Category: Issue Comments

DBRS has announced that it:

placed its credit ratings on Laurentian Bank of Canada (LBC or the Bank), including the Bank’s Long-Term Issuer Rating of A (low), Under Review with Negative Implications following a series of recent adverse developments, including the departures of LBC’s chief executive officer (CEO) and chair of the board as well as a mainframe outage that lasted several days before being resolved. The Bank’s Intrinsic Assessment of A (low) and Support Assessment (SA) of SA3 remain unchanged. The SA3 designation reflects no expectation of timely external support.

KEY CREDIT RATING CONSIDERATIONS
The Under Review with Negative Implications designation reflects DBRS Morningstar’s view that these adverse series of events in aggregate have weakened LBC’s franchise strength and future growth prospects, pressuring the credit ratings. LBC’s Personal Banking business, which has already had weaker earnings than its peers, has been under pressure with customer attrition, shrinking loans, and stagnant deposits in recent years. In DBRS Morningstar’s view, the mainframe outage that disrupted online access to retail and business accounts for four days could make it even more difficult for current management to turn around the important Personal Banking segment.

DBRS Morningstar’s review will assess the extent the rapid succession of executive departures and operational missteps have had on the Bank’s franchise and risk profile, along with the Bank’s ability to improve earnings and future prospects in light of the uncertainty of its strategic direction moving forward.

CREDIT RATING DRIVERS
Given the credit ratings are Under Review with Negative Implications, credit rating upgrades are unlikely. DBRS Morningstar would confirm the credit ratings with Stable trends if DBRS Morningstar views recent events as having no impact on LBC’s financial performance or franchise.

The credit ratings would be downgraded if DBRS Morningstar views the executive departures and operational risks exposed by the extended mainframe outage as negatively affecting the franchise and the Bank’s ability to produce sustained improvement in its financial performance. Increased pressures on funding and liquidity or additional operational missteps would also result in a credit rating downgrade.

CREDIT RATING RATIONALE
Franchise Combined Building Block (BB) Assessment: Good/Moderate

LBC is Canada’s eighth-largest Schedule I bank with assets of $50.6 billion as at July 31, 2023. The Bank offers retail services in Québec through its branch network as well as commercial lending across Canada and in the U.S. LBC also distributes financial products to brokers and financial advisors across Canada through its wholesale arm, B2B Bank. Over the past few years through 2022, LBC’s Personal Banking business faced customer attrition, shrinking loans, and stagnant deposits. Almost two years into the current strategic plan that was unveiled on December 10, 2021, the Bank has undertaken a digital-first approach and introduced new and enhanced digital capabilities to close gaps in its Personal Banking business, particularly across mortgage, Visa, and deposit products. On October 2, 2023, following the mainframe outage, the Bank announced the sudden and unexpected departure of its president and CEO, Rania Llewellyn, and the resignation of its board chair, Michael Mueller. With Éric Provost only recently being appointed as president and CEO, there remains limited visibility on LBC’s long-term strategic direction, although the Bank’s current focus is on improving operating efficiency and simplifying the organizational structure.

Earnings Combined Building Block (BB) Assessment: Good/Moderate
Relative to its peers, LBC has demonstrated lower profitability although it has a higher share of noninterest income at about 28% of total revenue for the first nine months of F2023. The Bank’s net income decreased by about 12.0% year over year (YOY) to $150.5 million for the first nine months of F2023 as a result of lower noninterest income and higher provision for credit losses and operating expenses. While a decrease in noninterest income was driven by reduced capital market revenue, noninterest expenses increased on higher salaries, employee benefits, and ongoing investments in technology. As a result, the operating efficiency ratio deteriorated to 70.4% for the first nine months of F2023 from 67.6% for the same period of 2022. Partly offsetting the downward pressure on net earnings, net interest income grew 2.5% YOY to $563.4 million for the first nine months of F2023; however, the net interest margin as calculated by DBRS Morningstar compressed by 7 basis points (bps) to 1.52%, primarily from higher funding costs.

Risk Combined Building Block (BB) Assessment: Good
Amounting to $37.0 billion as at Q3 2023, gross loans saw sluggish growth of about 1.2% YOY compared with 10.9% in the prior-year period. Lower non-mortgage personal loans partly offset an increase in residential mortgages and commercial loans. The bulk of credit risk lies in the commercial book, which accounted for about 48% of total loans as at Q3 2023 and has concentrations in commercial real estate and inventory financing. Overall, the Bank’s asset quality is good with low impairments and loan losses. The gross impaired loans ratio marginally increased by 11 bps YOY to 55 bps at the end of Q3 2023, largely because of increased impairments in commercial mortgages. As with the rest of the banking sector, DBRS Morningstar expects asset quality metrics to further deteriorate from their current levels in the short to intermediate term amid the challenging macroeconomic environment. Furthermore, if not managed prudently, the Bank’s continued realignment of the loan portfolio and geographic expansion, as well as deficiencies in IT capabilities and uncertainties around its new strategic direction, could expose LBC to heightened levels of operational and credit risk.

