Category: New Issues

Great-West Lifeco has announced a new issue.

Issue: Great West Lifeco Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series J

Size: 8-million shares (=$200-million); greenshoe for 30 days following closing of 1.2-million shares (=$30-million)

Initial Dividend: 6.00% p.a. until first Reset-Date. First dividend payable 2009-3-31 for $0.50959 based on a November 27 close.

Reset Dates: December 31, 2013 and every five years thereafter.

Convertible: Every reset date at holders’ option to and from Series K [Floater] (subject to a minimum outstanding in each series).

Reset Dividend: Series J [Reset] 5-Year Canadas +307bp. Series K [Floater] 3-month bills +307bp, reset quarterly.

Redeemable: Series J [Reset] every Reset Date at $25.00. Series K [Floater] every Reset Date at $25.00 and at all other times $25.50.

Closing: November 27, 2008

It’s very nice to see a new GWO issue – the last one was GWO.PR.I, which started trading 2006-4-12. It’s also nice to see such a good coupon on a fixed reset – the GWO perps closed last night bid to yield in the range 6.53%-6.85% … so the give-up for the reset feature is narrowing.

TD Bank has announced:

that it has entered into an agreement with a group of underwriters led by TD Securities Inc. for an issue of 8 million non-cumulative 5-Year Rate Reset Class A Preferred Shares, Series AC (the Series AC Shares), carrying a face value of $25.00 per share, to raise gross proceeds of $200 million. TDBFG intends to file in Canada a prospectus supplement to its January 11, 2007 base shelf prospectus in respect of this issue.

TDBFG has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series AC 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 AC Shares will yield 5.60% annually, payable quarterly, as and when declared by the Board of Directors of TDBFG, for the initial period ending January 31, 2014. Thereafter, the dividend rate will reset every five years at a level of 274 basis points over the then five-year Government of Canada bond yield.

Holders of the Series AC Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series AD (the Series AD Shares), subject to certain conditions, on January 31, 2014, and on January 31st every five years thereafter. Holders of the Series AD Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of TDBFG, equal to the three-month Government of Canada Treasury bill yield plus 274 basis points.

The issue is anticipated to qualify as Tier 1 capital for TDBFG and the expected closing date is November 5, 2008. TDBFG will make an application to list the Series AC Shares as of the closing date on the Toronto Stock Exchange.

The first dividend will be for $0.3337, payable January 31, based on anticipated closing November 5, 2008.

Well … if this doesn’t knock hell out of the Fixed-Reset market, I don’t know what will! I mentioned when reviewing the BoC Monetary Policy Report that we could see more at these levels …

Update, 2008-11-4 TD has announced:

that a group of underwriters led by TD Securities Inc. has exercised the option to purchase an additional 0.8 million non-cumulative 5-Year Reset Preferred Shares, Series AC (the Series AC Shares) carrying a face value of $25.00 per share. This brings the total issue announced on October 27, 2008, and expected to close November 5, 2008, to 8.8 million shares and gross proceeds raised under the offering to $220 million.

Royal Bank has announced:

a domestic public offering of $200 million of Non-Cumulative, 5 year rate reset Preferred Shares Series AL.

The bank will issue 8 million Preferred Shares Series AL priced at $25 per share and holders will be entitled to receive non-cumulative quarterly fixed dividend for the initial period ending February 24, 2014 in the amount of $1.40 per share, to yield 5.60% per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 4 million Preferred Shares at the same offering price.

Subject to regulatory approval, on or after February 24, 2014, the bank may redeem the Preferred Shares Series AL in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 2.67% over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AL 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 AM (the “Preferred Shares Series AM”) on February 24, 2014 and on February 24 every five years thereafter.

Holders of the Preferred Shares Series AM 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 2.67%. Holders of Preferred Shares Series AM will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AL on February 24, 2019 and on February 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is November 3, 2008.

Update: Fixed-Reset issues got clobbered today, not surprisingly … I have uploaded the Fixed-Reset Index Portfolio … the issues have a long way to go before they yield 5.6%. The yield differences is about 0.50% … if you think of them as 5-year issues, that will be about 2.5% further to go on price … if you think of them as perpetuals, that’s about 7.5% further downside on price. Although, mind you, there is no reason why the prices could remain unchanged, with the new Royal issue trading at an immediate premium.

Royal Bank has announced:

a domestic public offering of $225 million of Non-Cumulative, 5 year rate reset Preferred Shares Series AJ.

The bank will issue 9 million Preferred Shares Series AJ priced at $25 per share and holders will be entitled to receive non-cumulative quarterly fixed dividends for the initial period ending February 24, 2014 in the amount of $1.25 per share, to yield 5.0 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 3 million Preferred Shares at the same offering price.

Subject to regulatory approval, on or after February 24, 2014, the bank may redeem the Preferred Shares Series AJ in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 1.93% over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AJ 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 AK (the “Preferred Shares Series AK”) on February 24, 2014 and on February 24 every five years thereafter.

Holders of the Preferred Shares Series AK 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 1.93%. Holders of Preferred Shares Series AK will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AJ on February 24, 2019 and on February 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is September 16, 2008.

Issue: Royal Bank of Canada Non-Cumulative 5-Year Rate Reset Preferred Shares, Series AJ

Size: 9-million shares (=$225-million) + greenshoe 3-million shares (=$75-million) exercisable before closing.

Dividend: 5.00% until first exchange date; 5-year Canadas +193bp thereafter, reset every exchange date. Series AK (the floater) pays 90-day bills +193bp, reset quarterly.

Exchange Date: 2014-2-24 and every five years thereafter.

Redemption: Series AJ (the reset) redeemable every exchange date at $25.00. Floater redeemable every exchange date at $25.00 and at $25.50 at all other times.

