Category: New Issues

Bank of Montreal has announced:

a Basel III-compliant domestic public offering of $250 million of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 29 (the “Preferred Shares Series 29”). The offering will be underwritten on a bought-deal basis by a syndicate led by BMO Capital Markets. The Bank has granted to the underwriters an option to purchase up to an additional $50 million of the Preferred Shares Series 29 exercisable at any time up to two days before closing.

The Preferred Shares Series 29 will be issued to the public at a price of $25.00 per share. Holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending August 25, 2019, as and when declared by the board of directors of the Bank, payable in the amount of $0.24375 per share, to yield 3.90 per cent annually.

Subject to regulatory approval, on or after August 25, 2019, the Bank may redeem the Preferred Shares Series 29 in whole or in part at par. Thereafter, the dividend rate will reset every five years to be equal to the 5-Year Government of Canada Bond Yield plus 2.24 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 29 into an equal number of Non-Cumulative Floating Rate Class B Preferred Shares Series 30 (“Preferred Shares Series 30”) on August 25, 2019, and on August 25 of every fifth year thereafter. Holders of the Preferred Shares Series 30 will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the board of directors of the Bank, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.24 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 30 into an equal number of Preferred Shares Series 29 on August 25, 2024, and on August 25 of every fifth year thereafter.

The anticipated closing date is June 6, 2014. The net proceeds from the offering will be used by the Bank for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of $250 million of Non-Cumulative 5-year Rate Reset Class B Preferred Shares Series 29, the size of the offering has been increased to $400 million. As announced earlier today, the offering will be underwritten on a bought deal basis by a syndicate led by BMO Capital Markets.

The Implied Volatility calculation yields interesting results:

Click for Big

So the Implied Volatility is at its maximum reasonable value of 40%; this is far too low for NVCC-non-compliant issues and far too high for compliant ones, but the fit is reasonable anyway. Of interest is the fact that the two NVCC-compliant issues (BMO is the first to have two!) are well above the fitted line, which is as it should be.

Brookfield Asset Management Inc. has announced:

that it has agreed to issue 8,000,000 Class A Preferred Shares, Series 40 on a bought deal basis to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotiabank and TD Securities Inc. for distribution to the public. The Preferred Shares, Series 40 will be issued at a price of C$25.00 per share, for gross proceeds of C$200,000,000. Holders of the Preferred Shares, Series 40 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending September 30, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.86%.

Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 40 which, if exercised, would increase the gross offering size to C$250,000,000. The Preferred Shares, Series 40 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 40 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield also announced that it intends to redeem all of its outstanding Class A Preferred Shares, Series 22 (TSX:BAM.PR.P) for cash on September 30, 2014. The redemption price for each Preferred Share, Series 22 will be C$25.00. Holders of Preferred Shares, Series 22 will separately receive all accrued and unpaid dividends outstanding on the redemption date.

Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 40 to partially fund the redemption of its Preferred Shares, Series 22. The offering of Preferred Shares, Series 40 is expected to close on or about June 5, 2014.

The redemption of BAM.PR.P has been given its own post.

The issue looks fairly priced, with a small but reasonable new issue concession. Implied Volatility Theory suggests it is cheap relative to the lower-spread BAM issues, as the theoretical curve should flatten as implied volatility declines from its very high level of 40%.

BAM PerpetualDiscounts (BAM.PR.M, BAM.PR.N, BAM.PF.C, BAM.PF.D) were yielding within a tight range of 5.50-5.55% at the close yesterday, so the Break Even Rate Shock on this new issue is about 1.4%, a little less than we have seen on several recent new issues.

The Toronto-Dominion Bank has announced:

an inaugural Basel III-compliant domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 1 (the “Series 1 Shares”).

TD has entered into an agreement with a group of underwriters led by TD Securities Inc. to issue, on a bought deal basis, 12 million Series 1 Shares at a price of $25.00 per share to raise gross proceeds of $300 million. TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 1 Shares. This option is exercisable in whole or in part by the underwriters at any time up to two business days prior to closing.