Funding and Liquidity Combined Building Block (BB) Assessment: Good/Moderate
Despite recent events, LBC’s overall funding and liquidity position has remained stable. Accounting for about 66% of the funding base, total deposits, including capital market deposits, declined by 3.0% year to date to $26.3 billion for the first nine months of F2023 and were in line with a reduction in the loan book. Personal deposits, which represented 85% of total deposits, marginally increased to $22.4 billion for the first nine of months of F2023 on the back of an uptick in direct retail deposits, which were partly offset by a decline in broker-sourced deposits. The Bank expects to attract more direct client deposits on a national level in the coming years, which DBRS Morningstar would view favourably over broker deposits. Liquidity levels, which include cash and Government of Canada securities, are sufficient to meet the Bank’s needs, with liquid assets forming 24% of total assets as at Q3 2023.

Capitalisation Combined Building Block (BB) Assessment: Good/Moderate
LBC’s capital ratios under the standardized approach are above regulatory minimums and provide adequate buffers to absorb stressed levels of loan losses. DBRS Morningstar would view favourably a larger capital buffer, sufficient to absorb significant losses, especially as the Bank undertakes an “accelerated evolution of its strategic plan” and continues to grow its commercial loan book, which may be more susceptible to weakness in the event of a sustained economic downturn. The CET1 capital ratio increased to 9.8% as at Q3 2023, compared with 9.1% as at Q3 2022, primarily reflecting lower risk-weighted assets as well as internal capital generation.

The affected issue is LB.PR.H.

BCE Inc. has announced:

that the Toronto Stock Exchange (the “TSX”) has accepted a notice filed by BCE of its intention to renew its normal course issuer bid (“NCIB”) to purchase up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the TSX (the “Preferred Shares”). The period of the NCIB will extend from November 9, 2023 to November 8, 2024, or an earlier date should BCE complete its purchases under the NCIB. BCE will pay the prevailing market price at the time of acquisition for any Preferred Shares purchased plus brokerage fees payable by BCE (except with respect to purchases made under an issuer bid exemption order, which will be at a discount to the prevailing market price), and all Preferred Shares acquired by BCE under the NCIB will be cancelled.

The actual number of Preferred Shares repurchased under the NCIB and the timing of such repurchases will be at BCE’s discretion and shall be subject to the limitations set out in the TSX Company Manual.

The NCIB will be conducted through a combination of discretionary transactions and purchases under an automatic securities purchase plan through the facilities of the TSX as well as alternative trading systems in Canada, if eligible, or by such other means as may be permitted by securities regulatory authorities, including pre-arranged crosses, exempt offers, private agreements under an issuer bid exemption order issued by securities regulatory authorities and block purchases of Preferred Shares. Purchases made under an issuer bid exemption order will be at a discount to the prevailing market price.

Under the NCIB, BCE is authorized to repurchase shares of each respective series of the Preferred Shares as follows:

					Maximum Number of Shares Subject to Purchase
Series	Ticker	Issued and Outstanding Shares(1)	Public Float(1)	Average Daily Trading Volume(2)	Total(3)	Daily(4)
R	BCE.PR.R	7,894,800	7,894,800	5,406	789,480	1,351
S	BCE.PR.S	2,064,967	2,064,967	1,499	206,496	1,000
T	BCE.PR.T	5,354,833	5,354,833	4,556	535,483	1,139
Y	BCE.PR.Y	6,667,052	6,667,052	4,878	666,705	1,219
Z	BCE.PR.Z	2,785,698	2,785,698	1,827	278,569	1,000
AA	BCE.PR.A	11,604,661	11,604,661	9,332	1,160,466	2,333
AB	BCE.PR.B	7,055,639	7,055,639	5,602	705,563	1,400
AC	BCE.PR.C	6,505,774	6,505,774	5,029	650,577	1,257
AD	BCE.PR.D	12,671,126	12,671,126	11,791	1,267,112	2,947
AE	BCE.PR.E	6,097,913	6,097,913	5,653	609,791	1,413
AF	BCE.PR.F	9,145,387	9,145,387	5,502	914,538	1,375
AG	BCE.PR.G	8,636,930	8,636,930	4,969	863,693	1,242
AH	BCE.PR.H	4,878,370	4,878,370	2,998	487,837	1,000
AI	BCE.PR.I	9,362,540	9,362,540	4,724	936,254	1,181
AJ	BCE.PR.J	4,279,960	4,279,960	1,509	427,996	1,000
AK	BCE.PR.K	22,455,312	22,455,312	15,074	2,245,531	3,768
AL	BCE.PR.L	1,761,188	1,761,188	795	176,118	1,000
AM	BCE.PR.M	10,253,978	10,253,978	6,779	1,025,397	1,694
AN	BCE.PR.N	1,042,322	1,042,322	741	104,232	1,000
AQ	BCE.PR.Q	8,410,414	8,410,414	8,561	841,041	2,140
(1) As of October 31, 2023.
(2) For the 6 months ended October 31, 2023.
(3) Represents approximately 10% of the public float in respect of each series of Preferred Shares.
(4)Represents the maximum number of shares of each series of Preferred Shares that may be purchased over the TSX (or alternative trading systems in Canada, if eligible) during the course of one trading day. This amount is equal to the greater of (i) 25% of the average daily trading volume on the TSX calculated in accordance with the rules of the TSX, and (ii) 1,000 shares. This limitation does not apply to purchases made pursuant to block purchase exemptions.

