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.

Not a good month for insurers, particularly Sun Life, but it makes a change from a year ago to see BAM dominating the best performers’ list!

Transcontinental has announced:

that it has closed its previously announced bought deal public offering of 4,000,000 cumulative 5-year rate reset first preferred shares, series D (the “Series D Preferred Shares”) for gross proceeds of $100 million, purchased by a syndicate of underwriters led by Scotia Capital Inc. and CIBC World Markets Inc., acting as joint book-runners.

Transcontinental has also granted the underwriters an option to purchase up to 600,000 additional Series D Preferred Shares to cover over-allotments, exercisable in whole or in part at any time up to 30 days following closing of the offering. If the over-allotment option is exercised in full, the aggregate gross proceeds to Transcontinental will be $115 million.

The issue was announced September 21 and marks a continuance of the recent flood of low credit quality FixedResets.

The issue traded 230,450 shares in a range of 24.80-90 before closing at 24.80-83, 7×8.

Vital Statistics are:

TCL.PR.D is tracked by HIMIPref™. It has been added to the Scraps subindex due to credit concerns.

Great-West Lifeco has announced:

the closing of its previously announced offering of Non-Cumulative First Preferred Shares, Series L. Following the successful sale of the initially announced offering of 6,000,000 Series L Shares, the underwriters of the offering exercised their option to purchase an additional 800,000 Series L Shares, resulting in the Company issuing today 6,800,000 Series L Shares to raise gross proceeds of $170 million. The net proceeds will be used by the Company for general corporate purposes and to augment the Company’s current liquidity position.

The offering was made through a syndicate of underwriters co-led by BMO Capital Markets, CIBC and Scotia Capital Inc. The shares will be posted for trading on the Toronto Stock Exchange under the symbol “GWO.PR.L”.

The issue was announced last week and was priced very tight to market.

The issue traded 148,165 shares in arange of 24.45-60 before closing at 24.50-75, 18×60. Vital Statistics are:

GWO.PR.L is tracked by HIMIPref™. It has been added to the PerpetualDiscount subindex.

TRP.PR.A, the 4.60%+192 FixedReset announced last week has settled, trading 896,387 shares in a range of 24.91-03 before closing at 24.98-00, 120×126.

I was actually a little disappointed at the volume – given that the issue was super-sized to 22-million shares, I had been hoping for a million shares trading on opening day … but it was not to be.

Vital statistics are:

TRP.PR.A is tracked by HIMIPref™. It will be placed in the FixedReset subindex for now; at some point in the future the FixedReset index will be split into FixedResetPremium and FixedResetDiscount, but I will wait until the latter putative index can be adequately populated.

Connor, Clark & Lunn have announced (with a sigh of relief, I’m sure):

on behalf of ROC Pref Corp. (the “Company”) that the Company has matured as scheduled today. The redemption value will be $25.00 per Preferred Share, equal to the original subscription price, and all scheduled quarterly distributions have been paid. We thank you for your investment in ROC Pref Corp.

PRF.PR.A was last mentioned on PrefBlog when it was downgraded to P-2 by S&P. PRF.PR.A is not tracked by HIMIPref™

Split Yield Corp has announced:

Split Yield Corporation (“Split Yield”) reports financial results for the six months ending July 31, 2009.

The six month period ending July 31, 2009 was one of the most tumultuous periods in financial market history. Against this backdrop, the market prices of the stocks in the portfolio mirrored this activity reaching lows in early March but recovering significantly by the end of July. The net asset value per unit (a unit consists of one Class I Preferred share, one Class II Preferred share and one Capital share) increased by $3.43 to $18.66 per unit as at July 31, 2009.