The Series 1 Shares will yield 3.90% annually, payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending October 31, 2019. Thereafter, the dividend rate will reset every five years at a level of 2.24% over the then five-year Government of Canada bond yield.

Subject to regulatory approval, on October 31, 2019 and on October 31 every 5 years thereafter, TD may redeem the Series 1 Shares, in whole or in part, at $25.00 per share. Subject to TD’s right of redemption, holders of the Series 1 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Shares”), subject to certain conditions, on October 31, 2019, and on October 31 every five years thereafter. Holders of the Series 2 Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of TD, equal to the three-month Government of Canada Treasury bill yield plus 2.24%.

The expected closing date is June 4, 2014. TD will make an application to list the Series 1 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced Basel III-compliant domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 1 (the “Series 1 Shares”), the size of the offering has been increased to 20 million Series 1 Shares. The gross proceeds of the offering will now be $500 million. The offering will be underwritten by a group of underwriters led by TD Securities Inc.

The expected closing date is June 4, 2014. TD will make an application to list the Series 1 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

Given that TD.PR.S and TD.PR.Y both have Issue Reset Spreads below 170bp and are trading well above par, this issue looks extremely cheap at first glance. But TD.PR.S and TD.PR.Y are not NVCC compliant, so there is considerable less likelihood that they’ll be outstanding after 2021-1-31. So make of it what you will.

Click For Big

Update: Pfd-2 from DBRS. Note that this is one notch below the NVCC-non-compliant issues.

Royal Bank of Canada has announced:

a domestic public offering of $250 million of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series BB.

Royal Bank of Canada will issue 10 million Preferred Shares Series BB priced at $25 per share and holders will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending August 24, 2014 in the amount of $0.2190 per share, to yield 3.90 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 2 million Preferred Shares Series BB at the same offering price.

Subject to regulatory approval, on or after August 24, 2019, the bank may redeem the Preferred Shares Series BB in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 2.26 per cent over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series BB will, subject to certain conditions, have the right to convert all or any part of their shares to Non-Cumulative Floating Rate Preferred Shares Series BC on August 24, 2019 and on August 24 every five years thereafter.

Holders of the Preferred Shares Series BC will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 2.26 per cent. Holders of Preferred Shares Series BC will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series BB on August 24, 2024 and on August 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is June 3, 2014.

We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series BB, the size of the offering has been increased to 20 million shares. The gross proceeds of the offering will now be $500 million.

Great-West Lifeco Inc. has announced that it:

has today entered into an agreement with a syndicate of underwriters co-led by BMO Capital Markets and Scotiabank under which the underwriters have agreed to buy, on a bought deal basis, 6,000,000 Non-Cumulative First Preferred Shares, Series S (the “Series S Shares”) from Lifeco for sale to the public at a price of $25.00 per Series S Share, representing aggregate gross proceeds of $150 million.

Lifeco has granted the underwriters an underwriters’ option to purchase an additional 2,000,000 Series S Shares at the same offering price. Should the underwriters’ option be fully exercised, the aggregate gross proceeds of the Series S Shares offering will be $200 million.

The Series S Shares will yield 5.25% per annum, payable quarterly, as and when declared by the Board of Directors of the Company. The Series S Shares will not be redeemable prior to June 30, 2019. On and after June 30, 2019, Lifeco may, on not less than 30 nor more than 60 days’ notice, redeem for cash the Series S Shares in whole or in part, at the Company’s option, at $26.00 per share if redeemed on or after June 30, 2019 and prior to June 30, 2020; $25.75 per share if redeemed on or after June 30, 2020 and prior to June 30, 2021; $25.50 per share if redeemed on or after June 30, 2021 and prior to June 30, 2022; $25.25 per share if redeemed on or after June 30, 2022 and prior to June 30, 2023; and $25.00 per share if redeemed on or after June 30, 2023, in each case together with all declared and unpaid dividends up to but excluding the date of redemption.