BCE is making this NCIB because it believes that, from time to time, the Preferred Shares may trade in price ranges that do not fully reflect their value. BCE believes that, in such circumstances, the repurchase of its Preferred Shares represents an appropriate use of its available funds.

As of October 31, 2023, under its current normal course issuer bid that commenced on November 9, 2022 and will expire on November 8, 2023, and for which the company received approval from the TSX, BCE purchased, through the facilities of the TSX and alternative eligible trading systems, Preferred Shares as follows:

Series	Ticker	Maximum Number of Shares Subject to Purchase	Number of Shares Purchased	Weighted Average Price Paid per Security
R	BCE.PR.R	799,890	104,100	$14.76
S	BCE.PR.S	212,826	63,300	$18.05
T	BCE.PR.T	587,013	515,300	$17.85
Y	BCE.PR.Y	807,929	353,200	$17.76
Z	BCE.PR.Z	191,850	191,850	$19.11
AA	BCE.PR.A	1,230,766	703,000	$16.83
AB	BCE.PR.B	768,873	633,100	$17.95
AC	BCE.PR.C	1,002,799	238,500	$16.61
AD	BCE.PR.D	996,320	575,800	$17.90
AE	BCE.PR.E	651,291	415,800	$18.22
AF	BCE.PR.F	948,148	336,100	$16.04
AG	BCE.PR.G	897,953	342,600	$15.15
AH	BCE.PR.H	501,757	139,200	$18.08
AI	BCE.PR.I	953,504	172,500	$15.12
AJ	BCE.PR.J	446,496	185,000	$18.22
AK	BCE.PR.K	2,319,031	735,000	$14.22
AL	BCE.PR.L	179,938	38,200	$16.25
AM	BCE.PR.M	1,043,997	186,000	$14.71
AN	BCE.PR.N	105,472	12,400	$17.16
AQ	BCE.PR.Q	920,000	789,586	$20.50

BCE will enter into an automatic securities purchase plan (“ASPP”) with a designated broker in relation to the NCIB on or about the commencement date of the NCIB. The ASPP will allow for the purchase of Preferred Shares, subject to certain trading parameters, at times when BCE ordinarily would not be active in the market due to applicable regulatory restrictions or self-imposed trading black-out periods. Outside of these periods, the Preferred Shares will be repurchased by BCE at its discretion under the NCIB.

Geez, I hate these press releases with big tables in them – they take forever to format into HTML! But worth it, in this case – this is a really meaningful NCIB!

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

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series N (Series N Shares) (TSX: ENB.PR.N) on December 1, 2023. As a result, subject to certain conditions, the holders of the Series N Shares have the right to convert all or part of their Series N Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series O of Enbridge (Series O Shares) on December 1, 2023. Holders who do not exercise their right to convert their Series N Shares into Series O Shares will retain their Series N 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 N Shares outstanding after December 1, 2023, then all remaining Series N Shares will automatically be converted into Series O Shares on a one-for-one basis on December 1, 2023; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series O Shares outstanding after December 1, 2023, no Series N Shares will be converted into Series O Shares. There are currently 18,000,000 Series N Shares outstanding.

With respect to any Series N Shares that remain outstanding after December 1, 2023, 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 N Shares for the five-year period commencing on December 1, 2023 to, but excluding, December 1, 2028 will be 6.696 percent, being equal to the five-year Government of Canada bond yield of 4.046 percent determined as of today plus 2.65 percent in accordance with the terms of the Series N Shares.

With respect to any Series O Shares that may be issued on December 1, 2023, 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 O Shares for the three-month floating rate period commencing on December 1, 2023 to, but excluding, March 1, 2024 will be 1.94183 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 5.16 percent plus 2.65 percent in accordance with the terms of the Series O Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series N Shares who wish to exercise their right of conversion during the conversion period, which runs from November 1, 2023 until 5:00 p.m. (EST) on November 16, 2023, 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.N was issued as a FixedReset, 4.00%+265, that commenced trading 2012-7-17 after being announced 2012-7-9. The issue reset at 5.086% in 2018. I recommended against conversion and there was no conversion. ENB.PR.N is tracked by HIMIPref™ and assigned to the “Scraps – FixedResets (Discount)” subindex, relegated there due to credit concerns.

