Category: Issue Comments

Nexen Inc. has announced:

that we have completed our public offering of cumulative redeemable class A rate reset preferred shares, series 2 (the “Series 2 Shares”), which was announced on February 27, 2012.

With the underwriters fully exercising their option to acquire an additional 2 million Series 2 Shares, the size of the offering increased to a total of 8 million Series 2 Shares, resulting in gross proceeds of $200 million.

The net proceeds of the offering may be used to reduce Nexen’s indebtedness, for capital expenditures and for general corporate purposes.

The syndicate of underwriters was co-led by TD Securities Inc. and Scotiabank and included RBC Capital Markets, CIBC, BMO Capital Markets, National Bank Financial Inc., Desjardins Securities Inc. and HSBC Securities (Canada) Inc.

The Series 2 Shares will be listed on the Toronto Stock Exchange under the symbol “NXY.PR.A”.

NXY.PR.A is a FixedReset, 5.00%+359 announced February 27. It will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

NXY.PR.A traded 645,238 shares today in a range of 25.06-24 before closing at 25.22-23, 18×13. Vital statistics are:

Brookfield Asset Management has announced:

its intention to redeem all of its outstanding Class A Preference Shares, Series 10 (TSX: BAM.PR.H) for cash on April 5, 2012. The redemption price for each such share will be C$25.00 plus accrued and unpaid dividends thereon (for greater certainty, excluding declared dividends with a record date prior to the redemption date). Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 32 to redeem its Preference Shares, Series 10 and, to the extent the underwriters’ option is exercised, for general corporate purposes.

The issuance of the Series 32 (FixedReset, 4.50%+290) has been reported on PrefBlog.

Brookfield Office Properties has announced:

that that it intends to redeem all of its outstanding Class AAA Preference Shares, Series I (the “Series I Shares”) on March 30, 2012. The Redemption Price will be C$25.00 per Series I Share.

There are currently 6,138,022 outstanding Series I Shares, which are listed on the Toronto Stock Exchange under the symbol BPO.PR.I. All of the Series I Shares are held beneficially through CDS & Co., as nominee of CDS Clearing and Depositary Services Inc.

Notice of Redemption has been sent to CDS & Co. Payment of the Redemption Price will be made to all beneficial holders of the Series I Shares on or after March 30, 2012 through the facilities of CDS & Co.

BPO.PR.I is an interesting issue, since (as discussed in the post BPO.PR.I: What is the Meaning of Existence?), it has been both redeemable and retractible at par for quite some time … but both the issuer and the holders have been perfectly content to let it trade. BPO.PR.I is tracked by HIMIPref™ but has been relegated to the Scraps index on credit concerns.

Scotia Managed Companies has announced:

Allbanc Split Corp. (the “Company”) announced today that it has called 239,120 Preferred Shares for cash redemption on March 9, 2012 (in accordance with the Company’s Articles) representing approximately 24.893% of the outstanding Preferred Shares as a result of the special annual retraction of 239,120 Capital Shares by the holders thereof. The Preferred Shares shall be redeemed on a pro rata basis, so that each holder of Preferred Shares of record on March 7, 2012 will have approximately 24.893% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $26.75 per share.

In addition, holders of a further 284,500 Capital Shares and 284,500 Preferred Shares have deposited such shares concurrently for retraction on March 9, 2012. As a result, a total of 523,620 Capital Shares and 523,620 Preferred Shares, or approximately 42.05499% of both classes of shares currently outstanding, will be redeemed.

Holders of Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including March 9, 2012.

Payment of the amount due to holders of Preferred Shares will be made by the Company on March 9, 2012. From and after March 9, 2012 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.

Allbanc Split Corp. is a mutual fund Corporation created to hold a portfolio of publicly listed common shares of selected Canadian chartered banks. Class A Capital Shares and Class B Preferred Shares of Allbanc Split Corp. are listed for trading on The Toronto Stock Exchange under the symbols ABK.A and ABK.PR.B respectively.

ABK.PR.B was last mentioned on PrefBlog on February 27, when DBRS confirmed their credit rating. ABK.PR.B is not tracked by HIMIPref™.

Power Corporation of Canada has announced:

the successful completion and closing of an offering of 8,000,000 5.60% Non-Cumulative First Preferred Shares, Series G (the “Series G Shares”) priced at $25.00 per share to raise gross proceeds of $200 million.

The issue was bought by an underwriting syndicate co-led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The Series G Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “POW.PR.G”. Proceeds from the issue will be used to supplement Power Corporation of Canada’s financial resources and for general corporate purposes.

POW.PR.G is a 5.60% Straight Perpetual announced February 15.

POW.PR.G traded 594,733 shares today in a range of 25.37-48 before closing at 25.47-48, 10×4. The issue will be tracked by HIMIPref™ and is assigned to the PerpetualPremium index. Vital statistics are:

Standard & Poor’s has announced:

• In December 2011, Sun Life announced it would cease issuing individual life and annuity contracts in the U.S.We believe Sun Life’s U.S. business segment, including the run-off operations, will likely generate more than C$300 million annually in pretax operating earnings that supports earnings diversity.
• Accordingly, we are removing our ‘A’ ratings on Sun Life Financial Inc. from CreditWatch and affirming them, and affirming our ‘AA-‘ ratings on its core North American subsidiaries.
• The negative outlook on holding company Sun Life Financial Inc. reflects that fixed charge coverage may not rebound to the levels we expect in 2012.