The Series S Share offering is expected to close on May 22, 2014. The net proceeds will be used for general corporate purposes and to augment Lifeco’s current liquidity position.

They announced shortly afterwards that the greenshoe for another 2-million shares has been exercised, bringing the total issue size to $200-million.

I confess I’m a little surprised that they didn’t call GWO.PR.F, which has a coupon of 5.9% and is currently callable at par, but perhaps that will come later. Still, it’s nice to see another Straight Perpetual on the market; it is noteworthy that this is coming out of GWO, the most conservatively managed of the insurance companies.

Note that since this is an insurance issue, it will be analyzed by HIMIPref™ as a DeemedRetractible; a Deemed Maturity entry for 2025-1-31 at par has been added to the call schedule. This is due to my analysis, not as a result of anything in the prospectus.

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell ten million Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on May 22, 2014.

The holders of Series 11 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding March 1, 2020. The first quarterly dividend payment date is scheduled for September 1, 2014. The dividend rate will reset on March 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.64 per cent. The Series 11 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2020 and on March 1 of every fifth year thereafter.

The holders of Series 11 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 12 (the “Series 12 Preferred Shares”), subject to certain conditions, on March 1, 2020 and on March 1 of every fifth year thereafter. The holders of Series 12 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.64 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional two million Series 11 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by Scotiabank, CIBC, RBC Capital Markets, and TD Securities.

They announced shortly afterwards:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”), the size of the offering has been increased to 20 million shares. The aggregate gross proceeds will be C$500 million. Closing of the offering is expected on May 22, 2014.

This issue is virtually identical to ENB.PF.A, a FixedReset 4.40%+266, which commenced trading March 13, 2014, with a first Exchange date of 2019-12-1. That issue closed Friday at 25.60-65 and closed today at 25.30-39 … the new price is not an indicator of expensiveness because it goes ex-dividend tomorrow.

Update, 2015-05-15: DBRS rates Pfd-2(low).

Bank of Montreal has announced:

an inaugural Basel III-compliant domestic public offering of $300 million of Non-Cumulative 5-year Rate Reset Class B Preferred Shares Series 27 (the “Preferred Shares Series 27”). The offering will be underwritten on a bought deal basis by a syndicate led by BMO Capital Markets. The Bank has granted to the underwriters an option to purchase up to an additional $50 million of the Preferred Shares Series 27 exercisable at any time up to two days before closing.

The Preferred Shares Series 27 will be issued to the public at a price of $25.00 per Preferred Share Series 27 and holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending May 25, 2019 as and when declared by the board of directors of the Bank, payable in the amount of $0.25 per Preferred Share Series 27, to yield 4.00 per cent annually.

Subject to regulatory approval, on or after May 25, 2019, the Bank may redeem the Preferred Shares Series 27, in whole or in part at par. Thereafter, the dividend rate will reset every five years to be equal to the 5-Year Government of Canada Bond Yield plus 2.33 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 27 into an equal number of Non-Cumulative Floating Rate Class B Preferred Shares Series 28 (“Preferred Shares Series 28”) on May 25, 2019 and on May 25 of every fifth year thereafter. Holders of the Preferred Shares Series 28 will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the board of directors of the Bank, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.33 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 28 into an equal number of Preferred Shares Series 27 on May 25, 2024 and on May 25 of every fifth year thereafter.

The anticipated closing date is April 23, 2014. The net proceeds from the offering will be used by the Bank for general corporate purposes.

This was quickly followed up by:

Bank of Montreal (TSX:BMO)(NYSE:BMO) today announced that as a result of strong investor demand for its previously announced Basel III-compliant domestic public offering of $300 million of Non-Cumulative 5-year Rate Reset Class B Preferred Shares Series 27 (the “Preferred Shares Series 27”), the size of the offering has been increased to $500 million. As announced earlier today, the revised offering will be underwritten on a bought deal basis by a syndicate led by BMO Capital Markets.