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

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 1 (“Series 1 Shares”) (TSX: PPL.PR.A) on December 1, 2023.

As a result of the decision not to redeem the Series 1 Shares, and subject to certain terms of the Series 1 Shares, the holders of the Series 1 Shares will have the right to elect to convert all or part of their Series 1 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 2 of Pembina (“Series 2 Shares”) on December 1, 2023 (the “Conversion Date”). Holders who do not exercise their right to convert their Series 1 Shares into Series 2 Shares will retain their Series 1 Shares.

As provided in the terms of the Series 1 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 1 Shares, then all remaining Series 1 Shares will be automatically converted into Series 2 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 2 Shares outstanding immediately following the conversion, no Series 1 Shares will be converted into Series 2 Shares on the Conversion Date. There are currently 10,000,000 Series 1 Shares outstanding.

With respect to any Series 1 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 1 Shares for the five-year period from and including December 1, 2023, to, but excluding, December 1, 2028, will be 6.525 percent, being equal to the five-year Government of Canada bond yield of 4.055 percent determined as of today plus 2.47 percent, in accordance with the terms of the Series 1 Shares.

With respect to any Series 2 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 2 Shares for the three-month floating rate period from and including December 1, 2023, to, but excluding, March 1, 2024, will be 7.631 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 5.161 percent plus 2.47 percent, in accordance with the terms of the Series 2 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 1 Shares who wish to exercise their right of conversion during the conversion period, which runs from November 1, 2023, until 3:00 pm (MT) / 5:00 pm (ET) on November 16, 2023, 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 December 1, 2023, to holders of the Series 1 Shares of record on November 1, 2023, will be $0.306625 per Series 1 Share. For more information on the terms of the Series 1 Shares and the Series 2 Shares, please see the prospectus supplement dated July 19, 2013, which can be found on SEDAR at www.sedarplus.ca.

PPL.PR.A was issued as a FixedReset, 4.25%+247, that commenced trading 2013-7-26 after being announced 2013-7-17. The issue reset at 4.906% in 2018. I recommended against conversion and there was no converesion. PPL.PR.A is tracked by HIMIPref™ and assigned to the “Scraps – FixedResets (Discount)” subindex, relegated there due to credit concerns.

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

Bank of Montreal has announced:

the applicable dividend rates for its Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 44 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 44”) and Non-Cumulative Floating Rate Class B Preferred Shares, Series 45 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 45”).

With respect to any Preferred Shares Series 44 that remain outstanding after November 25, 2023, 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 the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on November 25, 2023 to, but excluding, November 25, 2028, will be 6.816 per cent. This dividend rate is equal to the sum of the five-year Government of Canada bond yield as at October 26, 2023 plus 2.68 per cent, as determined in accordance with the terms of the Preferred Shares Series 44.

With respect to any Preferred Shares Series 45 that may be issued on November 25, 2023, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of the actual number of days elapsed in each quarterly floating rate period divided by 365, 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 November 25, 2023 to, but excluding, February 25, 2024, will be 7.841 per cent. This dividend rate is equal to the sum of the three-month Government of Canada Treasury bill yield as at October 26, 2023 plus 2.68 per cent, as determined in accordance with the terms of the Preferred Shares Series 45.

Beneficial owners of Preferred Shares Series 44 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 ensure that they meet the deadline to exercise such right, which is 5:00 p.m. (ET) on November 10, 2023.

Conversion enquiries should be directed to BMO’s Registrar and Transfer Agent, Computershare Trust Company of Canada, at 1-800-340-5021.

BMO.PR.E was issued as a FixedReset, 4.85%+268, that commenced trading 2018-9-17 after being announced 2018-09-06. Notice of extension was reported a week ago. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

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

Bank of Montreal has announced:

that it does not intend to exercise its right to redeem the currently outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 44 (Non-Viability Contingent Capital (NVCC)) of the Bank (the “Preferred Shares Series 44”) on November 25, 2023. As a result, subject to certain conditions, the holders of Preferred Shares Series 44 have the right, at their option, to convert all or part of their Preferred Shares Series 44 on a one-for-one basis into Non-Cumulative Floating Rate Class B Preferred Shares, Series 45 (Non-Viability Contingent Capital (NVCC)) of the Bank (the “Preferred Shares Series 45”) on November 25, 2023. Holders who do not exercise their right to convert their Preferred Shares Series 44 into Preferred Shares Series 45 on such date will retain their Preferred Shares Series 44, unless automatically converted in accordance with the conditions below.

The foregoing conversions are subject to the conditions that:

(i) if, after November 10, 2023, the Bank determines that there would be fewer than 1,000,000 Preferred Shares Series 44 outstanding on November 25, 2023 after giving effect to such conversions, then all remaining Preferred Shares Series 44 will automatically be converted into an equal number of Preferred Shares Series 45 on November 25, 2023; and

(ii) alternatively, if the Bank determines that there would be fewer than 1,000,000 Preferred Shares Series 45 outstanding on November 25, 2023 after giving effect to such conversions, then no Preferred Shares Series 44 will be converted into Preferred Shares Series 45.

