Category: New Issues

Brookfield Asset Management has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets, Scotia Capital Inc. and TD Securities Inc. for distribution to the public 8,000,000 Preferred Shares, Series 26. The Preferred Shares, Series 26 will be issued at a price of $25.00 per share, for aggregate gross proceeds of CDN$200,000,000. Holders of the Preferred Shares, Series 26 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending March 31, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.31%.

Holders of Preferred Shares, Series 26 will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series 27, subject to certain conditions, on March 31, 2017 and on March 31 every five years thereafter. Holders of the Preferred Shares, Series 26 will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.31%.

Brookfield Asset Management Inc. has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase an additional 2,000,000 Preferred Shares, Series 26 at the same offering price. The Preferred Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of Brookfield Asset Management Inc. dated January 12, 2009, as amended. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the issue will be added to the general funds of Brookfield Asset Management Inc. and be used for general corporate purposes.

Yesterday, BAM issued 10-year notes:

an offering of C$350 million of senior notes (unsecured) (“notes”) with a March 1, 2021 maturity and a yield of 5.3%.

The notes have been assigned a credit rating of Baa2 (stable outlook) by Moody’s; A- (negative outlook) by Standard & Poor’s; BBB (stable outlook) by Fitch; and A low (stable outlook) by DBRS.

The notes are being offered through a syndicate of agents led by CIBC World Markets Inc., RBC Capital Markets and TD Securities Inc.

The net proceeds of the issue will be used to refinance existing indebtedness and for general corporate purposes.

This comes on top of the recent BPO 5.15%+300 FixedReset and news that the group is selling a chunk of Brookfield Renewable Power Fund. So they’ve been active! I wonder if something is in the wind?

We can take a stab at valuing these things with the BreakEven Rate Shock Calculator … using values of 5.85% as the yield on BAM’s PerpetualDiscounts and a yield spread of -1.35% to the FixedReset initial rate, with a term to reset of 6.5 years we get a Break Even Rate Shock of 224bp … pretty hefty, but by no means recordbreaking.

Additionally, we can look at the BAM.PR.R 5.40%+230 FixedReset, which has its first reset date 2016-6-30, nine months before the new issue’s. Interestingly, the Issue Reset Spreads are virtually identical for these two issues, although the initial fixed rate is lower for the new issue. BAM.PR.R will pay 90bp p.a. less than the new issue until reset, or $0.225 p.a., and is trading at around 25.80. The new issue looks a little rich.

Update, 2010-11-15: BAM did an almost simultaneous bond deal:

Following a bunch of debt and equity financings by its some of its subsidiaries, Brookfield Asset Management Inc. (BAM.A-T30.350.130.43%) came to market this morning with a $200-million preferred share offering. The deal comes a day after BAM tapped debt markets for $350-million of 10-year senior unsecured notes that pay 5.3 per cent.

Brookfield Office Properties has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc., for distribution to the public, eight million Preferred Shares, Series P. The Preferred Shares, Series P will be issued at a price of C$25.00 per share, for aggregate proceeds of C$200 million. Holders of the Preferred Shares, Series P will be entitled to receive a cumulative quarterly fixed dividend yielding 5.15% annually for the initial 6 ½-year period ending March 31, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.00%.

Holders of Preferred Shares, Series P will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series Q, subject to certain conditions, on March 31, 2017 and on March 31 every five years thereafter. Holders of Preferred Shares, Series Q will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 3.00%.

Brookfield Office Properties has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase an additional two million Preferred Shares, Series P at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$250 million.

The Preferred Shares, Series P will be offered by way of a prospectus supplement to the short-form base shelf prospectus of Brookfield Office Properties dated December 15, 2009. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the issue will be added to the general funds of Brookfield Office Properties and be used for general corporate purposes. The offering is expected to close on or about October 21, 2010.

Note that this issue has a long fixed-rate period of six and a half years; this allows BPO to use a GOC bond of longer term than normal to determine spread without compromising the issue structure (since they’re not a bank, they don’t have to worry about such things, but the underwriters are trying to keep things consistent).

This new issue joins two other BPO FixedResets:

Update, 2010-10-21: The issue was quickly upsized:

Brookfield Properties Corporation (“Brookfield Office Properties”) (BPO: NYSE, TSX) announced today that as a result of strong investor demand for its previously announced public offering of 5.15% Preferred Shares, Series P, it has agreed to increase the size of the offering from C$200 million to C$300 million with no underwriters’ option, or from 8.0 million to 12.0 million Preferred Shares, Series P. The offering was underwritten by a syndicate led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc.