To my chagrin, they did not announce the redemption of BMO.PR.O, a FixedReset, 6.50%+458 which is callable on May 25. Given the fat Issue Reset Spread, a call is as close to certain as one ever gets in this business … but I guess I’ll just have to keep checking their news releases every day.

The new issue is provisionally rated Pfd-2 by DBRS:

DBRS has today provisionally rated Bank of Montreal’s (the Bank) Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 27 (NVCC Preferred Shares Series 27 or Series 27) at Pfd-2 with a Stable trend.

DBRS assigned the NVCC Preferred Shares Series 27 a rating equal to the Bank’s intrinsic assessment less four rating notches because the Series 27 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.

The rating is consistent with DBRS’s criteria titled, “Rating Bank Capital Securities — Subordinated, Hybrid, Preferred & Contingent Capital Securities.”

… and P-2(low) by S&P:

Standard & Poor’s Ratings Services today said it assigned its ‘BBB-‘ global scale and ‘P-2(Low)’ Canada scale ratings to Bank of Montreal’s (BMO) C$300 million non-cumulative five-year rate reset class B preferred shares series 27. The issuer credit rating on BMO is A+/Stable/A-1.
…
The ‘BBB-/P-2(Low)’ ratings stand three notches below BMO’s stand-alone credit profile (SACP), incorporating:

• •A deduction of two notches the minimum downward notching from the SACP under our criteria for hybrid capital instruments; and
• •A deduction of an additional notch to reflect that the preferred shares feature a non-viability contingent conversion trigger provision. Should a trigger event occur (as defined by the Office of the Superintendent of Financial Institutions’ [OSFI] guideline for Capital Adequacy Requirements, Chapter 2), each preferred share outstanding will automatically and immediately be converted, without the holder’s consent, into a number of fully paid and freely tradable common shares of the bank determined in accordance with a conversion formula.

Laurentian Bank of Canada has announced:

that it has entered into an agreement with a syndicate of underwriters led by RBC Dominion Securities Inc., BMO Capital Markets and Laurentian Bank Securities Inc. (collectively, the “Underwriters”), under which the Underwriters have agreed to buy on a bought deal basis an aggregate of 5,000,000 Basel III-compliant Non-Cumulative Class A Preferred Shares, Series 13 (the “Preferred Shares Series 13”), at a price of $25.00 per Preferred Share Series 13 for gross proceeds of $125 million (the “Offering”). The Preferred Shares Series 13 will be offered for sale to the public in each of the provinces of Canada pursuant to a prospectus supplement to Laurentian’s short form base shelf prospectus dated October 10, 2012, which supplement will be filed with Canadian securities regulatory authorities in all Canadian provinces.

Holders of Preferred Shares Series 13 will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending on, but excluding, June 15, 2019, as and when declared by the board of directors of the Bank, payable in the amount of $0.26875 per Preferred Share Series 13, to yield 4.30 per cent annually.

Thereafter, the dividend rate will reset every five years to be equal to the 5-Year Government of Canada Bond Yield plus 2.55 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 13 into an equal number of Basel III-compliant Non-Cumulative Class A Preferred Shares, Series 14 (the “Preferred Shares Series 14”) on June 15, 2019 and on June 15 every five years thereafter. Holders of the Preferred Shares Series 14 will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the board of directors of the Bank, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.55 per cent. The Offering is expected to close on or about April 3, 2014 and is subject to Laurentian receiving all necessary regulatory approvals.

Laurentian also announced today that it intends to redeem, on June 16, 2014, all of its 4,400,000 issued and outstanding Non-Cumulative Class A Preferred Shares, Series 10 (the “Preferred Shares Series 10”), at a price of $25.00 per share for an aggregate consideration of $110 million.