In either case, the Bank will give written notice to that effect to any registered holders of Preferred Shares Series 44 affected by the preceding minimums on or before November 17, 2023.

The dividend rate applicable to the Preferred Shares Series 44 for the 5-year period commencing on November 25, 2023 to, but excluding, November 25, 2028, and the dividend rate applicable to the Preferred Shares Series 45 for the 3-month period commencing on November 25, 2023 to, but excluding, February 25, 2024, will be determined and announced by way of a news release on October 26, 2023. The Bank will also give written notice of these dividend rates to the registered holders of Preferred Shares Series 44.

Beneficial owners of Preferred Shares Series 44 who, on or after October 25, 2023, wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (ET) on November 10, 2023.

Conversion inquiries should be directed to BMO’s Registrar and Transfer Agent, Computershare Trust Company of Canada, at 1-800-340-5021

BMO.PR.E was issued as a FixedReset, 4.85%+268, that commenced trading 2018-9-17 after being announced 2018-09-06. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

National Bank of Canada has announced:

Further to its announcement of September 20, 2023, National Bank of Canada (the “Bank”) (TSX: NA) announced today the dividend rates applicable to the Non-Cumulative 5‑Year Rate Reset First Preferred Shares, Series 42 Non-Viability Contingent Capital (NVCC) (the “Series 42 Shares”) and the Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”).

Holders of Series 42 Shares, should any remain outstanding after November 15, 2023, 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 November 16, 2023, and ending on November 15, 2028, will be 7.056%, being equal to the sum of the five-year Government of Canada Bond yield (4.286%) plus 2.77%, as determined in accordance with the terms of the Series 42 Shares.
Holders of Series 43 Shares, should any be issued on November 15, 2023, 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 November 16, 2023, and ending on February 15, 2024, will be 7.93%, being equal to the sum of the 90-day Government of Canada Treasury Bill yield (5.16%) plus 2.77%, 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 43 Shares.

Holders of the Series 42 Shares have, subject to certain conditions, the right to convert all or part of their Series 42 Shares on a one-for-one basis into Series 43 Shares on November 15, 2023.

Beneficial owners of Series 42 shares who wish to exercise their conversion right 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 October 31, 2023, at 5:00 p.m. (EDT).

The September 20 press release referenced above stated:

National Bank of Canada (“National Bank”) (TSX: NA) announced today that it does not intend to exercise its right to redeem all or part of the currently outstanding 12,000,000 Series 42 Shares on November 15, 2023. As a result, subject to certain conditions, the holders of the Series 42 Shares will have the right to convert all or part of their Series 42 Shares on a one-for-one basis into Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”) on November 15, 2023, in accordance with the terms of the Series 42 Shares described in the prospectus supplement dated June 4, 2018.

Holders who do not exercise their right to convert their Series 42 Shares into Series 43 Shares on November 15, 2023, will retain their Series 42 Shares.

The foregoing conversions are subject to the conditions that:

i. if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 43 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then holders of Series 42 Shares will not be entitled to convert their shares into Series 43 Shares, and

ii. alternatively, if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 42 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then all remaining Series 42 Shares will automatically be converted into Series 43 Shares without the consent of the holders on November 15, 2023.

In either case, National Bank shall give a notice to that effect to all registered holders of Series 42 Shares no later than November 8, 2023.

On October 17, 2023, National Bank will give notice of:

i. the annual fixed dividend rate applicable to the Series 42 Shares to which a holder of Series 42 Shares will be entitled for the 5-year period from November 16, 2023, up to and including November 15, 2028; and

ii. the floating quarterly dividend rate applicable to the Series 43 Shares to which a holder of Series 43 Shares will be entitled for the 3-month period from November 16, 2023, up to and including February 15, 2024.

Beneficial owners of Series 42 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 October 16, 2023, until October 31, 2023, at 5:00 p.m. (EDT).

NA.PR.G was issued as a FixedReset, 4.95%+277, NVCC compliant, that commenced trading 2018-6-11 after being announced 2018-05-31. It is tracked by HIMIPref™ and is assigned to the FixedResets (Discount) subindex.

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

BCE Inc. renewed its Normal Course Issuer Bid on 2022-11-2:

BCE Inc. (BCE) today announced that the Toronto Stock Exchange (the “TSX”) has accepted a notice filed by BCE of its intention to renew its normal course issuer bid (“NCIB”) to purchase up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the TSX (the “Preferred Shares”). The period of the NCIB will extend from November 9, 2022 to November 8, 2023, or an earlier date should BCE complete its purchases under the NCIB. BCE will pay the prevailing market price at the time of acquisition for any Preferred Shares purchased plus brokerage fees payable by BCE (except with respect to purchases made under an issuer bid exemption order, which will be at a discount to the prevailing market price), and all Preferred Shares acquired by BCE under the NCIB will be cancelled.

