Category: Issue Comments

JovFunds Management has announced:

that the exchange of preferred shares of Charterhouse Preferred Share Index Corporation (the “Corporation”) for Class A units of Jov Leon Frazer Preferred Equity Fund (the “Merger”) was completed at the close of business on January 30, 2009. Preferred shareholders of the Corporation will receive 1.70389 units of the Class A units of the Fund for each preferred share of the Corporation held as at January 30, 2009. In connection with the Merger, the Corporation was delisted from the Toronto Stock Exchange on January 23, 2009. Units of the Fund are valued daily and may be transacted via the FundSERV Network beginning today.

Please refer to the Fund’s Simplified Prospectus at www.sedar.com for information on the Fund. For more information about the Merger, or for a copy of the Simplified Prospectus of the Fund, please call 1-866-514-6603 or visit us at www.JovFunds.com.

DBRS has announced that it:

has today discontinued the rating on the Preferred Shares issued by Charterhouse Preferred Share Index Corp. (the Company). On October 31, 2008, JovFunds Management Inc. announced that the Preferred Shareholders of the Company approved a special resolution to merge the Company into a newly formed open-ended mutual fund trust. The securities of the Company were de-listed from the Toronto Stock Exchange on January 23, 2009, and the merger was executed on January 30, 2009.

This completes the previously discussed timetable. JovFunds and Leon Frazer are both owned by Jovian Capital.

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.

Scotia has announced:

that it has completed the domestic offering of 11 million, non-cumulative 5-year rate reset preferred shares Series 28 (the “Preferred Shares Series 28”) at a price of $25.00 per share. The gross proceeds of the offering were $275 million.

The issue is a fixed-reset 6.25%+446, as previously announced. The original size was 10-million shares plus a 2-million greenshoe; bumped to 12+2; and they sold 13. A fine marketting job!

The issue traded 496,219 shares in a range of 24.80-00, closing at 24.90-92. It was one of three issues settling today, the others being TD.PR.G and NA.PR.P.

The issue has been added to the HIMIPref™ Fixed-Reset Sub-Index.

The new TD bank fixed-reset 6.25%+438 previously discussed settled today.

The original announcement was for an issue size of 8-million shares with a 3-million greenshoe; TD later announced that the greenshoe had been fully exercised and the issue size bumped, with a total of 15-million shares sold. Now that’s a selling job!

The issue traded 611,420 shares in a range of 24.80-97 before closing at 24.85-90.

The issue has been added to the HIMIPref™ Fixed-Reset Sub-Index.

National has announced:

that it has completed the public offering of non-cumulative 5-year rate reset first preferred shares series 26 (the “Series 26 Preferred Shares”), at a price of $25.00 per share. The offering was made through a syndicate of underwriters led by National Bank Financial Inc. Prior to the closing of the offering, the underwriters agreed to purchase 1,800,000 additional Series 26 Preferred Shares through the underwriters’ option, bringing the total issue to 5,800,000 shares and gross proceeds of the offering to $145 million

As previously discussed, this issue is a fixed-reset 6.60%+479. It traded 172,668 shares in a range of 24.85-95 before closing at 24.91-95.

The issue has been added to the HIMIPref™ Fixed-Reset Sub-Index.

The new Royal Bank Fixed Reset 6.25%+450 announced last week and bumped significantly in size during the marketting period settled today, closing at 24.97-00 after trading 964,597 shares in a range of 24.96-03.

It has been added to the Fixed-Reset Index.

I have had occasion recently to look carefully at BMO.PR.J and CIU.PR.A and thought I’d pass along some of the data.

They’re very similar issues: both came out during the issuance rush of early 2007 (BMO.PR.J at the beginning, CIU.PR.A at the end … BMO.PR.J pays $1.125 p.a., while CIU.PR.A pays $1.15.

The major differences between them are:

• Credit: BMO is Pfd-1; CIU is Pfd-2(high)
• Cumulativity: BMO.PR.J is non-cumulative; CIU.PR.A is cumulative.
• Volume: BMO.PR.J has an average daily trading volume worth $511M; CIU’s is only $95M

CIU.PR.A should be analyzed as junior to the series second showing on their books.

I have previously compared BMO.PR.J with BMO.PR.H.

Both issues were added to TXPR in July 2007.