…
“The rating action reflects our opinion that the group’s (Sun Life) 2012 after-tax operating earnings will come in between $C1.4 billion and C$1.5 million expected for the ratings following depressed results in 2011,” said Standard & Poor’s credit analyst Robert Hafner.
…
Furthermore, we expect that the U.S. business segment, including the operations the group placed in run-off in December as a result of the cessation of U.S. individual life and annuity contract sales, is likely to contribute more than C$300 million annually to consolidated earnings. This will adequately support earnings quality and diversification at SLF that helps satisfy our expectations for maintaining the two-notch difference between our ratings on SLF and SLA. Normally, there is a three-notch difference between the ratings on North American insurance holding companies and the ratings on subsidiaries. Although the earnings from the U.S. run-off operations will gradually decline, we expect the results to provide ample opportunity for the organization to generate replacement earnings from other businesses.

In addition, Sun Life’s mutual fund platform (MFS) generated C$271 million of after-tax operating earnings in 2011. Although we view mutual fund earnings to be of lower quality than insurance earnings, MFS does contribute to earnings diversification and is an unregulated source of earnings.
…
The negative outlook on SLF is because we could widen the notching between the company and its core operating insurance companies to three notches from two by lowering the ratings on SLF if fixed charge coverage does not rebound to expected levels in 2012. We could lower the ratings if we believe that it will not maintain earnings diversification as the U.S. individual life and annuity business runs off by replacing U.S. earnings with other sources. We could revise the outlook to stable and affirm the ratings if SLF restores fixed charge coverage to more than 5x.

The Negative Watch was reported on PrefBlog on December 14. In the interim, Moody’s downgraded SLF. S&P rates the preferreds P-2(high); DBRS viewed the 11Q4 results as non-material and maintains the preferreds at Pfd-1(low).

SLF has the following preferred shares outstanding: SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D and SLF.PR.E (DeemedRetractible) and SLF.PR.F, SLF.PR.G, SLF.PR.H and SLF.PR.I (FixedReset). All are tracked by HIMIPref™ and assigned to their respective indices.

Power Financial Corporation has announced:

the successful completion and closing of an offering of 10,000,000 5.50% Non-Cumulative First Preferred Shares, Series R (the “Series R Shares”) priced at $25.00 per share to raise gross proceeds of $250 million.

The issue was bought by an underwriting syndicate co-led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The Series R Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “PWF.PR.R”. Proceeds from the issue will be used to supplement Power Financial Corporation’s financial resources and for general corporate purposes.

PWF.PR.R is a 5.50% Straight Perpetual announced February 13.

PWF.PR.R traded 901,316 shares in a range of 24.95-25 before closing at 25.22-34, 2×100. The issue will be tracked by HIMIPref™ and is assigned to the PerpetualPremium index. Vital statistics are:

Manulife Financial Corporation has announced:

that it has completed its offering of 10 million Non-cumulative Rate Reset Class 1 Shares Series 7 (the “Series 7 Preferred Shares”) at a price of $25 per share to raise gross proceeds of $250 million.

The offering was underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., RBC Capital Markets and TD Securities. The Series 7 Preferred Shares commence trading on the Toronto Stock Exchange today under the ticker symbol MFC.PR.H.

The Series 7 Preferred Shares were issued under a prospectus supplement dated February 14, 2012 to Manulife’s short form base shelf prospectus dated September 3, 2010.

MFC.PR.H is a FixedReset, 4.60%+313 announced February 14.

The issue traded 649,139 shares today in a range of 24.90-05 before closing at 25.00-03, 25×141. The issue will be tracked by HIMIPref™ and assigned to the FixedReset index. Vital statistics are:

Great West Lifeco has announced:

the closing of its previously announced offering of 10,000,000 Non-Cumulative First Preferred Shares, Series P (the “Series P Shares”) through a syndicate of underwriters co-led by BMO Capital Markets, RBC Capital Markets, and Scotiabank for gross proceeds of $250 million. The Series P Shares will be posted for trading on the Toronto Stock Exchange under the symbol “GWO.PR.P”.

GWO.PR.P is a Straight Perpetual, coupon 5.40%, announced February 10.

The issue traded 648,620 shares today in a range of 24.95-09 before closing at 25.01-03, 24×21. This issue will be tracked by HIMIPref™ and assigned to the DeemedRetractibles index. Vital statistics are:

Standard & Poor’s has announced:

• On Feb. 21, 2012, Fortis Inc. announced it entered into an agreement to acquire all of the shares of CH Energy Group Inc. for about C$1.5 billion.
• As a result, we are placing our ratings, including our ‘A-‘ long-term corporate credit rating, on Fortis Inc. on CreditWatch with negative implications.
• The CreditWatch reflects our expectation of increased debt at the holding company level to finance the acquisition and that post-acquisition, deconsolidated credit metrics may be below our established thresholds.

…
“We will resolve the CreditWatch once greater details related to the transaction become available, including a financing plan, and the transaction closes,” said Standard & Poor’s credit analyst Gavin MacFarlane. We could lower the ratings if debt levels increase as a result of the transaction and the company is unable to meet established thresholds we associate with the current ratings, including company-level debt coverage from cash flows from its subsidiaries of more than 20% and consolidated adjusted funds from operations to debt of more than 10%. However, while less likely, we could still affirm the ratings on Fortis and return to a stable outlook if a very meaningful component of the financing plan consists of equity and we conclude
that forecast credit metrics are at levels consistent with the current ratings.

Fortis’ preferreds are currently rated P-2 [Watch Negative] by S&P and Pfd-2(low) [Review Developing] by DBRS.

Fortis has several series of preferred shares outstanding: FTS.PR.C & FTS.PR.E (Operating Retractible); FTS.PR.F (PerpetualPremium); FTS.PR.G & FTS.PR.H (FixedReset). All are tracked by HIMIPref™ and assigned to the indicated indices.