixed, cumulative preferential quarterly cash distributions equal to $0.18 per Preferred Share until April 30, 2029. On an annualized basis, this would represent a yield on the $10.00 Preferred Share issue price of 7.2% per annum. Such quarterly distributions are expected to be paid by the Company before the last business day of the month following the period in respect of which the distribution was payable. Based on the expected closing date of the Offering, currently being May 8, 2024 (the “Closing Date”), the initial distribution is expected to be payable to the holders of Preferred Shares of record on July 31, 2024. The first distribution will be pro-rated to reflect the period from the Closing Date to July 31, 2024.
…
No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) in respect of a cash distribution by the Company, the net asset value (“NAV” or “Net Asset Value”) per “Unit”, comprised of one Preferred Share and one Class A Share, would be less than $15.00 following the payment of such distributions.
…
…in order to achieve the Company’s targeted annual distributions for the Class A Shares and fixed annual distributions on the Preferred Shares while maintaining a stable NAV per Unit, the Company will be required to generate an average annual total return (comprised of net realized capital gains, option premiums and dividends) on the Portfolio of approximately 10.38%. The Portfolio is currently expected to generate dividend income of approximately 6.73% per annum. Accordingly, the Portfolio would be required to generate an additional approximately 3.65% per annum, including from dividend growth and realized capital appreciation, in order for the Company to distribute the targeted amount on the Class A Shares.
…
The Preferred Shares have been provisionally rated Pfd-3 (high) by DBRS Limited.
…
Monthly: Preferred Shares may be surrendered at any time for retraction to TSX Trust Company (in such capacity, the “Registrar and Transfer Agent”), the Company’s registrar and transfer agent, but will be retracted only on the second last business day of a month (the “Retraction Date”). Preferred Shares surrendered for retraction by 5:00 p.m. (Toronto time) on or before the twentieth business day prior to the Retraction Date will be retracted on such Retraction Date and the holder will be paid on or before the last business day of the following month (the “Retraction Payment Date”).

Holders of Preferred Shares whose Preferred Shares are surrendered for retraction will be entitled to receive a retraction price per Preferred Share equal to 96% of the lesser of (i) the NAV per Unit determined as of such Retraction Date, less the cost to the Company of the purchase of a Class A Share for cancellation; and (ii) $10.00. For this purpose, the cost of the purchase of a Class A Share will include the purchase price of the Class A Share, and commission and such other costs, if any, related to the liquidation of any portion of the Portfolio to fund the purchase of the Class A Share. Any declared and unpaid distributions payable on or before a Retraction Date in respect of Preferred Shares tendered for retraction on such Retraction Date will also be paid on the Retraction Payment Date. Subject to the terms of the Recirculation Agreement (as defined under “Redemptions and Retractions”), on any monthly retraction of Preferred Shares the Company will purchase or cause to be purchased for cancellation an equal number of Class A Shares in the market so that there will be an equal number of Preferred Shares and Class A Shares outstanding at all material times.
…
Annual management fee of 1.10% of the NAV of the Company calculated and payable monthly, based on the average NAV for that month, plus applicable taxes, provided that the management fee payable to the Manager shall not be paid in respect of the NAV attributable to any assets invested in the securities of any investment funds (including mutual funds) managed by the Manager or an affiliate of the Manager.
…
As the distributions to holders of Preferred Shares are expected to qualify as eligible dividends, the pre-tax equivalent yield for an individual in Ontario subject to the highest marginal tax rate (53.53%) on an annualized basis would be approximately 9.4% per annum.