The actual number of Preferred Shares repurchased under the NCIB and the timing of such repurchases will be at BCE’s discretion and shall be subject to the limitations set out in the TSX Company Manual.

The NCIB will be conducted through a combination of discretionary transactions and purchases under an automatic securities purchase plan through the facilities of the TSX as well as alternative trading systems in Canada, if eligible, or by such other means as may be permitted by securities regulatory authorities, including pre-arranged crosses, exempt offers, private agreements under an issuer bid exemption order issued by securities regulatory authorities and block purchases of Preferred Shares. Purchases made under an issuer bid exemption order will be at a discount to the prevailing market price.

Under the NCIB, BCE is authorized to repurchase shares of each respective series of the Preferred Shares as follows:

Series	Ticker	Issued and Outstanding Shares(1)	Public Float(1)	Average Daily Trading Volume(2)	Maximum Number of Shares Subject to Purchase
					Total(3)	Daily(4)
R	BCE.PR.R	7,998,900	7,998,900	4,055	799,890	1,013
S	BCE.PR.S	2,128,267	2,128,267	1,067	212,826	1,000
T	BCE.PR.T	5,870,133	5,870,133	11,269	587,013	2,817
Y	BCE.PR.Y	8,079,291	8,079,291	6,383	807,929	1,595
Z	BCE.PR.Z	1,918,509	1,918,509	659	191,850	1,000
AA	BCE.PR.A	12,307,661	12,307,661	9,932	1,230,766	2,483
AB	BCE.PR.B	7,688,739	7,688,739	6,989	768,873	1,747
AC	BCE.PR.C	10,027,991	10,027,991	3,598	1,002,799	1,000
AD	BCE.PR.D	9,963,209	9,963,209	5,255	996,320	1,313
AE	BCE.PR.E	6,512,913	6,512,913	5,004	651,291	1,251
AF	BCE.PR.F	9,481,487	9,481,487	5,397	948,148	1,349
AG	BCE.PR.G	8,979,530	8,979,530	5,276	897,953	1,319
AH	BCE.PR.H	5,017,570	5,017,570	2,961	501,757	1,000
AI	BCE.PR.I	9,535,040	9,535,040	3,983	953,504	1,000
AJ	BCE.PR.J	4,464,960	4,464,960	3,703	446,496	1,000
AK	BCE.PR.K	23,190,312	23,190,312	15,753	2,319,031	3,938
AL	BCE.PR.L	1,799,388	1,799,388	462	179,938	1,000
AM	BCE.PR.M	10,439,978	10,439,978	7,767	1,043,997	1,941
AN	BCE.PR.N	1,054,722	1,054,722	968	105,472	1,000
AQ	BCE.PR.Q	9,200,000	9,200,000	5,946	920,000	1,486
(1) As of November 2, 2022. (2) For the 6 months ended October 31, 2022. (3) Represents approximately 10% of the public float in respect of each series of Preferred Shares. (4) Represents the maximum number of shares of each series of Preferred Shares that may be purchased over the TSX (or alternative trading systems in Canada, if eligible) during the course of one trading day. This amount is equal to the greater of (i) 25% of the average daily trading volume on the TSX calculated in accordance with the rules of the TSX, and (ii) 1,000 shares. This limitation does not apply to purchases made pursuant to block purchase exemptions.

BCE is making this NCIB because it believes that, from time to time, the Preferred Shares may trade in price ranges that do not fully reflect their value. BCE believes that, in such circumstances, the repurchase of its Preferred Shares represents an appropriate use of its available funds.

As of November 2, 2022, under its current normal course issuer bid that commenced on November 9, 2021 and will expire on November 8, 2022, and for which the company received approval from the TSX, BCE did not purchase any Preferred Shares.

BCE will enter into an automatic securities purchase plan (“ASPP”) with a designated broker in relation to the NCIB on or about the commencement date of the NCIB. The ASPP will allow for the purchase of Preferred Shares, subject to certain trading parameters, at times when BCE ordinarily would not be active in the market due to applicable regulatory restrictions or self-imposed trading black-out periods. Outside of these periods, the Preferred Shares will be repurchased by BCE at its discretion under the NCIB.

I normally don’t report these announcements because they normally don’t mean anything. But:

According to the 2022 Annual Report:

Normal course issuer bid for BCE First Preferred Shares

On November 3, 2022, BCE announced the renewal of its NCIB to purchase for cancellation up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the Toronto Stock Exchange. The NCIB will extend up to November 8, 2023, or an earlier date should BCE complete its purchases under the NCIB.

In 2022, BCE repurchased and canceled 584,300 First Preferred Shares with a stated capital of $15 million for a total cost of $10 million. The remaining $5 million was recorded to contributed surplus.

