Category: Issue Comments

Power Financial Corporation has announced:

that it intends to redeem all $150 million of its outstanding 4.70% Non-Cumulative First Preferred Shares, Series J on July 30, 2010.

In accordance with the terms of the Series J Shares, the redemption price will be $25.50 for each Series J share plus an amount equal to all declared and unpaid dividends, net of any tax required to be withheld by the Corporation.

A notice of the redemption of the Series J Shares will be provided in accordance with the rights, privileges and conditions attached to the Series J Shares.

PWF.PR.J commenced trading in March, 2003, and was scheduled to become callable at par commencing 2012-4-30. It was last mentioned on PrefBlog in early 2007, after GWO bought Putnam.

PWF.PR.J is a member of the rapidly shrinking Operating Retractible index and closed last night at 25.80-85, with a negative Yield-to-Worst.

Financial 15 Split Corp. II has announced:

There will not be a distribution paid to Financial 15 II Class A Shares for June 30, 2010 as per the Prospectus which states no regular monthly dividends or other distributions will be paid on the Class A Shares in any month as long as the net asset value per unit is equal to or less than $15.00. The net asset value as of June 15, 2010 was $14.47.

FFN.PR.A was last mentioned on PrefBlog when the capital unit dividend was suspended in February (it was reinstated in March). FFN.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

In the press release announcing their new FixedReset 4.40%+160 issue, Power Financial announced:

The Corporation intends to redeem all of its $150 million First Preferred Shares, Series C on October 31, 2010.

The redemption price will be $25.40.

PWF.PR.D closed last night at 25.70-75 to yield 3.97-53% until this redemption.

PWF.PR.D commenced trading 1997-10-17, is tracked by HIMIPref™ and is a member of the Operating Retractible sub-index … there goes another one!

Loblaw Companies has announced that it:

has agreed to issue $350 million principal amount of Medium Term Notes, Series 2-B pursuant to its Medium Term Notes, Series 2 program. The notes are to be offered through an agency syndicate led by CIBC World Markets Inc. and RBC Dominion Securities Inc. and are expected to be issued on June 18, 2010. The notes will pay a fixed rate of 5.22% per annum until maturity on June 18, 2020. The notes will be unsecured obligations of the Company and will rank equally with all other unsecured indebtedness of the Company that has not been subordinated. The net proceeds of the offering will be used to pre-fund the Company’s $350 million of indebtedness maturing in January 2011 and for general corporate purposes.

L.PR.A, an Operating Retractible issued in June 2008, closed today at 26.90-96 to yield 4.48% to its 2015-7-30 softMaturity. On an interest-equivalent basis, these shares yield more than 100bp over the notes and have only a five year maturity (there is the potential for earlier calls).

DBRS has announced that it has changed the ratings trend on CM from negative to stable. The so-called press release is not available to the public.

Investment Executive reports:

DBRS says that the move to a stable trend reflects its view that “actions taken so far by CIBC to reduce its exposures in the structured credit runoff business should help to limit the losses on both earnings and capital.” It says that it expects the bank to continue to proactively reduce its structured credit runoff portfolio exposures.
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DBRS adds that the bank has also taken actions to improve risk management, including changing senior management, increasing the depth of its senior risk management team, and revamping the risk management process and procedures. It allows that while it is difficult to assess the effectiveness of these changes, “so far earnings from core businesses remain within our expectations, given weak credit markets in Canada.”

“Nevertheless, any material weaknesses in risk management that affect the consistency or sustainability of earnings will have a negative impact on CIBC’s ratings,” it stresses

CM has a large number of preferred shares issues outstanding: CM.PR.A (OpRet); CM.PR.D, CM.PR.E, CM.PR.G, CM.PR.H, CM.PR.I, CM.PR.J (PerpetualDiscount); CM.PR.K, CM.PR.L, CM.PR.M (FixedReset); CM.PR.P (PerpetualDiscount) and CM.PR.R (OpRet).

The last general news about CM was the post on the preferred DRIP into discounted common. All CM preferred issues are tracked by HIMIPref™.