How can one not love the bit about “to achieve the Company’s targeted annual distributions for the Class A Shares and fixed annual distributions on the Preferred Shares while maintaining a stable NAV per Unit … average annual total return (comprised of net realized capital gains, option premiums and dividends) on the Portfolio of approximately 10.38%.” Afficionados of SplitShare Credit Quality will knpw that given the presence of a cash drag, this requirement is highly sensitive to the price volatility of the underlying portfolio. Innumerate idiots, such as Capital Unit buyers and regulators, will remain blissfully ignorant of such high-school level math. But whatever, as long as the preferreds have a nice chunk of first-loss protection courtesy of the Capital Unitholders’ savings and the ‘minimum NAVPU rule’, this is not a major concern here.

DBRS has not yet confirmed its provisional Pfd-3(high) rating, but I can’t imagine any kind of problem with it.

The issue closed today on excellent volume of 839,091 shares. Vital Statistics are:

IS.PR.A SplitShare YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2029-04-29
Maturity Price : 10.00
Evaluated at bid price : 10.02
Bid-YTW : 7.16 %

Update, 2024-05-09: DBRS has announced:

DBRS Limited (Morningstar DBRS) finalized its provisional credit rating of Pfd-3 (high) assigned to the Preferred Shares issued by Infrastructure Dividend Split Corp. (the Company), managed by Middlefield Limited (the Manager).
…
Based on the initial asset coverage of 2.5x, the initial downside protection available to holders of the Preferred Shares is approximately 59% (after issuance fee and offering expenses). Downside protection available to the Preferred Shares consists of the NAV of the Class A Shares. The fixed distributions of dividends on the Preferred Shares will be funded from the dividends received on the securities in the Portfolio, which are expected to cover more than 1x the annual Preferred Shares distributions. The payment of regular monthly distributions to the holders of the Class A Shares, totalling $1.50 per annum, may reduce the downside protection over time. Without giving consideration to capital appreciation potential or any source of income other than the dividends earned by the Portfolio, the current distributions on the Class A Shares will create a projected grind on the NAV of the Portfolio of approximately 4.9% per year over the next five years. The grind in the portfolio is mitigated by a 1.5x NAV test.

Issue Comments

ENB.PR.T To Reset To 6.314%

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series R (Series R Shares) (TSX: ENB.PR.T) on June 3, 2024. As a result, subject to certain conditions, the holders of the Series R Shares have the right to convert all or part of their Series R Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series S of Enbridge (Series S Shares) on June 3, 2024. Holders who do not exercise their right to convert their Series R Shares into Series S Shares will retain their Series R Shares.

The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series R Shares outstanding after June 3, 2024, then all remaining Series R Shares will automatically be converted into Series S Shares on a one-for-one basis on June 3, 2024; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series S Shares outstanding after June 3, 2024, no Series R Shares will be converted into Series S Shares. There are currently 16,000,000 Series R Shares outstanding.

With respect to any Series R Shares that remain outstanding after June 3, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series R Shares for the five-year period commencing on June 3, 2024 to, but excluding, June 1, 2029 will be 6.314% percent, being equal to the five-year Government of Canada bond yield of 3.814% percent determined as of today plus 2.50 percent in accordance with the terms of the Series R Shares.

With respect to any Series S Shares that may be issued on June 3, 2024, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series S Shares for the three-month floating rate period commencing on June 3, 2024 to, but excluding, September 1, 2024 will be 1.82951 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 4.94 percent plus 2.50 percent in accordance with the terms of the Series S Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series R Shares who wish to exercise their right of conversion during the conversion period, which runs from May 2, 2024 until 5:00 p.m. (EST) on May 17, 2024, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary time to complete the necessary steps. Any notices received after this deadline will not be valid.

ENB.PR.T was issued as a FixedReset, 4.00%+250, that commenced trading 2012-12-5 after being announced 2012-11-26. It reset At 4.073% effective 2019-6-1. I recommended against conversion and there was no conversion. It is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Thanks to Assiduous Readers niagara and CanSiamCyp for bringing this to my attention!

Update, 2024-5-22: No conversion. Thanks, NK!