Subsequent to year end, BCE repurchased and canceled 1,090,400 First Preferred Shares with a stated capital of $27 million for a total cost of $20 million. The remaining $7 million was recorded to contributed surplus

… and according to the 23Q2 Quarterly Report:

Normal course issuer bid for BCE First Preferred Shares

For the three and six months ended June 30, 2023, BCE repurchased and canceled 1,848,950 and 3,560,950 First Preferred Shares with a stated capital of $46 million and $89 million for a total cost of $32 million and $63 million, respectively. The remaining $14 million and $26 million were recorded to contributed surplus for the three and six months ended June 30, 2023, respectively.

The 23Q3 Quarterly Report will be released 2023-11-2.

A poster on Financial Wisdom Forum, Thurman, has compiled the following numbers of the purchases to date (from a compilation of SEDI data), which I have not checked myself and present ‘as is’:

Symbol — Shares — Ave Price — Value
————————————————————
BCE.PR.A — 572,200 — $17.32 — $9,910,708.22
BCE.PR.B — 512,800 — $18.07 — $9,266,588.32
BCE.PR.C — 140,400 — $17.62 — $2,473,157.89
BCE.PR.D — 379,800 — $18.14 — $6,889,956.77
BCE.PR.E — 402,600 — $18.26 — $7,351,276.91
BCE.PR.F — 318,500 — $16.11 — $5,130,032.47
BCE.PR.G — 329,600 — $15.22 — $5,015,858.45
BCE.PR.H — 131,100 — $18.14 — $2,378,615.73
BCE.PR.I — 163,500 — $15.22 — $2,488,032.64
BCE.PR.J — 181,900 — $18.25 — $3,319,493.14
BCE.PR.K — 687,600 — $14.26 — $9,801,749.70
BCE.PR.L — 35,100 — $16.29 — $571,917.03
BCE.PR.M — 174,500 — $14.76 — $2,576,196.17
BCE.PR.N — 11,700 — $17.21 — $201,380.98
BCE.PR.Q — 638,200 — $20.73 — $13,231,363.82
BCE.PR.R — 98,200 — $14.82 — $1,455,565.46
BCE.PR.S — 59,400 — $18.11 — $1,075,488.32
BCE.PR.T — 452,600 — $18.16 — $8,221,445.70
BCE.PR.Y — 241,500 — $18.01 — $4,349,190.73
BCE.PR.Z — 191,850 — $19.11 — $3,666,577.96

Grand Total — 5,723,050 — $17.36 — $99,374,596.41

DBRS Limited (DBRS Morningstar) has announced that it:

upgraded the Issuer Rating of Intact Financial Corporation (Intact or the Company) to A (high) from “A” and also upgraded the Financial Strength Rating (FSR) of its main operating insurance subsidiaries to AA from AA (low). The FSRs of Intact’s UK-based subsidiary RSA Insurance Group Limited and its operating entities were also upgraded to AA from AA (low). The Issuer Rating on RSA Insurance Group Limited was upgraded to A (high) from “A”. The trends on all ratings were changed to Stable from Positive.

KEY CREDIT RATING CONSIDERATIONS
The rating upgrades reflect the Company’s strong financial performance and growth in premiums, as well as recent acquisitions that have enhanced the franchise through increased product and revenue diversification while deepening market shares.

The ratings and Stable trends reflect Intact’s well-designed and executed enterprise-wide risk management processes and focus on advanced data analytics and loss modeling that is evident in industry-leading combined ratios that support earnings generation. Additionally, regulatory capital levels are consistently above regulatory targets providing a considerable capital cushion to deal with market stress events or similar adverse developments. The ratings and trends also consider Intact retaining more risk given higher reinsurance costs and higher leverage following the acquisitions.

CREDIT RATING DRIVERS
Given the recent upgrade, a further ratings upgrade is unlikely. However, over the longer term, strong earnings growth supported by industry-leading underwriting profitability while maintaining adequate capital ratios would result in an upgrade. Conversely, the Company would be downgraded if it experiences a persistent material decline in underwriting results or weakening in regulatory capital buffers combined with a sustained deterioration in financial leverage.

CREDIT RATING RATIONALE
Intact is the largest provider of P&C insurance in Canada and is now a top three player in the UK commercial insurance market as a result of its most recent acquisition of Direct Line’s brokered commercial lines in September 2023. Over the past couple of years, the Company has substantially strengthened its market position and diversification in terms of its product lines, geographies, and distribution channels while increasing its potential for growth in the global commercial and specialty insurance, primarily through the RSA Insurance Group Plc (RSA) acquisition.

