Category: Issue Comments

Industrial Alliance Insurance and Financial Services Inc. has announced:

that it has the intention to redeem, on December 31, 2013, all of its Non-Cumulative 5-Year Rate Reset Class A Preferred Shares Series C (the “Series C Preferred Shares”) then outstanding. The redemption price will be $25.00 for each Series C Preferred Share plus an amount equal to all declared and unpaid dividends, less any tax required to be deducted and withheld by Industrial Alliance. There are 4,000,000 Series C Preferred Shares outstanding as of today.

A formal notice and instructions for the redemption of the Series C Preferred Shares will be sent to all registered shareholders in accordance with the rights, privileges, restrictions and conditions attached to the Series C Preferred Shares. The redemption of the Series C Preferred Shares is subject to the approval of the Autorité des marchés financiers.

IAG.PR.C is a FixedReset, 6.20%+338, which commenced trading at a very bad time for the markets; in fact, the underwriters had great difficulty unloading the issue. It has been tracked by HIMIPref™ and is a constituent of the FixedReset subindex.

Standard & Poor’s has announced:

• We are lowering our ratings on Westcoast Energy Inc., including our long-term corporate credit rating to ‘BBB’ from ‘BBB+’.
• We are also removing the ratings from CreditWatch, where they were placed with negative implications June 17, 2013.
• The ratings on Westcoast reflect those on parent Spectra Energy Corp.
• We downgraded Spectra to ‘BBB’ from ‘BBB+’ today, reflecting the drop-down of assets to subsidiary Spectra Energy Partners L.P.

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The ratings on Westcoast primarily reflect Standard & Poor’s view of parent company Spectra, as well as Westcoast’s “strong” business risk profile and “significant” financial risk profile. Furthermore, the credit profiles of both companies are very similar, in our view. Westcoast has what we believe is a diverse group of gas infrastructure assets that have a broad customer base, generate mostly fee-based revenue that reinforces stability, and benefit from regulatory protection to various degrees — all of which also support the strong business risk profile.

We have equalized our ratings on Westcoast with those on parent Spectra. We link the parent and operating company’s credit profiles based on our methodology for holding company structures. Accordingly, any rating action on Spectra would likely flow through to our ratings on Westcoast.

The stable outlook on Westcoast reflects that on Spectra.

The previous CreditWatch-Negative was reported on PrefBlog.

Westcoast is the proud issuer of two series of preferred shares, W.PR.H and W.PR.J, both Straight Perpetuals. Both are tracked by HIMIPref™ and both are currently assigned to the PerpetualDiscount subindex; both will be relegated to “Scraps” at the next index rebalancing at the end of November.

Interestingly, S&P affirmed UNG:

• We are affirming our ratings, including our ‘BBB+’ long-term corporate credit rating, on Union Gas Ltd.
• We are also removing the ratings from CreditWatch, where they were placed June 17, 2013.
• The rating action follows our downgrade to Spectra Energy Corp. to ‘BBB’ from ‘BBB+’ after the drop-down of assets to subsidiary Spectra Energy Partners L.P.
• Based on our ‘a-‘ stand-alone credit profile at Union Gas, the ‘BBB’ rating on Spectra Energy Corp., and our assessment of the regulatory insulation from the parent, we believe that a one-notch differential between the ratings on the parent and that on Union Gas is warranted.

Union Gas is the proud issuer of two preferred shares: UNG.PR.C and UNG.PR.D, which have been discussed in passing on PrefBlog, but neither is tracked by HIMIPref™. The commencement of CreditWatch-Negative status for UNG was reported on PrefBlog.

TD.PR.Z, a FloatingReset +168 just converted from TD.PR.Y, reached only a very small premium over TD.PR.Y on its debut today.

The issue traded 8,500 shares in a range of 25.00-09 before settling at 25.00-08, 15×5.

TD.PR.Z will be tracked by HIMIPref™ and is assigned to the brand-new FloatingReset subindex.