Issue Comments

PPL.PR.E To Reset To 6.814%

Pembina Pipeline Corporation has announced:

that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 5 (“Series 5 Shares”) (TSX: PPL.PR.E) on June 1, 2024.

As a result of the decision not to redeem the Series 5 Shares, and subject to certain terms of the Series 5 Shares, the holders of the Series 5 Shares will have the right to elect to convert all or part of their Series 5 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 6 of Pembina (“Series 6 Shares”) on June 1, 2024 (the “Conversion Date”). Holders who do not exercise their right to convert their Series 5 Shares into Series 6 Shares will retain their Series 5 Shares.

As provided in the terms of the Series 5 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 5 Shares, then all remaining Series 5 Shares will be automatically converted into Series 6 Shares on a one-for-one basis effective as of the Conversion Date; or (ii) if Pembina determines that there would be less than 1,000,000 Series 6 Shares outstanding immediately following the conversion, no Series 5 Shares will be converted into Series 6 Shares on the Conversion Date. There are currently 10,000,000 Series 5 Shares outstanding.

With respect to any Series 5 Shares that remain outstanding after the Conversion Date, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate for the Series 5 Shares for the five-year period from and including June 1, 2024, to, but excluding, June 1, 2029, will be 6.814 percent, being equal to the five-year Government of Canada bond yield of 3.814 percent determined as of today plus 3.00 percent, in accordance with the terms of the Series 5 Shares.

With respect to any Series 6 Shares that may be issued on the Conversion Date, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate applicable to the Series 6 Shares for the three-month floating rate period from and including June 1, 2024, to, but excluding, September 1, 2024, will be 7.940 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 4.940 percent plus 3.00 percent, in accordance with the terms of the Series 6 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset on the first day of March, June, September and December in each year.

Beneficial holders of Series 5 Shares who wish to exercise their right of conversion during the conversion period, which runs from May 2, 2024, until 3:00 pm (MT) / 5:00 pm (ET) on May 17, 2024, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with the time to complete the necessary steps. Any notices received after this deadline will not be valid.

As previously announced, the dividend payable on June 1, 2024, to holders of the Series 5 Shares of record on May 1, 2024, will be $0.285813 per Series 5 Share. Pursuant to the terms of the Series 5 Shares, as June 1, 2024, is not a business day, payment will occur on June 3, 2024. For more information on the terms of the Series 5 Shares and the Series 6 Shares, please see the prospectus supplement dated January 9, 2014, which can be found on SEDAR+ at www.sedarplus.ca.

PPL.PR.E was issued as a FixedReset, 5.00%+300, that commenced trading 2014-1-16 after being announced 2014-1-7. It reset At 4.573% effective 2019-6-1. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedReset Discount index on credit concerns.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

BMO.PR.S To Be Redeemed

Bank of Montreal has announced:

its intention to redeem all of its 20,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 27 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 27”) for an aggregate total of $500 million on May 25, 2024. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

The Preferred Shares Series 27 are redeemable at the Bank’s option on May 25, 2024 (the “Redemption Date”) at a redemption price of $25.00 per share. Payment of the redemption price will be made by the Bank on May 27, 2024, the first business day following the Redemption Date.

Separately from the payment of the redemption price, the final quarterly dividend of $0.24075 per share for the Preferred Shares Series 27 announced by the Bank on February 27, 2024 will be paid in the usual manner on May 27, 2024, to shareholders of record on April 29, 2024.

Notice will be delivered to holders of the Preferred Shares Series 27 in accordance with the terms thereof.

BMO.PR.S was issued as a FixedReset, 4.00%+233, NVCC-compliant issue that commenced trading 2014-4-23 after being announced 2014-4-14. The issue reset at 3.852% effective 2019-5-25. I recommended against conversion and there was no conversion. It is tracked by HIMIPref™ and is assigned to the FixedReset-Discount Sub-Index.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

BMO.PR.F To Be Redeemed

Bank of Montreal has announced:

its intention to redeem all of its 14,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 46 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 46”) for an aggregate total of $350 million on May 25, 2024. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

The Preferred Shares Series 46 are redeemable at the Bank’s option on May 25, 2024 (the “Redemption Date”) at a redemption price of $25.00 per share. Payment of the redemption price will be made by the Bank on May 27, 2024, the first business day following the Redemption Date.