The net proceeds of the Offering will be added to Laurentian’s general funds and will be used for general corporate purposes (including, subject to the approval of the Office of the Superintendent of Financial Institutions, to fund the redemption of the Preferred Shares Series 10).

This issue is very similar to LB.PR.F, a FixedReset 4.00%+260 announced 2012-10-11 … except that the new issue is NVCC compliant and LB.PR.F ain’t.

Update: In connection with the NVCC compliance, it should be noted that DBRS has provisionally rated this paper at Pfd-3(low):

DBRS assigned the NVCC Preferred Shares Series 13 a rating equal to that Bank’s intrinsic assessment less four rating notches because the Series 13 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.

… which may be compared with Pfd-3 on non-compliant issues.

The new issue is rated P-3 by S&P (BB on the global scale):

The ‘BB’ rating stands three notches below the stand-alone credit profile (SACP), incorporating:

• •A deduction of two notches, the minimum downward notching from the SACP under our criteria for a bank hybrid capital instrument; and
• •The deduction of an additional notch to reflect that the preferred shares feature a contingent conversion trigger provision. Should a trigger event occur (as defined by The Office of the Superintendent of Financial Institutions’ [OSFI] guideline for Capital Adequacy Requirements, Chapter 2), each preferred share outstanding will automatically and immediately be converted, without the holder’s consent, into a number of fully paid and freely tradable common shares of the bank determined in accordance with a conversion formula.

… which may be compared with P-3(high) on non-compliant issues.

Brookfield Asset Management Inc. has announced:

that it has agreed to issue 8,000,000 Class A Preferred Shares, Series 38 on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC, RBC Capital Markets and Scotiabank for distribution to the public. The Preferred Shares, Series 38 will be issued at a price of C$25.00 per share, for gross proceeds of C$200,000,000. Holders of the Preferred Shares, Series 38 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.40% annually for the initial period ending March 31, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.55%.

Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 38 which, if exercised, would increase the gross offering size to C$250,000,000. The Preferred Shares, Series 38 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus.
…
Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 38 to redeem its Preferred Shares, Series 12 and for general corporate purposes. The offering of Preferred Shares, Series 38 is expected to close on or about March 13, 2014.

Brookfield is up to its usual tricks – taking a very long initial fixed rate period (just over six years) in order to choose a higher yielding Canada bond as the basis for the reset.

The issue appears reasonably fairly priced against its peers, when examined with Implied Volatility Theory – but the implied volatility of 40% renders the conclusion a little suspect. Make of it what you will.

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Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell eight million Cumulative Redeemable Preference Shares, Series 9 (the “Series 9 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on March 13, 2014.

The holders of Series 9 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding December 1, 2019. The first quarterly dividend payment date is scheduled for June 1, 2014. The dividend rate will reset on December 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.66 per cent. The Series 9 Preferred Shares are redeemable by Enbridge, at its option, on December 1, 2019 and on December 1 of every fifth year thereafter.

The holders of Series 9 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 10 (the “Series 10 Preferred Shares”), subject to certain conditions, on December 1, 2019 and on December 1 of every fifth year thereafter. The holders of Series 10 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.66 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million Series 9 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by TD Securities Inc., CIBC, RBC Capital Markets, and Scotiabank.

Later, they further announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 9 (the “Series 9 Preferred Shares”), the size of the offering has been increased to 11 million shares. The aggregate gross proceeds will be C$275 million. Closing of the offering is expected on March 13, 2014.

This issue is extremely comparable to ENB.PR.N, a FixedReset 4.00%+265, which settled July 17, 2012, and was announced July 9, 2012. Not surprisingly, ENB.PR.N was down significantly on the day on good volume of 34,966 shares, closing at 24.66-68, 8×1, which makes it roughly equivalent to the new issue priced at $25.00 since there will be an extra $0.10 dividends per year for the new issue … until reset!

Update, 2014-3-7: Pfd-2(low) from DBRS.

It is also of interest to note that ENB issued 500-million in thirty-year notes at 4.57%.