Category: Issue Comments

I can’t stand it any more.

BNS.PR.S was issued by BNS to SLF as part of the payment for CI Investments on December 12 and at that time it was listed on the TSX.

Since that time:

• Not a single share has traded
• BNS hasn’t made any statements
• SLF hasn’t made any statements

I recently sent an email to the TSX:

Sirs,

You will recall that BNS issued preferred shares series 24 to SLF as partial payment a block of shares in CI Investments. These shares are currently listed on the TSX as BNS.PR.S, with the first day of potential trading being 2008-12-12.

Since this time, not a single share has traded.

According to your Company Manual (which I accessed at http://tsx.complinet.com/en/display/display_viewall.html?rbid=2072&element_id=327&record_id=327), Section 711 states that the TSX will “normally consider the delisting of securities of a listed issuer if, in the opinion of TSX, it appears that the public distribution, price, or trading activity of the securities has been so reduced as to make further dealings in the securities on TSX unwarranted.”

Section 712 states “Specifically, participating securities may be delisted if: … (d) the number of public security holders, each holding a board lot or more, is less than 150”

It would appear that BNS.PR.S is subject to such a review.

Has such a review been scheduled?

Sincerely,

It is my current understanding that they do not review individual securities. Delisting reviews are, I believe, performed on a company-wide basis and there is not much chance of Scotia being delisted any time soon!

I have been tracking BNS.PR.S – such as it is – since inception, but after three months can no longer justify the inclusion of this issue.

NewGrowth Corp. has announced:

that its Board of Directors has approved a proposal to reorganize the Company. The reorganization will permit holders of Capital Shares to extend their investment in the Company beyond the scheduled redemption date of June 26, 2009 for up to an additional 5 years. The Preferred Shares will be redeemed on the same terms originally contemplated in their share provisions on June 26, 2009. Holders of Capital Shares will continue to have the right to retract annually at 100% of unit value less the par value of a Preferred Share.

The reorganization will involve the issuance of a new class of Preferred Shares in order to provide continuing leverage for the continuing holders of Capital Shares and certain adjustments to the portfolio. The reorganization will be subject to receipt of all necessary regulatory approvals.

A special meeting of holders of Capital Shares has been called and will be held on May 11, 2009 to consider and vote upon the reorganization. Details of the proposed reorganization will be outlined in an information circular to be prepared and delivered to holders of Capital Shares in connection with the special meeting.

NEW.PR.B was last mentioned on PrefBlog when it was announced that the the company was considering a term extension. Given that the capital units, NEW.A, were issued at $1.93 and now have an NAV of $13.71, it is not surprising that some holders do not wish to crystallize their capital gain.

NEW.PR.B is not tracked by HIMIPref™.

Power Corporation has announced:

Power Financial Corporation’s operating earnings for the year ended December 31, 2008 were $1,974 million or $2.69 per share, compared with $2,082 million or $2.84 per share in 2007.

Other items, not included in operating earnings, were a net charge of $637 million or $0.90 per share in 2008, compared with a net charge of $38 million or $0.05 in 2007. Other items in 2008 consisted of Power Financial’s share of non-recurring items recorded by Lifeco, IGM and Pargesa. The main components of other items in 2008 were the write-down of intangibles assets
and goodwill relating to the acquisition of Putnam in 2007 ($983 million), the gain from the sale of health business at Great-West Life & Annuity ($472 milion), and the write-down of Pargesa’s investments in Lafarge and Pernod Ricard ($328 million for 2008).

As a result, net earnings were $1,337 million or $1.79 per share in 2008, compared with $2,044 million or $2.79 per share in 2007.

About three-quarters of net consolidated annual earnings were derived from Great-West Lifeco.

Power Corp. issues tracked by HIMIPref™ are POW.PR.A, POW.PR.B, POW.PR.C, POW.PR.D and POW.PR.F. The first four are included in the PerpetualDiscount Subindex; POW.PR.F has been relegated to “Scraps” on volume concerns.

DBRS has announced that it:

has today discontinued its rating on the Preferred Shares issued by Copernican International Financial Split Corp. at the request of AIC Investment Services Inc. (the Promoter).

CIR.PR.A was last mentioned on the post regarding the DBRS Mass Downgrade of SplitShares, at a time when its asset coverage was 0.5+:1. The issue had been downgraded to Pfd-5(low) in November, when the asset coverage was 0.7+:1. The asset coverage was 0.4-:1 as of March 6.

Hmm … I believe I detect a trend!

CIR.PR.A is not tracked by HIMIPref™.

The new Royal Bank Fixed-Reset, 6.25%+406 announced February 26 was soft on its opening day.

It traded 361,200 shares in a range of 24.70-82 before closing at 24.76-77, 10×214.

As is its wont, Royal has not announced the take-up, or lack thereof, of the greenshoe option.

Update, 2009-3-12: There are 11-million shares outstanding according to the TSX; announced size was 8-million + 3-million greenshoe; therefore the greenshoe was fully exercised.

Standard & Poor’s has announced:

it revised its outlook on IGM Financial Inc. (IGM) to negative from stable. At the same time, Standard & Poor’s affirmed its ratings on IGM, including the ‘A+/A-1’ long- and short-term counterparty credit ratings.
…
The negative outlook is based on our view of continuing uncertainties in 2009 that could lead to lower AUM and as such, to a lower basis for recurring revenues. We could lower the ratings if additional events during 2009 result in further, significant reductions in AUM, such as ongoing weak equity market performance or increased customer redemptions. We could revise the outlook to stable if there is evidence that markets (and as such, levels of AUM) stabilize at current levels or even improve. We believe that IGM’s strong balance sheet and prudent management still provide it with strong financial flexibility and mitigate the currently reduced levels of AUM and revenues. A
negative outlook is not necessarily a precursor to a downgrade or a CreditWatch placement. A negative outlook means that we consider there to be at least a one-in-three probability of a downward movement in a long-term counterparty credit rating over the intermediate term.