We can examine the comparables with the help of the Pairs Equivalency Calculator:

So TD.PR.Y has the smallest premium of the lot, eclipsed even by the previous low of BNS.PR.Q/BNS.PR.B Is the bloom is off the rose as far as FloatingResets are concerned?

Vital Statistics are:

Quadravest has announced:

Financial 15 Split Corp. (the “Company”) is pleased to announce that it has filed a short form prospectus in each of the provinces of Canada with respect to an additional offering of preferred shares (“Preferred Shares”) and class A shares (“Class A Shares”) of the Company. The offering will be co-led by National Bank Financial Inc., CIBC World Markets Inc. and RBC Capital Markets.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares will be offered at a price of $8.50 per Class A Share to yield 17.7%. The closing price of each of the Preferred Shares and the Class A Shares on October 29, 2013 on the TSX was $9.38 and $10.13, respectively.

The proceeds of the secondary offering, net of expenses and the Agents’ fee, will be used by the Company to invest in a high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal	National Bank of Canada	Bank of America Corp.
The Bank of Nova Scotia	Manulife Financial Corporation	Citigroup Inc.
Canadian Imperial Bank of Commerce	Sun Life Financial Services of Canada Inc.	Goldman Sachs Group Inc.
Royal Bank of Canada	Great-West Lifeco Inc.	JP Morgan Chase & Co.
The Toronto-Dominion Bank	CI Financial Corp.	Wells Fargo & Co.

The Company’s investment objectives are:

Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of $0.04375 per Preferred Share to yield 5.25% per annum on the original issue price; and
ii. on or about the termination date, currently December 1, 2015 (the “Termination Date”), to pay the holders of the Preferred Shares $10.00 per Preferred Share, which was the original issue price of the Preferred Shares.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends initially targeted to be $0.10 per Class A Share to yield 8.0% per annum on the original issue price of the Class A Shares, and currently targeted to be $0.1257 per Class A Share;
ii. on or about Termination Date, to pay the holders of Class A Shares $15.00 per Class A Share, which was the original issue price of the Class A Shares.

The Company is currently scheduled to terminate on December 1, 2015. The Company intends to seek shareholder approval to extend the Termination Date initially to December 1, 2020, and thereafter for additional terms of five years each at the discretion of Quadravest Capital Management Inc., as the manager of the Company. In conjunction with such extension, if approved, shareholders would be offered a special retraction right which would allow them to exit their investment in the Company on the same basis as if the Company were to terminate on its otherwise scheduled Termination Date. Further information regarding the term extension will be provided at the time meetings of shareholders are called to consider and, if deemed acceptable, approve the extension.

The sales period of this overnight offering will end at 8:30 a.m. EST on October 31, 2013.

A copy of the preliminary short form prospectus is available from National Bank Financial Inc., CIBC World Markets Inc. and RBC Capital Markets.

FTN.PR.A was last mentioned on PrefBlog in connection with its Semi-Annual Report 13H1.

FTN.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

DBRS has announced that it:

has today downgraded Thomson Reuters Corporation’s (Thomson Reuters or the Company) Issuer Rating, Unsecured Debentures and Unsecured Medium-Term Notes ratings to BBB (high) from A (low), Commercial Paper rating to R-2 (high) from R-1 (low) and Preferred Shares rating to Pfd-3 (high) from Pfd-2 (low). The trends are all Stable. This action follows the Company’s change in financial management guidelines. As part of a broader plan to improve its business mix and cost structure while returning value to shareholders, the Company now intends to target a net debt-to-EBITDA ratio of up to 2.5 times (x) from 2.0x prior.
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The downgrade reflects DBRS’s view that the Company’s target net debt-to-EBITDA ratio of up to 2.5x results in a credit risk profile that is no longer consistent with the A (low) rating category. Going forward, DBRS will continue to monitor the progress of Thomson Reuters’ strategic initiatives related to product simplification, cost cutting, non-core asset dispositions and the effective rollout of the Company’s financial data provision platforms. Thomson Reuters’ revised ratings with Stable trends reflect the Company’s entrenched market position, the diverse nature of its customer base and its predominantly subscription-based revenue model. The ratings also reflect the need for constant innovation, exposure to changing technology, intensifying competition in key segments and the risks associated with the Company’s acquisition and divestiture program.