Fairfax Financial Holdings Limited has announced:

that it will issue in Canada 8 million Preferred Shares, Series I at a price of $25.00 per share, for aggregate gross proceeds of $200 million, on a bought deal basis to a syndicate of Canadian underwriters.

Holders of the Preferred Shares, Series I will be entitled to receive a cumulative quarterly fixed dividend yielding 5.0% annually for the initial five year period ending December 31, 2015. Thereafter, the dividend rate will be reset every five years at a rate equal to the then current 5-year Government of Canada bond yield plus 2.85%.

Holders of Preferred Shares, Series I will have the right, at their option, to convert their shares into Preferred Shares, Series J, subject to certain conditions, on December 31, 2015, and on December 31 every five years thereafter. Holders of the Preferred Shares, Series J will be entitled to receive cumulative quarterly floating dividends at a rate equal to the then current three-month Government of Canada Treasury Bill yield plus 2.85%.

Fairfax has granted the underwriters an option, exercisable in whole or in part at any time up to 9:00 am on the date that is two business days prior to the closing date, to purchase an additional 2 million Preferred Shares, Series I at the same offering price for additional gross proceeds of $50 million.

Fairfax intends to use the net proceeds of the offering to augment its cash position, to increase short term investments and marketable securities held at the holding company level, to retire outstanding debt and other corporate obligations from time to time, and for general corporate purposes. The offering is expected to close on or about October 5, 2010.

Fairfax intends to file a prospectus supplement to its short form base shelf prospectus dated September 25, 2009, in respect of this offering with the applicable Canadian securities regulatory authorities. Details of this offering will be set out in the prospectus supplement, which will be available on the SEDAR website for the Company at www.sedar.com.

It is my understanding that the deal has been biggie-sized to $250-million, with a $50-million greenshoe. The junk just keeps coming!

Update: Fairfax has announced:

that as a result of strong investor demand for its previously announced offering of Preferred Shares, Series I, the size of the offering has been increased to 10 million shares. The aggregate gross proceeds will now be $250 million. The offering will be underwritten on a bought deal basis to a syndicate of Canadian underwriters.
…
Fairfax has granted the underwriters an option, exercisable in whole or in part at any time up to 9:00 am on the date that is two business days prior to the closing date, to purchase an additional 2 million Preferred Shares, Series I at the same offering price for additional gross proceeds of $50 million.

Innergex Renewable Energy Inc. has announced:

that it will be issuing 3,400,000 Cumulative Rate Reset Preferred Shares, Series A (the “Series A Preferred Shares”) for aggregate gross proceeds of $85 million on a bought deal basis to a syndicate of underwriters led by BMO Capital Markets and TD Securities Inc.

The Series A Preferred Shares will pay cumulative dividends of $1.25 per share per annum, yielding 5.00% per annum, payable quarterly, for the initial five year period ending January 15, 2016. The dividend rate will be reset on January 15, 2016 and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus 2.79%. The Series A Preferred Shares will be redeemable by Innergex on or after January 15, 2016, in accordance with their terms.

Holders of the Series A Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series B, (the “Series B Preferred Shares”) subject to certain conditions, on January 15, 2016 and on January 15 every five years thereafter. Holders of the Series B 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 2.79%.

As stated by Michel Letellier, President and Chief Executive Officer of Innergex: “With this transaction, Innergex’s capital structure is more diversified and will appeal to a broader investor base”. Net proceeds resulting from the sale of the Series A Preferred Shares will be used by Innergex to enhance its financial flexibility, to reduce indebtedness and for general corporate purposes.

The Series A Preferred Shares will be offered for sale to the public in each of the provinces of Canada pursuant to a short form prospectus of Innergex to be filed with Canadian securities regulatory authorities in all Canadian provinces. The offering is scheduled to close on or about September 14, 2010, subject to certain conditions, including obtaining all necessary regulatory approvals.

Furthermore, Innergex will be filing a revised Annual Information Form which takes into account the previously completed combination of the Corporation with Innergex Power Income Fund.

Innergex Renewable Energy Inc. is a leading developer, owner and operator of run-of-river hydroelectric facilities and wind energy projects in North America. Innergex’s management team has been involved in the renewable power industry since 1990. Innergex owns a portfolio of projects which consists of: i) interests in 17 operating facilities with an aggregate net installed capacity of 326 MW; ii) interests in 7 projects under development with an aggregate net installed capacity of 203 MW for which power purchase agreements have been secured; and iii) prospective projects of more than 2,000 MW (net).