Yellow Pages Income Fund has announced:

that its subsidiary, Yellow Media Inc. (the “Issuer”), will be issuing $200 million aggregate principal amount of 6.25% convertible unsecured subordinated debentures (the “Convertible Debentures”) on a bought deal basis. The Convertible Debentures pay interest semi-annually on April 1 and October 1 of each year commencing October 1, 2010. The Convertible Debentures have a maturity date of October 1, 2017 and will be convertible, at the option of the holder, for trust units (“Units”) of the Fund at an exchange price of $8.00 per Unit.

The Issuer has also granted the underwriters the option to purchase up to $30 million principal amount of additional Convertible Debentures at a price of $1,000 per Convertible Debenture (plus accrued interest from the initial closing of the offering to the closing of the over-allotment option) to cover over-allotments, exercisable in whole or in part anytime up to 30 days following closing of the offering.

Net proceeds resulting from the sale of the Convertible Debentures of the Issuer shall be used by the Issuer to repay indebtedness, including under the Issuer’s commercial paper program and to fund the redemption of the Issuer’s outstanding 5.50% Exchangeable Unsecured Subordinated Debentures, and for general corporate purposes.

Pursuant to the Fund’s previously announced plan of arrangement under the Canada Business Corporations Act, the Fund’s income trust structure will be converted into a corporate structure. As a result, the Convertible Debentures will, without the requirement for the consent of any holders of Convertible Debentures, become debentures of the successor public corporation on the effective date of the arrangement having the same terms as the Convertible Debentures and will become convertible into common shares of the successor public corporation.

The Convertible Debentures will be offered for sale to the public in each of the provinces and territories of Canada pursuant to a short form prospectus of the Issuer to be filed with Canadian securities regulatory authorities in all Canadian jurisdictions.

The underwriting syndicate is led by RBC Capital Markets and TD Securities and Scotia Capital, acting as joint book-runners.

The offering is scheduled to close on or about July 8, 2010, subject to certain conditions, including conditions to be set forth in the underwriting agreement.

Yellow Media (formerly YPG Holdings) has four issues of preferreds outstanding:

• YPG.PR.A, OpRet, closed 6/14 at 24.60-73 to yeild 4.87-63%
• YPG.PR.B, OpRet, 20.56-72 to yield 8.40-27%
• YPG.PR.C, FixedReset, 24.10-30, 7.16-10%
• YPG.PR.D, FixedReset, 24.20-60, 7.24-11%

Update: DBRS rates them at BBB.

DBRS has announced that it:

has today assigned a rating of A (low) with a Stable trend to the prospective issue by Nova Scotia Power Inc. (NSPI) of $300 million, 5.61% medium-term notes, maturing June 15, 2040 (the Notes). The offering is expected to settle on June 15, 2010.

The Notes rank equally with all other unsecured obligations of NSPI and are being issued pursuant to the Short Form Base Shelf Prospectus dated May 21, 2010, as supplemented by the Prospectus Supplement dated June 9, 2010. Proceeds from this issue are expected to be used to repay short-term debt and for general corporate purposes.

NSPI is a wholly owned subsidiary of EMA.

It will be recalled that EMA recently issued EMA.PR.A, a FixedReset paying 4.40%+184.

Direct comparisons between the credits these issues are difficult; NSPI is a subsidiary of EMA, together with the difference in seniority.

Standard & Poor’s rates EMA’s preferreds at BBB- on the global scale and NSPI’s notes at BBB+; as a rough explanation, we can say that there is one notch for the holdco/sub relationship and one for the preferred/senior note relationship (which is much less than would be applied to a bank of the same credit quality).

It will be noticed that TCA recently issued long notes at 6.10% and TRP’s two FixedReset issues, TRP.PR.A and TRP.PR.B, closed last night yielding 4.12% (to call) and 3.95% (to perpetuity) respectively, while TCA’s two PerpetualDiscounts (TCA.PR.X and TCA.PR.Y) yield about 5.90%, down about 17bp from issue time. Make of it what you will!