TRI.PR.B was last mentioned on PrefBlog when S&P put it on Trend-Negative in May 2012.

Standard & Poor’s also downgraded the company but preferreds were not affected:

• We are lowering our corporate credit rating on New York-based Thomson Reuters Corp. to ‘BBB+’ from ‘A-‘ given the company’s shift in financial policy, which will result in higher debt leverage.
• In addition, we are assigning our ‘A-2′ global scale short-term rating to Thomson Reuters’ commercial paper program.
• We expect Thomson Reuters’ adjusted debt leverage will remain above our 2.5x maximum threshold for the ‘A-‘ corporate credit rating in the medium term.
• We also expect the company to use all of its discretionary cash flow and additional debt to repurchase up to US$1 billion in shares next year, as well as pay dividends, make acquisitions, and fund a US$350 million one-time charge.
• The stable outlook reflects our belief that Thomson Reuters’ operating
  performance will improve in the next year; that the company will successfully complete its Financial & Risk division transformation in
  2014, resulting in healthy and sustainable revenue and EBITDA growth; and that credit ratios will remain in line with our expectations in the medium term, including adjusted debt to EBITDA below 3x on a sustainable basis.

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“The downgrade reflects the company’s shift in its financial policy to allow for a higher level of debt leverage, namely a maximum of 2.5x net debt to EBITDA from the prior target of 2.0x,” said Standard & Poor’s credit analyst Lori Harris. Adding our adjustments, we believe Thomson Reuters’ debt leverage will remain above our maximum 2.5x threshold for the company at the ‘A-‘ rating level. We expect Thomson Reuters to use all of its discretionary cash flow and additional debt this year and next for share repurchases, one-time charges, material pension plan contributions, dividends, and acquisitions. Specifically, management has announced plans for a US$350 million one-time charge mostly for its F&R division and a US$500 million contribution to its defined benefit pension plans this year, as well as up to US$1 billion in share repurchases next year.

TRI.PR.B is tracked by HIMIPref™ and is currently included in the Floaters subindex. It will be moved to Scraps at the regular monthly rebalancing on October 31, on credit concerns.

BNS.PR.B, a FloatingReset +170 just converted from BNS.PR.Q, reached only a very small premium over BNS.PR.Q on its debut today.

The issue traded 17,400 shares in a range of 24.70-15 before settling at 24.85-05, 1×11.

BNS.PR.B will be tracked by HIMIPref™ and is temporarily assigned to the FixedReset subindex. When TD.PR.Z settles on October 31 all FloatingResets will be transferred from the FixedReset subindex to a new FloatingReset subindex.

We can examine the comparables with the help of the Pairs Equivalency Calculator:

So BNS.PR.B has the smallest premium of the lot. It will be most interesting to see whether the bloom is off the rose as far as FloatingResets are concerned!

Vital Statistics are:

The Toronto-Dominion Bank has announced:

that 4,518,147 of its 10 million Non-Cumulative 5-Year Rate Reset Preferred Shares, Series Y (the “Series Y Shares”) will be converted on October 31, 2013, on a one-for-one basis, into Non-Cumulative Floating Rate Preferred Shares, Series Z (the “Series Z Shares”) of TD. As a result, on October 31, 2013, TD will have 5,481,853 Series Y Shares and 4,518,147 Series Z Shares issued and outstanding. The Series Y Shares and the Series Z Shares will be listed on the Toronto Stock Exchange under the symbols TD.PR.Y and TD.PR.Z, respectively.