The issue is rated P-3 by S&P and Pfd-3(low) by DBRS. The first dividend, if declared, shall be payable on January 17, 2011, the first business day after January 15, 2011 for $0.42123 per Series A Preferred Share, based on closing September 14, 2010.

More junk!

Update: DBRS comments:

While the Company’s existing assets would be expected to produce reasonable financial results and credit metrics under a steady-state scenario, the capital program will require significant financing beyond internally generated cash flow, expected to consist largely of debt. Furthermore, DBRS expects that Innergex will maintain a high common dividend payout ratio (in excess of 100% of net income) throughout the medium term. As such, consolidated credit metrics are expected to remain tight for the rating category through the medium term, with EBITDA-to-interest in the area of 2.5 times (x) and cash flow-to-debt in the 8% to 10% range. DBRS would expect future modest improvement in coverage metrics when assets under development are completed and enter service. Debt-to-capital, currently 62%, would be expected to migrate upward over time, given the significant common dividends.

The proceeds from the intended $85 million preferred share offering will be used to refinance existing debt and to fund future capital expenditures. While the amount of preferred shares will comprise a material portion of the capital structure, particularly in relation to the book value of shareholders’ equity, DBRS is comfortable with the provisional Pfd-3 (low) rating given the stability of the underlying business (largely attributable to the young generating fleet and strong PPAs), as well as the significant financial cushion that the common dividends provide.

Eight of the Company’s 14 operating assets have non-recourse debt totalling approximately $320 million; while selective use of project financing can serve to isolate business risk at the individual asset level, the asset-level debt obligations rank ahead of Innergex’s obligations.

Update, 2010-9-8: DBRS has finalized the rating at Pfd-3(low) with a stable trend.

AltaGas has announced:

that it will issue 6,000,000 Cumulative Redeemable Five-Year Fixed Rate Reset Preferred Shares, Series A (the “Series A Preferred Shares”) at a price of $25 per Series A Preferred Share (“the Offering”) for aggregate gross proceeds of $150 million on a bought deal basis with a syndicate of underwriters, led by TD Securities Inc., RBC Capital Markets and CIBC World Markets Inc.

Holders of the Series A Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend for the initial period ending on but excluding September 30, 2015 (the “Initial Period”) at an annual rate of 5.00%, payable on the last day of March, June, September and December, as and when declared by the board of directors of AltaGas. The first quarterly dividend payment is payable on December 31, 2010 and shall be $0.4589 per Series A Preferred Share. The dividend rate will reset on September 30, 2015 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.66%. The Series A Preferred Shares are redeemable by AltaGas, at its option, on September 30, 2015 and on September 30 of every fifth year thereafter.

Holders of Series A Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Floating Rate Preferred Shares, Series B (the “Series B Preferred Shares”), subject to certain conditions, on September 30, 2015 and on September 30 of every fifth year thereafter. Holders of Series B Preferred Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 2.66%, as and when declared by the board of directors of AltaGas.

The Offering is expected to close on or about August 19, 2010. Net proceeds will be used to reduce outstanding indebtedness under AltaGas’ credit facilities, thereby strengthening AltaGas’ balance sheet and giving it the financial flexibility to support, among other things, construction activities related to the Forrest Kerr project.

The Series A Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under AltaGas’ short form base shelf prospectus dated July 15, 2010. An application has been made to list the Series A Preferred Shares on the Toronto Stock Exchange as of the closing date. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

More junk! This is rated Pfd-3 by DBRS and P-3 by S&P

Update: According to DBRS:

DBRS has today assigned a rating of Pfd-3 with a Stable trend to AltaGas Ltd.’s (AltaGas or the Company) $200 million Cumulative Redeemable Five-Year Rate Reset Preferred Shares, Series A (Series A Preferred Shares), with a dividend rate of 5.0% per annum, payable quarterly for the initial five-year period ending September 30, 2015. The dividend rate will reset on September 30, 2015, and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.66%. The Series A Preferred Shares are redeemable by AltaGas on September 30, 2015, and on September 30 every five years thereafter.

The Series A Preferred Shares are being issued under the Prospectus Supplement dated August 10, 2010 to the Short Form Base Shelf Prospectus dated July 15, 2010, and are expected to settle on August 19, 2010. The Series A Preferred Shares will rank equally with any future preferred shares of the Company and the net proceeds from the offering will be used for repayment of outstanding bank indebtedness and for general corporate purposes.