IGM.PR.A is tracked by HIMIPref™. It is incorporated in the OperatingRetractible sub-index.

The TD 6.25%+415bp Fixed-Reset announced last week has settled, with a 3-million share greenshoe exercise added to the initial announcement of 8-million shares.

The issue did not choose the best of all possible days to commence trading, but traded an eminently respectable 452,475 shares in a range of 24.72-89 before closing at 24.85-87, 64×20.

TD.PR.I is tracked by HIMIPref™. It has been added to the Fixed-Reset subIndex.

CIBC has announced:

that it completed the offering of 8 million non-cumulative Rate Reset Class A Preferred Shares Series 37 (the “Series 37 Shares”) priced at $25.00 per share to raise gross proceeds of $200 million.

The offering was made through a syndicate of underwriters led by CIBC World Markets Inc. The Series 37 Shares commence trading on the Toronto Stock Exchange today under the ticker symbol CM.PR.M.

The Series 37 Shares will yield 6.5% per annum, payable quarterly, for an initial period ending July 31, 2014. On July 31, 2014, and on July 31 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 4.33%.

As noted in the new issue announcement, the size was the 8-million shares announced above, plus a 3-million share greenshoe.

The issue cannot be labelled a complete failure, however, as it traded 262,889 shares in a range of 24.60-78 before closing at 24.62-71, 10×20.

CM.PR.M is tracked by HIMIPref™ and is included in the Fixed-Reset subindex.

STRATA Income Fund has announced:

its intention to make a normal course issuer bid for its Capital Units and Preferred Securities through the facilities of the Toronto Stock Exchange (the “TSX”). This normal course issuer bid is intended to commence on March 10, 2009 and will terminate on March 9, 2010. In accordance with the Declaration of Trust by which STRATA is governed, market purchases pursuant to its normal course issuer bid may be effected by the Fund.

The Fund had 7,637,608 Capital Units and 3,843,054 Preferred Securities issued and outstanding as at February 27, 2009. STRATA may, during the 12 month period commencing March 10, 2009 purchase on the TSX up to 763,760 Capital Units and 364,498 Preferred Securities, being 10% of the public floats of 7,637,608 Capital Units and 3,644,980 Preferred Securities, respectively, and may not, in any 30 day period, purchase more than 152,752 Capital Units and 76,861 Preferred Securities, being 2% of the respective securities issued and outstanding. STRATA will hold in treasury for resale all capital units and preferred securities purchased pursuant to the bid. As at February 27, 2009, STRATA had purchased 55,600 Capital Units and 48,900 Preferred Securities at an average price of $2.92 per Capital Unit and $9.04 per Preferred Security under its previously approved normal course issuer bid.

The quoted figures imply that there are 1.99 Capital Units per Preferred Security. The Capital Unit NAV was $2.37 on February 26, implying asset coverage of 1.5-:1 as of that date.

The capital units closed at 1.49-70, 4×3 today, while the preferreds were at 9.35-74, 1×7. It would appear that the NCIB is, in fact, beneficial to unitholders of both types.

STW.PR.A was last mentioned on PrefBlog when the Capital Units’ distribution was reduced.

STW.PR.A is tracked by HIMIPref™ and included in the Interest-Bearing sub-index.

Standard & Poor’s has announced that it has:

lowered its ratings on Toronto-based Sun Life Financial Inc. (TSX: SLF; Sun Life Financial) and its rated Canadian and U.S. operating companies by one notch. These operating subsidiaries now have long-term counterparty credit and financial strength ratings of ‘AA’ and include: Sun Life Assurance Co. of Canada; Sun Life Assurance Co. of Canada (U.S.); and Sun Life Insurance & Annuity Co. of New York (collectively known as Sun Life). The long- and short-term counterparty credit ratings on Sun Life Financial are ‘A+/A-1’. At the same time, we removed the ratings from CreditWatch with negative implications, where they were placed Feb. 17, 2009. The outlook is negative. The ratings and outlook on Sun Life’s Hong Kong subsidiary, Sun Life Hong Kong Ltd. (A+/Stable/–) remain unchanged.

“The downgrade reflects our assessment of the deteriorating business and macroeconomic conditions that in our opinion have placed increased pressure on Sun Life Financial’s earnings, investments, and capital adequacy position,” said Standard & Poor’s credit analyst Donald Chu. More specifically, we expect the deterioration within the global equity and credit markets will likely result in a lower level of fee generation by Sun Life Financial’s significant wealth management and asset management operations, increased hedging and borrowing cost, and added pressure on the investment portfolio in the next 12-18 months.
…
The negative outlook reflects our view that further deterioration could occur within the group’s investment portfolio. We could lower the ratings if our assessment of the company’s investment portfolio and its ability to absorb future losses within its existing capital cushion weakens, if improvement is not seen within the U.S. operations and/or if the global equity markets remain in a deep and prolonged decline. We could revise the outlook to stable if we believe that the group’s core after-tax operating earnings are likely to remain above C$1.75 billion on a normal run rate basis, the fixed charge ratio is likely to remain better than 8x, and asset quality issues will be less significant than its North American peers

The SunLife preferreds outstanding (SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D and SLF.PR.E) were downgraded to A- on the bond scale (from A), which did not change their quality as measured on the preferred scale, where it remains at P-1(low).

All the outstanding SunLife preferreds are tracked by HIMIPref™ and included in the PerpetualDiscount sub-index.