Category: Issue Comments

These are total returns, with dividends presumed to have been reinvested at the bid price on the ex-date. The list has been restricted to issues in the HIMIPref™ indices.

Dividend 15 Split Corp. has announced:

that it has filed a short form prospectus in each of the provinces of Canada with respect to an additional offering of Preferred Shares and Class A Shares. The offering will be co-led by RBC Capital Markets and CIBC World Markets.

The proceeds from the re-opening of the Company, net of expenses and the Agents’ fee, will be used by the Company to invest in an actively managed portfolio of dividend-yielding common shares which includes each of the 15 Canadian companies listed below. These are currently among the highest dividend-yielding securities in the S&P/TSX 60 Index:

The preliminary prospectus has all the numbers and dates of interest dotted out.

DFN.PR.A was last mentioned on PrefBlog when their secondary offering last spring raised just over $50-million. DFN.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

GWO.PR.N, a 3.65%+130 FixedReset which met with a lackadaisical reception when it settled on November 23, has apparently proved to be a tough sell – the underwriters are attempting to blow out their inventory at 24.50, with the repriced offering closing on December 3.

Still looks expensive according to me – that’s a pretty skimpy Issue Reset Rate and one must assume that it will never be called – but what do I know? Toronto Stock Exchange volume is about 440,000 shares as of 1pm, traded in a range of 24.48-54.

Canada Life Financial Corporation has announced:

that it intends to redeem all 6,000,000 of its Series B Preferred Shares on December 31, 2010.

A formal notice and instructions for the redemption of the Series B Preferred Shares will be forwarded to shareholders in accordance with the rights, privileges, restrictions and conditions attached to the Series B Preferred Shares.

The redemption price will be $25.00 for each Series B Preferred Share plus an amount equal to all declared and unpaid dividends, up to but excluding the redemption date, less any tax required to be deducted and withheld by CLFC. The paid-up capital of each Series B Preferred Share is $25.00.

CLFC was established in 1999. CLFC’s principal subsidiary, The Canada Life Assurance Company, was founded in 1847 and provides insurance and wealth management products and services in Canada, the United Kingdom, Isle of Man, Ireland and Germany. CLFC and Canada Life are subsidiaries of The Great-West Life Assurance Company, and members of the Power Financial Corporation group of companies.

Finally! This issue has spent considerable time over the years trading well above its current call price, but those parsimonious gnomes at GWO just had to wait until the first day of its par call!

Great-West Lifeco has announced:

the closing of its previously announced offering of 3.65% Non-cumulative 5-Year Rate Reset First Preferred Shares, Series N (the “Series N Shares”) through a syndicate of underwriters led by BMO Nesbitt Burns Inc., RBC Dominion Securities Inc. and Scotia Capital Inc. and including CIBC World Markets Inc., TD Securities Inc., National Bank Financial Inc. and Desjardins Securities Inc. for gross proceeds of $250 million.

The Series N Shares were priced at $25.00 per share. The net proceeds will be used for general corporate purposes and to augment Lifeco’s current liquidity position. The Series N Shares will be posted for trading on the Toronto Stock Exchange under the symbol “GWO.PR.N”.

GWO.PR.N is the 3.65%+130 FixedReset announced November 15. The final size of $250-million means that the greenshoe of $50-million was not exercised.

GWO.PR.N traded 110,585 shares today in a range of 24.65-76 before closing at 24.65-70, 39×128. Vital statistics are:

GWO.PR.N is tracked by HIMIPref™ and has been assigned to the FixedReset index.

Dividend Growth Split Corp has announced:

it has filed a preliminary short form prospectus with respect to a treasury offering of preferred shares and class A 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.
…
The offering price of the preferred shares is $10.00 per share. The closing price of the preferred shares on the TSX on November 19, 2010 was $10.45. The investment objectives for the preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per preferred share to yield 5.25% per annum on the original issue price, and to return the original issue price to holders of preferred shares at the time of redemption on November 30, 2014.

The final class A share offering price will be non-dilutive to existing class A shareholders as it will be set at a level that ensures that the net proceeds of the Offering per Unit are greater than the most recently calculated Net Asset Value per Unit prior to the date of the final prospectus. The closing price of the class A shares on the TSX on November 19, 2010 was $9.70. 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 per class A share.

DGS.PR.A was last mentioned on PrefBlog when the last treasury offering closed. DGS.PR.A is not tracked by HIMIPref™ as it is too small … but that excuse won’t hold up for much longer if they keep up the pace of treasury offerings!