Update: Tim Kiladze of the Globe writes in AltaGas quenches retail investors’ thirst for yield:

With a 5 per cent coupon, investors got more than double the five-year Canada bond yield.

And they ate it up. There was such strong demand that lead manager TD Securities upsized the offering to $200-million. (RBC Dominion Securities and CIBC World Markets were co-leads.)

The deal serves as another reminder that retail investors typically can’t participate in corporate debt issues, so to them preferred shares and stocks/units with sustainable yields look very attractive right now.

Retail can’t usually participate directly in corporate debt issues, no. But there are plenty of good ETFs out there with low MERs that can.

Preferred shares … with sustainable yields look very attractive right now. Quite right; they do. Trouble is, this isn’t one of them. It’s callable at par September 30, 2015. This is A SHORT-TERM ISSUE, unless they get into serious trouble, in which case it will be a long term issue. In either case, calling the yield “sustainable” is, shall we say, something of a stretch.

Fairfax Financial Holdings has announced:

that it will issue in Canada 8 million Preferred Shares, Series G at a price of $25.00 per share, for aggregate gross proceeds of $200 million, on a bought deal basis to a syndicate of Canadian underwriters.

Holders of the Preferred Shares, Series G will be entitled to receive a cumulative quarterly fixed dividend yielding 5.0% annually for the initial five year period ending September 30, 2015. Thereafter, the dividend rate will be reset every five years at a rate equal to the then current 5-year Government of Canada bond yield plus 2.56%.

Holders of Preferred Shares, Series G will have the right, at their option, to convert their shares into Preferred Shares, Series H, subject to certain conditions, on September 30, 2015, and on September 30 every five years thereafter. Holders of the Preferred Shares, Series H will be entitled to receive cumulative quarterly floating dividends at a rate equal to the then current three-month Government of Canada Treasury Bill yield plus 2.56%.

Fairfax has granted the underwriters an option, exercisable in whole or in part at any time up to 9:00 am on the date that is two business days prior to the closing date, to purchase an additional 2 million Preferred Shares, Series G at the same offering price for additional gross proceeds of $50 million.

Fairfax intends to use the net proceeds of the offering to augment its cash position, to increase short term investments and marketable securities held at the holding company level, to retire outstanding debt and other corporate obligations from time to time, and for general corporate purposes. The offering is expected to close on or about July 28, 2010.

Northland Power Income Fund has announced:

that Northland Power Preferred Equity Inc. (the “Corporation”), an indirect wholly-owned subsidiary of the Fund, will issue in Canada a total of 4 million Cumulative Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) guaranteed by the Fund, 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.

The holders of Series 1 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.3125 per share, payable quarterly, as and when declared by the Board of Directors of the Corporation. The Series 1 Preferred Shares will yield 5.25% annually at the issue price, for the initial five-year period ending September 30, 2015 with the first dividend payment date scheduled for September 30, 2010, based on an anticipated closing date of July 28, 2010. The dividend rate will reset on September 30, 2015 and every five years thereafter at a rate equal to the then five-year Government of Canada Bond yield plus 2.80%. The Series 1 Preferred Shares are redeemable on or after September 30, 2015.

The holders of Series 1 Preferred Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on September 30, 2015 and on September 30 of every fifth year thereafter. The holders of Series 2 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors, at a rate equal to the then three month Government of Canada Treasury Bill yield plus 2.80%.

The Corporation has granted the underwriters an over-allotment option exercisable up to 30 days after closing to purchase up to an additional 600,000 Series 1 Preferred Shares at the issue price on the same terms, for additional gross proceeds of up to $15 million.

The Corporation intends to lend the net proceeds of the offering to NPIF Holdings L.P., a subsidiary of the Fund, which will use the funds in the construction of advanced development projects of the Fund, to repay certain debt and for general corporate purposes.

The Fund’s proposed conversion to a corporation has received unitholder approval and the approval of the Ontario Superior Court of Justice and is expected to be completed on January 1, 2011. Under the terms of the conversion as approved, the Corporation will amalgamate with the successor of the Fund and the Series 1 Preferred Shares will become an equal number of preferred shares having the same attributes as the successor to the Fund, which will be called “Northland Power Inc.”. If the Corporation does not amalgamate with, or otherwise become, the successor, the successor entity will assume all the obligations of the Fund under the guarantee of the Series 1 and Series 2 Preferred Shares.

The Series 1 and Series 2 Preferred Shares will be offered to the public in Canada pursuant to a short form prospectus that will be filed with securities regulatory authorities in each of the provinces of Canada.