TD.PR.Y will reset at 3.5595%. I recommended conversion to TD.PR.Z.

Brompton Group has announced:

) Dividend Growth Split Corp. is pleased to announce that it has completed a treasury offering of 3,130,000 class A shares and 3,130,000 preferred shares for aggregate gross proceeds of approximately $60 million. Shares will continue to trade on the Toronto Stock Exchange under the existing symbols DGS (class A shares) and DGS.PR.A (preferred shares).

Dividend Growth Split Corp. invests in a portfolio of common shares of high quality, large capitalization companies, which have among the highest dividend growth rates of those companies included in the S&P/TSX Composite Index. Currently, the portfolio consists of common shares of the following 20 companies:

Great-West Lifeco Inc.	The Bank of Nova Scotia	AGF Management Limited	Shaw Communications Inc.
Industrial Alliance Insurance and Financial Services Inc.	Canadian Imperial Bank of Commerce	IGM Financial Inc.	TELUS Corporation
Manulife Financial Corporation	National Bank of Canada	Power Corporation of Canada	Canadian Utilities Limited
Sun Life Financial Inc.	Royal Bank of Canada	Manitoba Telecom Services	Enbridge Inc.
Bank of Montreal	The Toronto-Dominion Bank	Rogers Communications Inc.	TransCanada Corporation

The class A shares were offered at a price of $9.10 and the preferred shares were offered at a price of $10.07. The final class A and preferred share offering prices were determined so as to be non-dilutive to the most recent calculated net asset value per unit of the Company prior to the filing of the prospectus.

The investment objectives for the class A shares are to provide holders with regular monthly cash distributions targeted to be $0.10 per class A share, and to provide the opportunity for growth in net asset value.

The investment objectives for the preferred shares are to provide holders with fixed cumulative preferential quarterly cash distributions currently in the amount of $0.13125 per preferred share, representing a yield on the offer price of 5.2% per annum, and to return the original issue price to holders of preferred shares on the maturity date.

On October 1, 2013, the Company announced an extension of the maturity date of the class A and preferred shares of the Company for an additional 5 year term to November 28, 2019, subject to extension for successive terms of up to 5 years. The preferred share dividend rate for the extended term will be announced at least 60 days prior to the original November 30, 2014 maturity date. The new dividend rate will be determined based on then-current market yields for preferred shares with similar terms.

The syndicate of agents for the offering was led by RBC Capital Markets and CIBC and includes Scotiabank, TD Securities Inc., BMO Capital Markets, National Bank Financial Inc., GMP Securities L.P., Raymond James Ltd., Canaccord Genuity Corp., Desjardins Securities Inc., Dundee Securities Ltd., Mackie Research Capital Corporation, and Macquarie Private Wealth Inc.

The company’s intent to proceed with the Treasury Offering was previously reported on PrefBlog.

DGS.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Veresen Inc. has announced:

that it has closed its previously announced bought deal offering of 6,000,000 Cumulative Redeemable Preferred Shares, Series C (the “Series Preferred Shares”) at a price of $25.00 per share representing aggregate gross proceeds of $150,000,000 (the “Offering”).

The Offering was first announced by Veresen on October 9, 2013 when Veresen entered into an agreement with a syndicate of underwriters co-lead by Scotiabank, TD Securities Inc. and CIBC.

Proceeds from the Offering will be used to reduce indebtedness and for general corporate purposes.

The Series C Preferred Shares have been rated Pfd-3 (High) by DBRS Limited and P-3 (High) by Standard & Poor’s, a division of The McGraw Hill Companies, Inc.

The Series C Preferred Shares will begin trading on the Toronto Stock Exchange today under the symbol “VSN.PR.C”.

VSN.PR.C is a FixedReset, 5.00%+301 announced October 9. It has been rated Pfd-3(high) [Stable] by DBRS; it will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 259,016 shares today in a range of 24.60-88 before closing at 24.70-82, 4×48.

Vital statistics are: