Category: New Issues

Element Financial Corporation has announced (emphasis added):

that it plans to sell, on a bought deal basis, pursuant to a supplement to Element’s Base Shelf Prospectus dated December 6, 2013, an aggregate of 3,000,000 Cumulative 5-year Rate Reset Preferred Shares, Series C of Element (the “Series C Preferred Shares”) at a price of $25.00 per Series C Preferred Share for gross proceeds of $75 million (the “Offering”) to a syndicate of underwriters co-led by GMP Securities L.P, National Bank Financial Inc., BMO Nesbitt Burns Inc., CIBC World Markets, RBC Capital Markets, and TD Securities Inc. and including Desjardins Securities Inc., Raymond James Ltd. and Manulife Securities Inc. (collectively, the “Underwriters”).

“Our initial preferred share offering last December allowed Element to establish our access to this funding option, which is non-dilutive to our common shareholders,” noted Steven K. Hudson, Element’s Chairman and CEO. “Early in the year we are already seeing exceptionally strong organic growth across all of our origination platforms and the five-year rate reset feature of these securities makes it ideally suited as a matched funding source for these platforms, including our recently announced strategic alliance with Trinity Industries. This second preferred share transaction allows us to respond to the investor demand that emerged in response to our initial offering, add further diversification to our funding sources and provide Element with access to capital that is not dilutive over 2014 to our common shareholders,” added Mr. Hudson.

Holders of the Series C Preferred Shares will be entitled, as and when declared by the Board of Directors of the Company, to receive a cumulative quarterly fixed dividend for the initial five-year period ending June 30, 2019 of 6.50% per annum. Thereafter, the dividend rate will reset every five years to an annual dividend rate equal to the 5-Year Government of Canada Bond Yield as quoted on Bloomberg on the 30th day prior to the first day of the relevant subsequent five year fixed rate period plus 4.81%. Holders of the Series C Preferred Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series D of the Company (the “Floating Rate Series D Preferred Shares”), subject to certain conditions and the Company’s right to redeem the Series C Preferred Shares, on June 30, 2019 and on June 30 every five years thereafter.

Holders of the Floating Rate Series D Preferred Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of the Company, equal to the then current three-month Government of Canada Treasury Bill yield plus 4.81%. Holders of the Floating Rate Series D Preferred Shares may convert their Floating Rate Series D Preferred Shares into Series C Preferred Shares, subject to certain conditions and the Company’s right to redeem the Floating Rate Series D Preferred Shares, on June 30, 2024 and on June 30 every five years thereafter. The Series C Preferred Shares will not be rated.

The Company has granted to the Underwriters an option (the “Over-Allotment Option”), which may be exercised at any time for a period of 30 days following the closing of the Offering, to purchase at the issue price an additional 450,000 Series C Preferred Shares for additional gross proceeds of up to $11.25 million. In the event that the Over-Allotment Option is exercised in its entirety, the aggregate gross proceeds of the Offering will be approximately $86.25 million.

The proceeds of the Offering, including any proceeds from the exercise of the Over-Allotment Option, will be used to originate and finance, directly or indirectly, finance assets as well as for general corporate purposes. The Offering is expected to close on March 7, 2014 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the Toronto Stock Exchange.

They later announced:

that it has amended the terms of its previously announced bought deal offering of Cumulative 5-Year Rate Reset Preferred Shares, Series C of Element (“Series C Preferred Shares”) to increase the size of such offering to $125.0 million (the “Offering”).

Under the amended terms of the Offering, a syndicate of underwriters co-led by GMP Securities L.P, National Bank Financial Inc., BMO Capital Markets, CIBC World Markets, RBC Capital Markets and TD Securities Inc. and including Desjardins Securities Inc., Raymond James Ltd. and Manulife Securities Inc. (collectively, the “Underwriters”) have agreed to purchase, on a bought deal basis, an aggregate of 5,000,000 Series C Preferred Shares at a price of $25.00 per Series C Preferred Share for total gross proceeds of $125.0 million.

This issue will not be tracked by HIMIPref™ due to the lack of a credit rating. As I explain every time this comes up, this is not because I worship the Credit Rating Agencies, but because a downgrade (or simply a threat of one) from a major agency can help to focus the minds of management and directors.

Element Financial was last mentioned on PrefBlog when they issued a FixedReset, 6.60%+471 in December 2013. That issue, EFN.PR.A, closed at 25.25 today.

Algonquin Power & Utilities Corp. has announced:

that it will issue 4 million cumulative rate reset preferred shares, Series D (the “Series D Shares”) at a price of $25.00 per share, for aggregate gross proceeds of $100 million, on a bought deal basis to a syndicate of underwriters in Canada led by CIBC and TD Securities Inc.

The holders of the Series D Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.25 per share, payable quarterly, as and when declared by the board of directors of APUC. The Series D Shares will yield 5.00% per cent annually, for the initial period ending on March 31, 2019. The first of such dividends, if declared, shall be payable on June 30, 2014, and shall be $0.4007 per Series D Share, based on the anticipated closing of the offering on March 5, 2014. The dividend rate will be reset on March 31, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.28%. The Series D Shares are redeemable by APUC, at its option, on March 31, 2019 and on March 31 of every five years thereafter.

The holders of Series D Shares will have the option to convert all or any of their Series D Shares into Cumulative Floating Rate Preferred Shares, Series E (the “Series E Shares”) of APUC on the basis of one Series E Share for each Series D Share converted, subject to certain conditions, on March 31, 2019 and on March 31 every five years thereafter. The holders of the Series E Shares will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the board of directors of APUC, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.28%.

The net proceeds of the offering will be used to partially finance certain of APUC’s previously disclosed growth opportunities, reduce amounts outstanding on APUC’s credit facilities and for general corporate purposes.

The Series D Shares will be offered to the public in Canada by way of a supplement to APUC’s short form base shelf prospectus dated February 18, 2014.

Not much of a new issue concession here! AQN.PR.A has an Issue Reset Spread of 294bp, which implies a future dividend yield of 4.64%, or $1.16 p.a. given a current five-year Canada rate of 1.70%. It’s trading at about $22.50, for a ‘future Current Yield’ of 5.16%, which is about 20bp MORE than the new issue … and the new issue has greater negative convexity, too.

I say this issue is expensive.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 15 (“Series 15 Preferred Shares”). Manulife will issue 8 million Series 15 Preferred Shares priced at $25 per share to raise gross proceeds of $200 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., CIBC World Markets and RBC Capital Markets and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is February 25, 2014. Manulife intends to file a prospectus supplement to its July 18, 2012 base shelf prospectus in respect of this issue.

Holders of the Series 15 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 3.90 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending June 19, 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 2.16 per cent.

Holders of Series 15 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 16 (“Series 16 Preferred Shares”), subject to certain conditions, on June 19, 2019 and on June 19 every five years thereafter. Holders of the Series 16 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.16 per cent.

The net proceeds from the offering will be utilized for general corporate purposes, including future refinancing requirements.

“Our financing activities take into account future refinancing needs. We have over $3 billion in potential refinancing requirements over the next 12 to 20 months. We have taken the opportunity to issue preferred shares with favourable terms,” said Senior Executive Vice President and Chief Financial Officer Steve Roder.

As this is issued by an Insurance Holding Company which I expect to become subject to NVCC rules similar to banks as soon as OSFI gets off its duff (some hopes!) I have added a Deemed Maturity entry to the call schedule, dated 2025-1-31 at 25.00. I keep expecting the insurance issuers to make their issues convertible into common without shareholder consent, so they can assign this power to OSFI later, but it hasn’t happened yet.

This actually seems quite expensive. I come up with a theoretical price of 24.30 for it. It will be noted that MFC.PR.K, with a spread of +222, closed at 24.71-80 today.

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Update: If we assume that the MFC DeemedRetractibles are actually PerpetualDiscounts (they’re trading in much that manner) and we use the Current Yield of MFC.PR.C of 5.25% as its yield (MFC.PR.B’s Current Yield is higher), then the Break Even Rate Shock is a stunning 196bp.

Canadian Western Bank has announced:

its intent to issue $100 million of Basel III-compliant non-cumulative 5-year rate reset First Preferred Shares Series 5 (the “Series 5 Preferred Shares”). The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. The expected closing date is February 10, 2014.

Under the terms of the offering, CWB will issue 4,000,000 Series 5 Preferred Shares at a price of $25.00 per share. CWB has also granted the underwriters an option, exercisable in whole or in part, to purchase on the same terms up to an additional 600,000 Series 5 Preferred Shares at any time up to two business days prior to closing.

Should the underwriters choose to exercise this option in full, the maximum gross proceeds raised under the offering will be $115 million.

Holders of the Series 5 Preferred Shares will be entitled to receive a non-cumulative fixed dividend in the amount of $1.10 annually, payable quarterly, as and when declared by the Board of Directors of CWB, for the initial period ending April 30, 2019. The quarterly dividend represents an annual yield of 4.40% based on the stated issue price per share. Thereafter, the dividend rate will reset every five years at a level of 276 basis points over the then 5-year Government of Canada bond yield. CWB maintains the right to redeem, subject to the approval of the Office of the Superintendent of Financial Institutions (“OSFI”), up to all of the then outstanding Series 5 Preferred Shares on April 30, 2019, and on April 30 every five years thereafter at a price of $25.00 per share.

Should CWB choose not to exercise its right to redeem the Series 5 Preferred Shares, holders of these shares will have the right to convert their shares into an equal number of Basel III-compliant non-cumulative floating rate First Preferred Shares Series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on April 30, 2019, and on April 30 every five years thereafter. Holders of the Series 6 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of CWB, equal to the 90-day Government of Canada Treasury Bill rate plus 276 basis points.

Net proceeds from the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for CWB. This offering is made pursuant to the terms outlined in the prospectus supplement to CWB’s January 30, 2014 base shelf prospectus that will subsequently be filed. CWB will make an application to list the Series 5 Preferred Shares on the Toronto Stock Exchange as of the expected closing date.

Subject to the approval of OSFI, CWB intends to redeem the currently outstanding non-cumulative 5-year rate reset First Preferred Shares Series 3 on April 30, 2014 in accordance with the terms of such shares.

Later in the day, they announced:

that as a result of
strong investor demand for its previously announced domestic public offering of Basel III-compliant noncumulative 5-year rate reset First Preferred Shares Series 5, the size of the offering has been increased to 5 million shares. The gross proceeds of the offering will now be $125 million. The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. The expected closing date is February 10, 2014.

Net proceeds from the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for CWB.

They are provisionally rated Pfd-3 by DBRS (emphasis added):

DBRS has today assigned a provisional rating to Canadian Western Bank’s (the Bank or CWB) Non-Cumulative 5-year Rate Reset First Preferred Shares Series 5 (NVCC Preferred Shares Series 5 or Series 5) of Pfd-3 with a Stable trend.

DBRS assigned the NVCC Preferred Shares Series 5 a rating equal to that of the Bank’s intrinsic assessment less four rating notches, as the Series 5 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 instrumentsDBRS has today assigned a provisional rating to Canadian Western Bank’s (the Bank or CWB) Non-Cumulative 5-year Rate Reset First Preferred Shares Series 5 (NVCC Preferred Shares Series 5 or Series 5) of Pfd-3 with a Stable trend.

DBRS assigned the NVCC Preferred Shares Series 5 a rating equal to that of the Bank’s intrinsic assessment less four rating notches, as the Series 5 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 National Bank of Canada has announced:

that it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. for an issue on a bought deal basis of 8 million Basel III-compliant non-cumulative 5-year rate reset first preferred shares series 30 (the “Series 30 Preferred Shares”), at a price of $25.00 per share, to raise gross proceeds of $200 million.

National Bank has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 30 Preferred 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 maximum gross proceeds raised under the offering will be $250 million should this option be exercised in full.

The Series 30 Preferred Shares will yield 4.10% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending May 15, 2019. The first of such dividends, if declared, shall be payable on May 15, 2014. Thereafter, the dividend rate will reset every five years at a level of 240 basis points over the then 5-year Government of Canada bond yield. Subject to regulatory approval, National Bank may redeem the Series 30 Preferred Shares in whole or in part at par on May 15, 2019 and on May 15 every five years thereafter.

Holders of the Series 30 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares Series 31 (the “Series 31 Preferred Shares”), subject to certain conditions, on May 15, 2019, and on May 15 every five years thereafter. Holders of the Series 31 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of National Bank, equal to the 90-day Government of Canada Treasury Bill rate plus 240 basis points.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank. The expected closing date is on or about February 7, 2014. National Bank intends to file in Canada a prospectus supplement to its October 5, 2012 base shelf prospectus in respect of this issue.

Looks like these things are selling like hotcakes (although how well hotcakes ever sold is a matter for conjecture)! The bank has issued another release:

as a result of strong investor demand for its previously announced domestic public offering of Non-cumulative 5-Year Rate Reset First Preferred Shares Series 30, the size of the offering has been increased to 14 million shares. The gross proceeds of the offering will now be $350 million. The offering will be underwritten by a syndicate led by National Bank Financial Inc. The expected closing date is February 7, 2014.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank.

The Royal Bank of Canada has announced:

an inaugural Basel III-compliant domestic public offering of $200 million of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series AZ.

Royal Bank of Canada will issue 8 million Preferred Shares Series AZ priced at $25 per share and holders will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending May 24, 2014 in the amount of $0.3123 per share, to yield 4.00 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 AZ at the same offering price.

Subject to regulatory approval, on or after May 24, 2019, the bank may redeem the Preferred Shares Series AZ in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 2.21 per cent over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AZ 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 BA on May 24, 2019 and on May 24 every five years thereafter.

Holders of the Preferred Shares Series BA 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 2.21 per cent. Holders of Preferred Shares Series BA will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AZ on May 24, 2024 and on May 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is January 30, 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.

Sales were good! 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 AZ, the size of the offering has been increased to 20 million shares. The gross proceeds of the offering will now be $500 million. The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is January 30, 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.

As noted, the new issue is NVCC compliant. I have a term sheet that states:

Series AZ Preferred Share will be automatically and immediately converted, on a full and permanent basis, without the consent of the holder thereof, into the number of fully-paid and freely-tradable common shares of the Bank (“Common Shares”) determined in accordance with the Contingent Conversion Formula set out below (the “Contingent Conversion”).

“Trigger Event” has the meaning set out in the Office of the Superintendent of Financial Institutions Canada (“OSFI”) Guideline for Capital Adequacy Requirements (CAR), Chapter 2 ‒ Definition of Capital, effective January 2013, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:

(a) the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion of the Series AZ Preferred Shares and all other contingent instruments issued by the Bank and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or

(b) a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable.

The first step is the big gulp – the Superintendent has full discretion.

The “Contingent Conversion Formula” is: (Multiplier x Share Value) ÷ Conversion Price = number of Common Shares into which each Series AZ Preferred Share shall be converted.

The “Multiplier” is 1.0.

The “Share Value” of a Series AZ Preferred Share is $25.00 plus declared and unpaid dividends on such Series AZ Preferred Share.

The “Conversion Price” of each Series AZ Preferred Share is the greater of (i) a floor price of $5.00, and (ii) the Current Market Price of the Common Shares.

“Current Market Price” of the Common Shares means the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”), if such shares are then listed on the TSX, for the 10 consecutive trading days ending on the trading day preceding the date of the Trigger Event. If the Common Shares are not then listed on the TSX, for the purpose of the foregoing calculation reference shall be made to the principal securities exchange or market on which the Common Shares are then listed or quoted or, if no such trading prices are available, “Current Market Price” shall be the fair value of the Common Shares as reasonably determined by the board of directors of the Bank.

They’ve thought about prohibited owners:

The terms and conditions of the Series AZ Preferred Shares will include mechanics to permit holders of such shares that are prohibited pursuant to certain restrictions set out therein or pursuant to the Bank Act (Canada) from taking delivery of Common Shares issued upon a Trigger Event and to allow the Bank to attempt to facilitate a sale of such Common Shares on behalf of such persons. The net proceeds received from the Bank from the sale of any such Common Shares will be divided among the applicable persons in proportion to the number of Common Shares that would otherwise have been delivered to them upon the Contingent Conversion after deducting the costs of sale and any applicable withholding taxes.

For the official regulations governing NVCC, see the official Capital Adequacy Requirements.

Rated Pfd-2 by DBRS (emphasis added):

DBRS has today provisionally rated Royal Bank of Canada’s (the Bank or RBC) non-cumulative five-year rate reset first preferred shares, Series AZ (NVCC preferred shares Series AZ or Series AZ) at Pfd-2 with a Stable trend.

DBRS assigned the NVCC preferred shares Series AZ a rating equal to that Bank’s intrinsic assessment less four rating notches because the Series AZ 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, “DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities.”

For more information on DBRS’s methodologies and criteria or the banking industry, visit www.dbrs.com or contact us at info@dbrs.com.

Rated P-2(high) by S&P (emphasis added):

Standard & Poor’s Ratings Services today said it assigned its ‘BBB+’ global scale and ‘P-2(High)’ Canada scale rating to Royal Bank of Canada’s (RBC) proposed tier 1 noncumulative five-year rate reset first preferred shares series AZ.

“In accordance with our criteria for hybrid capital instruments, the ratings reflect our analysis of the proposed instrument, and our assessment of RBC’s stand-alone credit profile of ‘a+’,” said Standard & Poor’s credit analyst Lidia Parfeniuk. (For more information, see “Bank Hybrid Capital Methodology And Assumptions,” published Nov. 1, 2011, on RatingsDirect).

The ‘BBB+’ 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.

…
Because we expect this instrument’s conversion to occur at or near the point of the banks’ nonviability, we view this mechanism as a nonviability trigger.

We expect to assign “intermediate” equity content to these preferred shares, reflecting RBC’s full discretion to suspend dividends on the instrument.

The pricing seems in line with the other RY FixedResets according to Implied Volatility theory, with the caveats that:

• The standard simplifying assumption that all options have three years until exercise date is wrong, and
• The calculated Implied Volatility is in excess of 40%, which means that Implied Volatility theory doesn’t really work, and
• The new issue is the only one of the set that is NVCC compliant.

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The Break-Even Rate Shock for this issue (compared with RY.PR.W, which is NVCC-eligible) is 1.35%.

TransCanada Corporation has announced:

that it will issue 10 million cumulative redeemable first preferred shares, series 9 (the “Series 9 Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $250 million on a bought deal basis to a syndicate of underwriters in Canada co-led by Scotiabank, BMO Capital Markets and RBC Capital Markets.

The holders of Series 9 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.0625 per share, payable quarterly on the 30th day of January, April, July and October, as and when declared by the board of directors of TransCanada. The Series 9 Preferred Shares will yield 4.25 per cent per annum for the initial fixed rate period ending October 30, 2019 with the first dividend payment date scheduled for April 30, 2014. The dividend rate will reset on October 30, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.35 per cent. The Series 9 Preferred Shares are redeemable by TransCanada, at its option, on October 30, 2019 and on October 30 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 9 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 10 (the “Series 10 Preferred Shares”), subject to certain conditions, on October 30, 2019 and on October 30 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 TransCanada, at an annualized rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 2.35 per cent.

TransCanada 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 9 Preferred Shares at a price of $25.00 per share.

The anticipated closing date is January 20, 2014. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

The Series 9 Preferred Shares will be offered to the public in Canada pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under TransCanada’s short form base shelf prospectus dated December 2, 2013. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Sales must have gone well! They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable first preferred shares, series 9 (the “Series 9 Preferred Shares”), the size of the offering has been increased to 18 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds of the offering will now be $450 million. The syndicate of underwriters is co-led by Scotiabank, BMO Capital Markets and RBC Capital Markets.

The anticipated closing date is January 20, 2014. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

Update, 2014-1-14: Rated Pfd-2(low) by DBRS

Pembina Pipeline Corporation has announced:

that it has entered into an agreement with a syndicate of underwriters, led by Scotiabank and RBC Capital Markets, pursuant to which the underwriters have agreed to purchase from Pembina 6,000,000 cumulative redeemable rate reset class A preferred shares, Series 5 (the “Series 5 Preferred Shares”) at a price of $25.00 per share for distribution to the public.

The holders of Series 5 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.25 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Pembina, yielding 5.00 per cent per annum, for the initial fixed rate period to but excluding June 1, 2019. The first quarterly dividend payment date is scheduled for March 1, 2014. The dividend rate will reset on June 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.00 per cent. The Series 5 Preferred Shares are redeemable by Pembina, at its option, on June 1, 2019 and on June 1 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 5 Preferred Shares will have the right to convert their shares into cumulative redeemable floating rate class A preferred shares, Series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on June 1, 2019 and on June 1 of every fifth year thereafter. The holders of Series 6 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Pembina, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.00 per cent.

Pembina 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 2,000,000 Series 5 Preferred Shares at a price of $25.00 per share.

Proceeds from the offering will be used to partially fund Pembina’s 2014 capital expenditure program, including capital expenditures relating to Pembina’s current expansion and growth projects, to reduce indebtedness under the Corporation’s credit facilities and for general corporate purposes of the Corporation and its affiliates.

Closing of the offering is expected on January 16, 2014, subject to customary closing conditions.

The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the Corporation on February 22, 2013 in each of the provinces of Canada.

The offering must have gone well – they later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable rate reset class A preferred shares, Series 5 (the “Series 5 Preferred Shares”), the size of the offering has been increased to 10 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds will be $250 million.

Understandable … there was a pretty good new issue concession on this offering compared to the extant issues:

The extant issues got whacked today, down 40-50 cents each.

Update: Pfd-3 from DBRS.

Aimia Inc. has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, TD Securities Inc., RBC Capital Markets and BMO Capital Markets for distribution to the public, 5,000,000 Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Preferred Shares”). The Series 3 Preferred Shares will be issued at a price of C$25.00 per share, for aggregate gross proceeds of C$125 million.

Holders of the Series 3 Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 6.25% annually for the initial five-year period ending March 31, 2019. The dividend rate will be reset on March 31, 2019 and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus 4.20%. The Series 3 Preferred Shares will be redeemable by Aimia on March 31, 2019, and every five years thereafter in accordance with their terms. Holders of Series 3 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Preferred Shares”), subject to certain conditions, on March 31, 2019 and on March 31 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 4.20%.

Aimia has granted the underwriters an option, exercisable in whole or in part anytime up to 48 hours prior to the closing of the offering, to purchase an additional 1,000,000 Series 3 Preferred Shares at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$150 million.

The Series 3 Preferred Shares will be offered by way of a prospectus supplement to the short form base shelf prospectus dated April 12, 2013 filed with the securities regulatory authorities in all provinces and territories of Canada.

The net proceeds of the issue will be used by Aimia to supplement its financial resources and for general corporate purposes.

The offering is expected to close on or about January 15, 2014, subject to certain conditions, including conditions set forth in the underwriting agreement.

This issue looks extraordinarily cheap compared to AIM.PR.A, which commenced trading after a ticker change from AER.PR.A, which commenced trading in January, 2010 after being announced earlier that month. It is a 6.50%+375 FixedReset.

AIM.PR.A closed at 25.73-85 on January 3 to yield 4.12% at the bid price to a call on its first Exchange Date, 2015-3-31. It got whacked today after the new issue announcement, closing at 25.41-50, but this is still very, very expensive to the new issue for as long as the new issue is available at par. The new issue has a reset 45bp higher! There’s still a lot of adjustment in store for these two issues.

Element Financial Corporation has announced (emphasis added):

Element also announced that it plans to sell, on a bought deal basis, pursuant to a supplement to the Base Shelf Prospectus, an aggregate of 3.0 million Cumulative 5-year Rate Reset Preferred Shares, Series A of Element (“Series A Preferred Shares”) at a price of $25.00 per Series A Preferred Share for gross proceeds of approximately $75 million (the “Preferred Share Offering”, and together with the Common Share Offering, the “Offerings”) to a syndicate of underwriters co-led by GMP Securities L.P, National Bank Financial Inc., CIBC World Markets, RBC Capital Markets, BMO Nesbitt Burns Inc. and TD Securities Inc. and including Manulife Securities Inc. and Hampton Securities Limited (collectively, the “Preferred Share Underwriters”, and together with the Common Share Underwriters, the “Underwriters”).

Holders of the Series A Preferred Shares will be entitled, as and when declared by the Board of Directors of the Company, to receive a cumulative quarterly fixed dividend for the initial five-year period ending December 31, 2018 of 6.60% per annum. Thereafter, the dividend rate will reset every five years to an annual dividend rate equal to the 5-Year Government of Canada Bond Yield as quoted on Bloomberg on the 30th day prior to the first day of the relevant subsequent five year fixed rate period plus 4.71%.

Holders of the Series A Preferred Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series B of the Company (the “Floating Rate Series B Preferred Shares”), subject to certain conditions and the Company’s right to redeem the Series A Preferred Shares, on December 31, 2018 and on December 31 every five years thereafter. Holders of the Floating Rate Series B Preferred Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of the Company, equal to the then current three-month Government of Canada Treasury Bill yield plus 4.71%. Holders of the Floating Rate Series B Preferred Shares may convert their Floating Rate Series B Preferred Shares into Series A Preferred Shares, subject to certain conditions and the Company’s right to redeem the Floating Rate Series B Preferred Shares, on December 31, 2023 and on December 31 every five years thereafter. The Series A Preferred Shares will not be rated.

The Company has granted to each of the Common Share Underwriters and the Preferred Share Underwriters an option (collectively, the “Over-Allotment Options”), which may be exercised at any time for a period of 30 days following the closing of the Offerings, to purchase at the issue price under the Offerings an additional 3,545,550 Common Shares for additional gross proceeds of up to approximately $48.8 million and an additional 450,000 Series A Preferred Shares for additional gross proceeds of up to $11.25 million. In the event that the Over-Allotment Options are exercised in their entirety, the aggregate gross proceeds of the Offerings will be approximately $460 million.

The proceeds of the Offerings, including any proceeds from the exercise of the Over-Allotment Options, will be used to originate and finance, directly or indirectly, finance assets as well as for general corporate purposes. The Offerings are expected to close on December 17, 2013 and are subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the Toronto Stock Exchange.

This issue will not be tracked by HIMIPref™ due to the lack of a credit rating. As I explain every time this comes up, this is not because I worship the Credit Rating Agencies, but because a downgrade (or simply a threat of one) from a major agency can help to focus the minds of management and directors.

Update, 2013-12-10: Globe & Mail story titled Investors like Element Financial’s ‘boring’ business.

Update, 2014-2-26: Trades as EFN.PR.A