This issue will be tracked by HIMIPref™, but with a provisional rating of P-3 from S&P will be relegated to the Scraps index.

Update: DBRS discontinued the fund’s stability rating, presumably because the fund discontinued paying:

DBRS has today elected to discontinue the stability rating of Northland Power Income Fund (the Fund).

DBRS notes this action is unrelated to the Fund’s stability profile.

Power Financial Corporation has announced:

that it has agreed to issue, on a bought deal basis, 8,000,000 4.40% Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series P (the “Series P Shares”) at a price of $25.00 per Series P Share, representing aggregate gross proceeds of $200 million. The issue will be underwritten by a syndicate of underwriters co-led by BMO Capital Markets, RBC Capital Markets and Scotia Capital Inc. Power Financial has also granted the underwriters an option to purchase an additional 4,000,000 Series P Shares at the same offering price. Should the underwriters’ option be exercised fully, the total gross proceeds of the Series P Share offering will be $300 million.

The Series P Shares will yield 4.40% per annum, payable quarterly, as and when declared by the Board of Directors of the Corporation, for an initial period ending January 31, 2016. On January 31, 2016 and on January 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 1.60%. Holders of the Series P Shares will have the right to convert their shares into Non-Cumulative Floating Rate First Preferred Shares, Series Q of the Corporation (the “Series Q Shares”), subject to certain conditions and the Corporation’s right to redeem the Series P shares as described below, on January 31, 2016 and on January 31 every five years thereafter. Holders of the Series Q Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of the Corporation, equal to the three-month Government of Canada Treasury Bill yield plus 1.60%.

Holders of the Series Q Shares may convert their Series Q Shares into Series P Shares, subject to certain conditions and the Corporation’s right to redeem the Series Q Shares as described below, on January 31, 2021 and on January 31 every five years thereafter.

The Series P Shares will not be redeemable prior to January 31, 2016. On January 31, 2016 and on January 31 every five years thereafter, the Corporation may, subject to certain conditions, redeem all or any part of the Series P Shares at a cash redemption price per share of $25.00 together with all declared and unpaid dividends.

The Corporation may redeem all or any part of the Series Q Shares at a cash redemption price per share of $25.00 together with all declared and unpaid dividends in the case of redemptions on January 31, 2021 and on January 31 every five years thereafter or $25.50 together with all declared and unpaid dividends in the case of redemptions on any other date after January 31, 2016.

The Series P Share offering is expected to close on or about June 29, 2010. The net proceeds will be used to supplement the Corporation’s financial resources and for general corporate purposes.

The company also announced that PWF.PR.D will be redeemed on October 31.

As showin in the following graph prepared by the Straight Perpetual Implied Volatility Calculator, PWF PerpetualDiscounts closed today yielding an average of about 6.02%, with no sign of any allowance for the embedded issuer call.

Click for Big

Plugging these numbers into the Break Even Rate Shock Calculator results in an indication of 255bp, making this yet another very expensive issue.

TransCanada Corp. has announced:

that it will issue 12 million cumulative redeemable first preferred shares, series 5 (the “Series 5 Preferred Shares”) at a price of $25.00 per share, for aggregate gross proceeds of $300 million on a bought deal basis to a syndicate of underwriters in Canada led by Scotia Capital Inc., RBC Capital Markets, and BMO Capital Markets.

The holders of Series 5 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 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, yielding 4.40 per cent per annum, for the initial fixed rate period ending January 30, 2016. The first quarterly dividend payment date is scheduled for November 1, 2010. The dividend rate will reset on January 30, 2016 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 1.54 per cent. The Series 5 Preferred Shares are redeemable by TransCanada, at its option, on January 30, 2016 and on January 30 of every fifth year thereafter.

The holders of Series 5 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on January 30, 2016 and on January 30 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 TransCanada, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 1.54 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 5 Preferred Shares at a price of $25.00 per share.

The anticipated closing date is June 29, 2010. The net proceeds of the offering will be used to partially fund capital projects, for other 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 PerpetualDiscounts issued by its subsidiary, TCA.PR.X and TCA.PR.Y, closed last night to yield about 5.85% which, assuming we can consider the credits to be identical, results in a Break Even Rate Shock of 222bp. This compares to 277bp for EMA.PR.A; SLF.PR.G at 384bp. March’s issue of TRP.PR.B was 266bp.

Note, however, that the issuer is playing the calendar game with this issue: the issue terms may imply to the unwary that the GOC 5-Year is now at 2.86%, but these instruments now yield 2.70%, with an implied reset (assuming no change in GOC-5) to 4.24%.