Separately from the payment of the redemption price, the final quarterly dividend of $0.31875 per share for the Preferred Shares Series 46 announced by the Bank on February 27, 2024 will be paid in the usual manner on May 27, 2024, to shareholders of record on April 29, 2024.

Notice will be delivered to holders of the Preferred Shares Series 46 in accordance with the terms thereof.

BMO.PR.F is a FixedReset 5.10%+351, NVCC-compliant issue that commenced trading 2019-4-17 after being announced 2019-4- 8. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

RY.PR.Z To Be Redeemed

Royal Bank of Canada has announced:

its intention to redeem all of its issued and outstanding Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series AZ (Series AZ shares) (TSX: RY.PR.Z) on May 24, 2024, for cash at a redemption price of $25.00 per share to be paid on May 24, 2024.

There are 20,000,000 Series AZ shares outstanding, representing $500 million of capital. The redemptions will be financed out of the general corporate funds of Royal Bank of Canada.

The final quarterly dividend of $0.23125 for each of the Series AZ shares will be paid separately from the redemption price for each of the Series AZ Shares and in the usual manner on May 24, 2024 to shareholders of record at the close of business on April 25, 2024. After such dividend payments, the holders of Series AZ shares will cease to be entitled to dividends.

RY.PR.Z is a NVCC-compliant FixedReset, 4.00%+221, that commenced trading 2014-1-30 after being announced 2014-1-21. The extension was announced 2019-4-12. The issue reset At 3.700% effective May 24, 2019. I recommended against conversion and there was no conversion. This issue is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

Thanks to Assiduous Readers Peculiar_Investor and bluehawk for bringing this to my attention!

Issue Comments

NA.PR.S To Reset At 6.191%

National Bank of Canada has announced:

that it does not intend to exercise its right to redeem all or part of the currently outstanding 14,000,000 Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series 30, Non-Viability Contingent Capital (NVCC) (the “Series 30 Shares”) on May 15, 2024. As a result, subject to certain conditions, the holders of the Series 30 Shares will have the right to convert all or part of their Series 30 Shares on a one-for-one basis into Non-Cumulative Floating Rate First Preferred Shares, Series 31 (NVCC) (the “Series 31 Shares”) on May 15, 2024, in accordance with the terms of the Series 30 Shares described in the prospectus supplement dated January 31, 2014.

Holders who do not exercise their right to convert their Series 30 Shares into Series 31 Shares on May 15, 2024, will retain their Series 30 Shares.

The foregoing conversions are subject to the conditions that:

i. if the Bank determines that there would remain outstanding on May 15, 2024, less than 1,000,000 Series 31 Shares, after having taken into account all Series 30 Shares tendered for conversion into Series 31 Shares, then holders of Series 30 Shares will not be entitled to convert their shares into Series 31 Shares, or

ii. if the Bank determines that there would remain outstanding on May 15, 2024, less than 1,000,000 Series 30 Shares, after having taken into account all Series 30 Shares tendered for conversion into Series 31 Shares, then all remaining Series 30 Shares will automatically be converted into Series 31 Shares without the consent of the holders on May 15, 2024.

In either case, the Bank shall give a notice to that effect to all registered holders of Series 30 Shares no later than May 8, 2024.

Holders of Series 30 Shares, should any remain outstanding after May 15, 2024, will be entitled to receive fixed-rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on May 16, 2024, and ending on May 15, 2029, will be 6.191%, being equal to the sum of the five-year Government of Canada Bond yield (3.791%) plus 2.40%, as determined in accordance with the terms of the Series 30 Shares.