DBRS has announced that it:

confirmed the Unsecured Debentures and Preferred Shares ratings of Fortis Inc. (Fortis or the Company) at BBB (high) and Pfd-3 (high), respectively, and changed the trends to Positive from Stable. The trend change is largely driven by the Company’s low business risk profile (benefiting from its ownership of a diversified basket of utility businesses which provide over 90% of consolidated EBITDA), its strong credit metrics (which have improved modestly over the years), the significant reduction in external debt at subsidiary Terasen Inc. (Terasen) and the Company’s demonstrated ability to acquire and integrate stable utility businesses financed on a conservative basis.
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Capital expenditures at the regulated utilities are subject to regulatory approval. It is anticipated that the majority of capital expenditures will be funded at the subsidiary level, with a combination of internally generated cash, operating company-level debt and equity from Fortis (expected to average $100 million annually for the next five years) to fund capital build-out programs, while maintaining their respective regulated capital structures. DBRS views the level of Fortis’s equity injections as reasonable, and does not anticipate that the Company will use debt to fund the injections, thereby avoiding double leverage.

DBRS will consider an upgrade to the Unsecured Debentures and Preferred Shares ratings if Fortis continues to exhibit strong financial and operating performance and maintain its conservative financial practices; barring any materially negative regulatory actions at the operating subsidiaries, or mergers and acquisitions activity financed on an aggressive basis.

Fortis’ preferreds are rated Pfd-3(high) by DBRS. S&P rates Series D, E and H as P-2; Series C is also rated P-2, but S&P seems to think that these are denominated in USD.

Fortis has five series of preferred shares outstanding: FTS.PR.C (OpRet); FTS.PR.E (OpRet); FTS.PR.F (PerpetualDiscount); FTS.PR.G (FixedReset) and FTS.PR.H (FixedReset). All are tracked by HIMIPref™ and all have been relegated to the Scraps index on credit concerns.

Faircourt Asset Management, on behalf of Faircourt Income & Growth Split Trust, has announced:

that it has received requests for redemptions totaling approximately 6.4 million Units of the Trust. Payment will be made on July 22nd, 2010 based on the Net Asset Value per Trust Unit calculated using a three day volume weighted average price for exchange-traded securities held by the Trust, determined as of June 30, 2010 less costs of funding the redemption, including commissions.

The Trust currently has approximately 4.9 million Warrants outstanding, at an exercise price of $4.00 per unit while the current Net Asset Value of the Trust as at the close of business June 2nd is $4.57 or $4.34 on fully diluted basis. The Warrants will expire on June 25th, 2010. Holders of Warrants desiring to exercise Warrants and purchase Units should ensure that subscriptions and payment in full of the Subscription Price are received by the Warrant Agent prior to 4:01 p.m. (Toronto time) on June 25, 2010. Warrants submitted to the Warrant Agent for exercise on June 25, 2010 will be exercised in accordance with the practices and procedures of the Warrant Agent and the applicable CDS Participants

The fund, advised by Acuity Investment Management Inc., is most notable for having the Capital Units underperform the benchmark by over 20% annually in the five years to 2009-12-31. There were 9,806,610 units outstanding as of year-end, so this announcement reflects a mass churning by unitholders – assuming they exercise their warrants, which are in-the-money. Otherwise, of course, it’s just a plain mass-retraction.

FIG.PR.A was last mentioned on PrefBlog when the Capital Units’ dividend was reinstated. FIG.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Emera has announced:

that it has completed its public offering of six million Cumulative 5-Year Rate Reset First Preferred Shares, Series A for aggregate gross proceeds of $150 million. The offering was first announced on May 25, 2010 when Emera entered into an agreement with a syndicate of underwriters in Canada led by Scotia Capital Inc., RBC Capital Markets and CIBC World Markets Inc.

The net proceeds of the offering will be used for general corporate purposes.

The aggregate gross proceeds of $150-million implies that the $50-million greenshoe was not exercised, while the low volume implies the underwriters had trouble flogging the issue.

EMA.PR.A is a FixedReset, 4.40%+184, announced May 25.

It traded 26,700 shares today in a range of 24.70-00 before closing at 24.75-89, 27×10.

Vital statistics are:

EMA.PR.A is tracked by HIMIPref™, but has been relegated to the Scraps index on credit concerns.