In a word, yech. As the audited financials state:

The Company has 1,213,202 Class I Preferred shares and 1,213,202 Class II Preferred shares outstanding as at July 31, 2009 with a principal repayment of $24,264,040 and $18,198,030 respective due on termination date, February 1, 2012. As at July 31, 2009 the Company had net assets equivalent to $18.66 per Class I Preferred share and nil per Class II Preferred share. This represents a deficiency as at July 31, 2009 of $1.34 per Class I Preferred share and $15.00 per Class II Preferred share for a total deficiency of $19,823,720. If this condition prevails, the Company will have insufficient assets to meet its full liability of the Preferred shares at the termination date.

How did things come to such a pass? Well … I don’t know. The chart of NAV:

… shows some numbers for cumulative performance that, when a product is taken, come to a cumulative return since inception of -4.77%, and NAV has declined a lot more than that. I can only assume that this figure reports total return on the portfolio gross of distributions, in which case the decline in NAV is due to the cumulative distributions since inception of $7.25, $10.54 and $12.52 on the capital units, YLD.PR.B and YLD.PR.A, respectively. The MER (1.95% annualized in 1H09) will also have played a role.

The company notes:

The Company’s investment manager, Quadravest Capital Management Inc., actively manages the Company’s portfolio consisting primarily of common equities in the S&P/TSX 60 and the S&P 100 Indices. In order to generate additional income above the dividend and interest income earned in the Portfolio, the Company writes covered call options. This conservative strategy is designed to enhance the income in the portfolio by enabling the Company to earn strong income in times of volatile markets while reducing the effects of market corrections. In addition, this source of income is treated as capital gains and as such receives a more favorable tax treatment relative to other sources of income.

Quick! Does anybody have total return figures handy for those indices, from April 16, 1998 to July 31, 2009?

BPO.PR.L, the new FixedReset 6.75%+417 announced August 21 has closed smoothly.

The issue traded 898,182 shares in range of 25.02-30 before closing at 25.03-05, 20×75.

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

DBRS has announced that it:

has today discontinued its rating on the Preferred Shares issued by GlobalBanc Advantaged 8 Split Corp. (the Company) at the request of the Company.

The company stated that:

The board of directors concluded that there was no benefit to continuing the rating, and incurring the costs associated with the rating.

The company announced yesterday that:

announces a distribution of $0.005 per Preferred Share for the quarter ending September 30, 2009. The distribution will be paid on October 13, 2009 to holders of record on September 30, 2009. A distribution will not be paid on the Class A Shares for the quarter ending September 30, 2009.

The Board of Directors has again decided to maintain the distribution at the same level as the last two quarters even though the Bloomberg Dividend Forecast now anticipates that dividends to be paid by certain of the banks included in the Bank Portfolio may increase slightly in 2010. The Board of Directors will continue to monitor the Bloomberg Dividend Forecast, the Company’s current cash flow and changes in its expenses and may revise the amount of dividends paid on the Preferred Shares in the future.

Unitholders are reminded that the Preferred Shares, as a class, are entitled to receive, as and when paid in the discretion of the Board of Directors of the Company, cumulative dividends not exceeding $0.1125 per share per annum. The shortfall below the prescribed amount of the Preferred Share dividend (currently, $0.2575 in aggregate) will accumulate and, in accordance with the terms of the Preferred Shares and the Class A Shares, will be paid in priority to any payments on the Class A Shares.

GBA.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-5(low) by DBRS in February. GBA.PR.A is not tracked by HIMIPref™.

I’m a little late with this news, but that’s life …

Global Forty-Five Split Corp. announced on August 20:

that it has re-instated a distribution of $0.05 per Class A Share for the month ending August 31, 2009. The distribution will be paid on or before September 15, 2009 to unitholders of record on August 31, 2009.

The Manager will assess the ability to pay distributions, and the amount thereof, on a monthly basis. Among other considerations, the Company is not permitted to pay a distribution on the Class A Shares if, after the payment of the distribution by the Company, the Net Asset Value per Unit would be less than $15.00.

The Capital Unit dividend had been suspended in November 2008.

The last mention of GFV.PR.A on PrefBlog occurred when it was upgraded to Pfd-3(high) by DBRS. GFV.PR.A is not tracked by HIMIPref™.