Holders of Series 31 Shares, should any be issued on May 15, 2024, 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 the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on May 16, 2024, and ending on August 15, 2024, will be 7.380%, being equal to the sum of the 90-day Government of Canada Treasury Bill yield (4.98%) plus 2.40%, calculated on the basis of actual number of days elapsed in such quarterly floating rate period divided by 365, as determined in accordance with the terms of the Series 31 Shares.

Beneficial owners of Series 30 Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which will run from April 15, 2024, until April 30, 2024, at 5:00 p.m. (EDT).

NA.PR.S is a NVCC-compliant FixedReset, 4.10%+240, that commenced trading 2014-2-7 after being announced 2014-1-29. It reset At 4.025% effective May 16, 2019. I recommended against conversion and there was no conversion. It is tracked by HIMIPref™ and assigned to the FixedResets-Discount subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

CWB.PR.D To Reset To 7.651%

Canadian Western Bank has announced:

the applicable dividend rates for its … non-cumulative 5-year rate reset First Preferred Shares Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Preferred Shares”) (TSX: CWB.PR.D) and non-cumulative floating rate First Preferred Shares Series 10 (Non-Viability Contingent Capital (NVCC)) (the “Series 10 Preferred Shares”).

…
Series 9 Preferred Shares
With respect to any Series 9 Preferred Shares that remain outstanding after April 30, 2024, commencing as of such date, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of CWB and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on May 1, 2024, and ending on April 30, 2029, will be 7.651% per annum or $0.4781875 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at April 1, 2024, plus 4.04%, as determined in accordance with the terms of the Series 9 Preferred Shares.

With respect to any Series 10 Preferred Shares that may be issued on May 1, 2024 in connection with the conversion of the Series 9 Preferred Shares into the Series 10 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of CWB and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on May 1, 2024, and ending on July 31, 2024, will be 2.260% (9.039% on an annualized basis) or $0.5649375 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at April 1, 2024, plus 4.04%, as determined in accordance with the terms of the Series 10 Preferred Shares.

Beneficial owners of Series 9 Preferred Shares who wish to retain their Series 9 Preferred Shares do not need to take any further action. Beneficial owners of Series 9 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (EDT) on April 15, 2024. The news release announcing such conversion right was issued on March 21, 2024 and can be viewed on SEDAR+ or CWB’s website. Conversion inquiries should be directed to CWB’s Registrar and Transfer Agent, Computershare Trust Company of Canada, at 1-800-564-6253.

CWB.PR.D was issued as a FixedReset, 6.00%+404, NVCC-Compliant, that commenced trading 2019-1-29 after being announced 2019-01-21. Notice of extension was issued 2024-3-21. It is tracked by HIMIPref™ but is relegated to the Scraps FixedReset-Discount subindex on credit concerns.

Issue Comments

CWB.PR.B To Reset To 6.371%

Canadian Western Bank has announced:

the applicable dividend rates for its non-cumulative 5-year rate reset First Preferred Shares Series 5 (the “Series 5 Preferred Shares”) (TSX: CWB.PR.B), non-cumulative floating rate First Preferred Shares Series 6 (the “Series 6 Preferred Shares”) …

Series 5 Preferred Shares
With respect to any Series 5 Preferred Shares that remain outstanding after April 30, 2024, commencing as of such date, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of CWB and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on May 1, 2024, and ending on April 30, 2029, will be 6.371% per annum or $0.3981875 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at April 1, 2024, plus 2.76%, as determined in accordance with the terms of the Series 5 Preferred Shares.

With respect to any Series 6 Preferred Shares that may be issued on May 1, 2024 in connection with the conversion of the Series 5 Preferred Shares into the Series 6 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of CWB and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on May 1, 2024, and ending on July 31, 2024, will be 1.940% (7.759% on an annualized basis) or $0.4849375 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at April 1, 2024, plus 2.76%, as determined in accordance with the terms of the Series 6 Preferred Shares.