The Company’s risk profile reflects its strong risk-management framework including its efficient and successful integration of RSA as well as prior acquisitions. De-risking actions taken in 2022 and 2023 including selling the Denmark and the Middle East operations in 2022, exiting the auto lines business in the UK in early in 2023, decreasing its exposure to earthquake risk in Canada and through a pension buy-in transaction related to the UK pension liabilities, are viewed positively while reduced reinsurance coverage may expose the Company to more underwriting earnings volatility in the future. Notwithstanding this, the Company has demonstrated considerable sophistication in underwriting and in capital and investment portfolio management through various periods of market stresses. Reinsurance coverage sufficiently protects against the risks that could most adversely impact capital. Intact also has a strong risk appetite to expand its offerings of cyber risk insurance which comes with lots of opportunities as it is one of the fastest growing insurance business lines. It also presents the Company with challenges related to systemic risk exposure that are being prudently assessed and managed at the enterprise level.

Intact’s earnings ability reflects its strong underwriting and pricing discipline across its business segments and geographies, combined with solid revenue generation capabilities from related businesses (i.e., brokerage ownerships and property restoration services) and investments. Over the past several years, the Company has doubled its direct written premium volume, primarily as a result of the 2021 RSA acquisition but also through organic growth. The Company’s net earnings are strong and resilient with a three-year weighted return on equity (ROE) of 16%.

The Company’s high proportion of marketable bonds and equities and access to external sources of liquidity in various jurisdiction where Intact operates are viewed positively as they help mitigate liquidity risk. Intact’s liquidity stress testing capabilities and its focus on loss modeling and data analytics further enhance its liquidity risk management.

Intact maintains regulatory capital ratios with appropriate buffers across its regulated entities allowing the Company to handle reasonably adverse events. At 32%, Intact’s financial leverage is slightly above its target level of 30% but is expected to decline throughout 2024. On the other hand, the annual fixed charge coverage ratios have been high over the past three years, supported by Intact’s consistently strong earnings. Higher interest rates since mid-2022 have contributed significantly and positively to its investment income but are also making it more expensive to service debt going forward.

Affected issues are: IFC.PR.A, IFC.PR.C, IFC.PR.E, IFC.PR.F, IFC.PR.G, IFC.PR.I and IFC.PR.K.

Purpose Investments has announced:

Big Banc Split Corp. (the “Company”) is pleased to announce that the board of directors of the Company has approved an extension of the maturity date of the Company’s class A shares (“Class A Shares”) and preferred shares (“Preferred Shares”) for an additional 3-year term to November 30, 2026 (the “New Term”) along with a significant increase in distribution rates for both Class A Shares and Preferred Shares. Effective December 1, 2023, the monthly distribution on Class A Shares will increase to $0.12 per Class A Share (or $1.44 per annum), representing a 14.8% yield per annum based on the closing price as at September 28, 2023. The monthly distributions on Preferred Shares will increase to $0.07 ($0.84 per annum), representing an 8.4% yield on the par value of $10.00 per Preferred Share (the “Preferred Share Distribution Rate”). Purpose Investments Inc. (“Purpose”) is the manager, portfolio manager and promoter of the Company and provides all administrative services required by the Company.

“Having carefully assessed the portfolio of the Company and its yield-generating potential, we are pleased to provide shareholders with an extension of the Company’s maturity date, along with material increases in monthly distribution rates on both the Class A Shares and Preferred Shares,” said Vlad Tasevski, Head of Asset Management and Head of Investors and Institutional Partners at Purpose Investments Inc. “We believe the Preferred Shares offer a very competitive combination of attractive monthly distributions and downside protection, while the Class A shares combine the opportunity for an enhanced capital appreciation with an attractive double-digit distribution yield per annum. We believe this emphasis on yield is consistent with our medium-term market outlook for the Company’s Portfolio,” added Tasevski.

The Company invests on an approximately equally weighted basis in a portfolio (the “Portfolio”) of equity securities (the “Portfolio Shares”) of the following publicly traded Canadian banks: Bank of Montreal; Canadian Imperial Bank of Commerce; National Bank of Canada; Royal Bank of Canada; The Bank of Nova Scotia; and The Toronto-Dominion Bank. In order to seek additional returns and enhance the Portfolio’s income, Purpose Investments Inc. (“Purpose Investments”), the Company’s manager, may write covered call options and cash-covered put options in respect of some or all of the Portfolio Shares held in the Portfolio.

In connection with the extension, holders of Class A Shares and Preferred Shares who do not wish to continue their investment in the Company will be able to retract their Preferred Shares or Class A Shares, as applicable, on November 30, 2023, pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Company were to terminate on November 30, 2023. Pursuant to this option, the retraction price may be less than the market price if the Class A Share or Preferred Share, as applicable, is trading at a premium to net asset value. To exercise this retraction right, shareholders must provide notice to their investment dealer by October 31, 2023, at 5:00 p.m. (Toronto time). Alternatively, shareholders may sell their Preferred Shares and/or Class A Shares through their securities dealer at the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their Class A Shares or Preferred Shares.

The NAVPU was 18.87 on 2023-10-3. With less than 1.4-million Units outstanding as of 2022-12-31, the fund is too small to be tracked by HIMIPref™.

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