Scotiabank has announced:

that Scotiabank has agreed to make an offer for all of the common shares of DundeeWealth that the Bank does not own. Scotiabank currently owns 18 per cent of DundeeWealth.
…
The value of the offer to DundeeWealth shareholders is $21.00 per common share representing an enterprise value for DundeeWealth of approximately $3.2 billion. Scotiabank will offer 0.2497 of a Scotiabank common share and, at the election of each shareholder, either $5.00 in cash or 0.2 of a $25.00, 3.70% five year rate reset Scotiabank preferred share for each DundeeWealth common share (including common shares issuable on conversion of other shares).
…
Dundee Corporation owns 48 per cent of DundeeWealth. As a result of Dundee Corporation’s commitment to tender, on completion of the offer Scotiabank will own at least 67 per cent of DundeeWealth. After the completion of the offer, Scotiabank also expects to proceed with the acquisition of the balance of the common shares of DundeeWealth.

This will improve the credit quality of DW.PR.A quite considerably, and the cash might have an effect on the credit ratings of DC as well. DW.PR.A closed on Friday at 24.95-30, for a yield-to-worst of 4.94-68%, but is now quoted at 26.01-25. The Modified Duration on Friday was 5.38,

It’s interesting that Scotia is offering partial payment in FixedReset preferreds with an initial coupon of 3.70% – that would make the Issue Reset Spread about 150bp, so this issue will be treated as “more perpetual than otherwise”.

Update: DBRS comments:

The transaction is consistent with BNS’s strategy of growing its wealth management businesses, which the Bank believes offers attractive opportunities. DBRS views BNS’s wealth management businesses as a key component of the Bank’s domestic growth strategy.

BNS will gain significant market share to 7.8% and become the fifth largest mutual fund provider in Canada and the third largest among the Canadian banks with over $55 billion in assets under management, up from tenth position. The Bank is currently under-represented in retail mutual funds.

The transaction provides BNS with added capabilities in the advisor channel, which is the primary distribution channel for DWI. Over the last three years, BNS has been investing to strengthen its distribution capabilities in wealth management, including both the direct and advisor channels. Both mutual fund brands, ScotiaFunds and Dynamic, will be maintained.

BCE Inc. has announced:

that none of its Cumulative Redeemable First Preferred Shares, Series R (Series R Preferred Shares) will be converted into Cumulative Redeemable First Preferred Shares, Series Q (Series Q Preferred Shares).

On October 12, 2010, BCE notified holders of Series R Preferred Shares that they could elect to convert their shares into Series Q Preferred Shares subject to the terms and conditions attached to those shares. Only 71,965 of BCE’s 8,000,000 Series R Preferred Shares were surrendered for conversion into Series Q Preferred Shares. As this would result in there being less than one million Series Q Preferred Shares outstanding, no Series R Preferred Shares will, as per the terms and conditions attached to those shares, be converted on December 1, 2010 into Series Q Preferred Shares. Shareholders who had elected to convert their Series R Preferred Shares will be receiving, by December 1, 2010, share certificates representing the number of shares surrendered for conversion.

The Series R Preferred Shares will continue to be listed on The Toronto Stock Exchange under the symbol BCE.PR.R. The Series R Preferred Shares will pay on a quarterly basis, for the five-year period beginning on December 1, 2010, as and when declared by the Board of Directors of BCE, a fixed dividend based on an annual dividend rate of 4.490%.

BCE.PR.R was last mentioned on PrefBlog when the dividend reset to 4.49% was announced. BCE.PR.R is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

The Bank of Canada has released the Autumn 2010 Review with articles

• Has Exchange Rate Pass-Through Really Declined? Some
  Recent Insights from the Literature

• Financial Stress, Monetary Policy, and Economic Activity
• Trends in Issuance: Underlying Factors and Implications

The last article, by Jonathan Witmer, attracted my eye, but was something of a disappointment … typical B-School Look-Mummy-I-Got-A-Spreadsheet broker research stuff.

Update: Not everyone agrees with my assessment of the Witmer paper.

DBRS has announced that it:

has today discontinued the ratings of the Preferred Shares/Securities issued by Mulvihill Premium Canadian Bank, Top 10 Split Trust, and World Financial Split Corp. The ratings are being withdrawn at the request of Mulvihill Capital Management Inc., the manager of the three funds.

PIC.PR.A was last mentioned on PrefBlog when the Capital Units were consolidated. It is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

WFS.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-4(low) by DBRS. It is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

TXT.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-4(high) by DBRS. It is not tracked by HIMIPref™.