Anyway, with no further comment, here are some graphs:

• YTW
• YTW Difference
• Flat Bid Price
• Flat Bid Price Difference

STRATA Income Fund has announced:

Based upon a review of various factors, we have reduced the distribution for STRATA Income Fund (the “Fund”) to $0.05 per capital unit payable on February 13, 2009 to unitholders of record on January 31, 2009. Among the more important considerations were distribution cuts by a number of oil and gas royalty trusts in response to the recent correction in oil and gas prices, the global economic slowdown including its impact on corporate revenues and earnings, and corporate conversions accompanied by distribution cuts by a number of income trusts. These factors have caused COMPASS Income Fund (“COMPASS”), the sole underlying investment of the Fund, to reduce its distributions and STRATA to follow suit.

Notwithstanding the current challenging economic environment, we believe there are some very positive developments occurring which we shall consider in determining future distribution levels of COMPASS and of the Fund. More specifically, Middlefield’s oil and gas consultant, Groppe Long and Littell, is currently forecasting a significant recovery in energy prices with crude oil expected to average US$85 per barrel in 2009. In addition, we expect that the various economic stimulus packages and interest rate cuts will begin to take effect in the second half of 2009, thereby improving business prospects.

It should be noted that the Fund will be maturing on November 30, 2009, at which time the preferred securities, which are currently yielding 6.0% per annum, will be repaid in full at the original subscription price of $10.00 plus accrued interest. In addition, those holding STRATA capital units will have the option to receive the net asset value at maturity or exchange their capital units for units of COMPASS.

The capital units and the preferred securities trade on the Toronto Stock Exchange under the symbols STW.UN and STW.PR.A, respectively.

STW.PR.A was last mentioned on PrefBlog when its Stealth Redemption was confirmed. STW.PR.A is tracked by HIMIPref™ and is included in the HIMIPref™ InterestBearing subindex

SNP Health Split Corp. has announced:

The Capital Shares and Preferred Shares will be redeemed by the Company on February 11, 2009 in accordance with the redemption provisions of the shares. Pursuant to these provisions, the Preferred Shares will be redeemed at a price per share equal to the lesser of $25.00 and the Net Asset Value per Unit. The Capital Shares will be redeemed at a price equal to the amount (for every two capital shares) by which the Net Asset Value per Unit exceeds $25.00.

The NAVPU is $28.70 as of January 15 according to Scotia Managed Companies. Not a very successful split corporation as far as the capital unitholders are concerned … capital units were issued at $11.15. On the bright side, though, I might use the handy graph of performance as an illustration of the difference between preferreds and capital!

SNH.PR.U was last mentioned on PrefBlog when it was downgraded to Pfd-5(high) by DBRS. SNH.PR.U is not tracked by HIMIPref™.

The previously announced Scotia Fixed Resets 6.25%+414 settled today with such success that both Royal and Scotia were convinced to add to the growing pile in the late afternoon. Both issues came with the same 6.25% initial fixed rate, with resets to +450 and +446 respectively … which gives you some idea of what has happend to Canada Five Year yields in the last two weeks!

BNS.PR.T traded 769,327 shares in a range of 24.90-35, to close at 25.00-05, 104×30.

Today’s skill-testing question is: What time were the new issues announced? Hint:

A very successful issue! After announcing an initial size of 8-million shares, Scotia announced on January 8:

that, as a result of strong investor demand for its domestic public offering of non-cumulative 6.25% 5-year rate reset preferred shares Series 26 (the “Preferred Shares Series 26”), the size of the offering has been increased to 10 million shares. The gross proceeds of the offering will now be $250 million and is expected to close on or after January 21, 2009.

The offering was made through a syndicate of investment dealers led by Scotia Capital Inc. on a bought deal basis. The Bank has granted to the underwriters an option to purchase up to an additional 3 million Preferred Shares Series 26 at closing, which option is exercisable by the underwriters any time up to 48 hours before closing.

and has now announced:

that it has completed the domestic offering of 13 million, non-cumulative 5-year rate reset preferred shares Series 26 (the “Preferred Shares Series 26”) at a price of $25.00 per share. The gross proceeds of the offering were $325 million.

And today, of course, Scotia came up with another 8-million share issue with a 2-million share greenshoe, immediately bumped up to 10-million shares with the potential for another 2-million.

BNS.PR.T has been added to the HIMIPref™ Fixed-Reset SubIndex.