Beneficial owners of Series 5 Preferred Shares who wish to retain their Series 5 Preferred Shares do not need to take any further action. Beneficial owners of Series 5 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (EDT) on April 15, 2024. The news release announcing such conversion right was issued on March 21, 2024 and can be viewed on SEDAR+ or CWB’s website. Conversion inquiries should be directed to CWB’s Registrar and Transfer Agent, Computershare Trust Company of Canada, at 1-800-564-6253.

CWB.PR.B was issued as a FixedReset, 4.40%+276, that commenced trading 2014-2-10 after being announced 2014-1-31. The extension was announced 2019-3-11. It reset at 4.301% effective 2019-5-1. I recommended against conversion and there was no conversion. Notice of extension was announced 2024-3-21. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) index on credit concerns.

Issue Comments

TRP.PR.D To Reset To 5.985%

TC Energy Corporation has announced:

that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 7 (Series 7 Shares) on April 30, 2024. As a result, subject to certain conditions, the holders of Series 7 Shares have the right to choose one of the following options regarding their shares:

  • 1. to retain any or all of their Series 7 Shares and continue to receive a fixed rate quarterly dividend, or
  • 2. to convert, on a one-for-one basis, any or all of their Series 7 Shares into Cumulative Redeemable First Preferred Shares, Series 8 (Series 8 Shares) of TC Energy and receive a floating rate quarterly dividend.

Should holders of Series 7 Shares choose to retain their shares, such shareholders will receive the new annual fixed dividend rate applicable to the Series 7 Shares of 5.985 per cent for the five-year period commencing April 30, 2024 to, but excluding, April 30, 2029.

Should holders of Series 7 Shares choose to convert their shares to Series 8 Shares, holders of Series 8 Shares will receive the floating quarterly dividend rate applicable to the Series 8 Shares of 7.379 per cent for the first quarterly floating rate period commencing April 30, 2024 to, but excluding, July 30, 2024. The floating quarterly dividend rate will be reset every quarter.

Beneficial owners of Series 7 Shares who want 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 to meet the deadline to exercise such right, which is 5 p.m. (EDT) on April 15, 2024. Any notices received after this deadline will not be valid. It is recommended that this be done well in advance of the deadline to provide the broker or other nominee with time to complete the necessary steps.

Beneficial owners of Series 7 Shares who do not exercise their conversion right through their broker or other nominee by the deadline will retain their Series 7 Shares and receive the new annual fixed dividend rate applicable to the Series 7 Shares, subject to the conditions stated below.

The foregoing conversions are subject to the conditions that: (i) if TC Energy determines that there would be less than one million Series 7 Shares outstanding after April 30, 2024, then all remaining Series 7 Shares will automatically be converted into Series 8 Shares on a one-for-one basis on April 30, 2024 and (ii) alternatively, if TC Energy determines that there would be less than one million Series 8 Shares outstanding after April 30, 2024, no Series 7 Shares will be converted into Series 8 Shares. In either case, TC Energy will issue a news release to that effect no later than April 23, 2024.

Holders of Series 7 Shares and Series 8 Shares will have the opportunity to convert their shares again on April 30, 2029 and every fifth year thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with an investment in the Series 7 Shares and the Series 8 Shares, please see the Corporation’s prospectus supplement dated Feb. 25, 2013 which is available on sedarplus.ca or on our website.

TRP.PR.D was issued as a FixedReset, 4.00%+238, that commenced trading 2013-3-4 after being announced 2013-2-25. The extension was announced 2019-3-15. The issue reset at 3.903% effective April 30, 2019. I recommended against conversion and there was no conversion. TRP.PR.D is tracked by HIMIPref™ and assigned to the FixedReset (Discount) subindex.

Thanks to Assiduous Readers niagara and CC for bringing this to my attention!