Closing: 2008-9-16

TD Bank has announced:

it has entered into an agreement with a group of underwriters led by TD Securities Inc. for an issue of 8 million non-cumulative 5-Year Rate Reset Class A Preferred Shares, Series AA (the “Series AA Shares”), carrying a face value of $25.00 per share, to raise gross proceeds of $ 200 million.

TDBFG intends to file in Canada a prospectus supplement to its January 11, 2007 base shelf prospectus in respect of this issue.

TDBFG has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series AA 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 AA Shares will yield 5.00% annually, payable quarterly, as and when declared by the Board of Directors of TDBFG, for the initial period ending January 31, 2014. Thereafter, the dividend rate will reset every five years at a level of 196 basis points over the then five-year Government of Canada bond yield.

Holders of the Series AA Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series AB (the “Series AB Shares”), subject to certain conditions, on January 31, 2014, and on January 31st every five years thereafter. Holders of the Series AA Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of TDBFG, equal to the three-month Government of Canada Treasury Bill yield plus 196 basis points.

The issue is anticipated to qualify as Tier 1 capital for TDBFG and the expected closing date is September 12, 2008.

Issue: Toronto-Dominion Bank (The) Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series AA

Size: 8-million shares (=$200-million), greenshoe for another 2-million shares (=$50-million prior to closing.

Ratings: DBRS, Pfd-1; S&P, P-1(Low); Moody’s, Aa2

Dividend: 5.00% p.a., paid quarterly, reset every exchange date to 5-Year Canadas +196bp.

Exchange Dates: January 31, 2014 and every five years thereafter.

Exchange: Exchangeable to and from Series AB, which pays 90-day T-Bills + 196bp, reset quarterly.

Redemption: Series AA (the fixed) are redeemable (at issuer’s option, remember!) every exchange date at $25.00. Series AB (the floater) are redeemable every exchange date at $25.00 and at $25.50 at all other times.

So now there are ten … and I will have to redeem my intention to add these Fixed-Reset thingies to the HIMIPref™ universe … this would have to happen at month-end! I’ll aim for next Monday, the 8th.

And now there are nine. One more and I’ve got to get cracking with a – thankfully, rather minor – HIMIPref™ upgrade to put them in the database.

CM has announced:

it had entered into an agreement with a group of underwriters led by CIBC World Markets Inc. for an issue of 9 million non-cumulative Rate Reset Class A Preferred Shares, Series 33 (the “Series 33 Shares”) priced at $25.00 per Series 33 Share to raise gross proceeds of $225 million.

CIBC has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase an additional 3 million Series 33 Shares at the same offering price. Should the underwriters’ option be fully exercised, the total gross proceeds of the financing will be $300 million.

The Series 33 Shares will yield 5.35% per annum, payable quarterly, as and when declared by the Board of Directors of CIBC, for an initial period ending July 31, 2014. On July 31, 2014 and on July 31 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 2.18%.

Holders of the Series 33 Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series 34 (the “Series 34 Shares”), subject to certain conditions, on July 31, 2014 and on July 31 every five years thereafter. Holders of the Series 34 Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of CIBC, equal to the three-month Government of Canada Treasury Bill yield plus 2.18%.

Holders of the Series 34 Shares may convert their Series 34 Shares into Series 33 Shares, subject to certain conditions, on July 31, 2019 and on July 31 every five years thereafter.

The expected closing date is September 10, 2008. The net proceeds of this offering will be used for general purposes of CIBC.

Issue: Canadian Imperial Bank of Commerce Non-Cumulative Rate Reset Class A Preferred Shares, Series 33

Size: 9-million shares (=$225-million), greenshoe for 3-million shares (=$75-million) exercisable before closing.

Initial Dividend: 5.35% p.a., paid quarterly, until the first Exchange Date

Subsequent Dividends: 5-year Canadas +218bp, reset on Exchange Dates

Exchange Date: July 31, 2014 and every five years thereafter.

Exchange Option: Exchangeable to and from Series 34, which pays 3-month bills + 218bp, on Exchange Dates, reset quarterly.

Redemption: Series 33 (5-year-rate) redeemable every Exchange Date at $25.00. Series 34 (floater) is redeemable every Exchange Date at $25.00 and at all other times at $25.50.

It is interesting that the spread to the BNS new issue announced yesterday is 35bp for the initial period and 30bp thereafter. There are currently seven CM perpetualDiscounts, trading to yield between 6.43% and 6.68% at their bids; there are six BNS perpetualDiscounts, trading to yield between 5.73% and 5.90% at their bids. So the spread for seasoned issues is about 70bp, roughly double the spread on new issues. Live and learn.

CM announced this issue immediately after their 3Q08 Earnings Release … this is getting to be a habit!

I have written an article on the analysis of Fixed-Resets.

Update, 2014-05-06: Trades as CM.PR.K

And now there are eight. Two more and I’ll add them to the HIMIPref™ database.

BNS has announced:

a domestic public offering of 8 million non-cumulative 5-year rate reset preferred shares Series 22 (the “Preferred Shares Series 22”) at a price of $25.00 per share, for gross proceeds of $200 million.

Holders of Preferred Shares Series 22 will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending January 25, 2014 yielding 5.00% per annum, as and when declared by the Board of Directors of Scotiabank. Thereafter, the dividend rate will reset every five years at a rate equal to 1.88% over the 5-year Government of Canada bond yield.

Holders of Preferred Shares Series 22 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 23 (the “Preferred Shares Series 23”) of Scotiabank on January 26, 2014 and on January 26 every five years thereafter.

Holders of the Preferred Shares Series 23 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 1.88%, as and when declared by the Board of Directors of Scotiabank. Holders of Preferred Shares Series 23 will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series 22 on January 26, 2019 and on January 26 every five years thereafter.

The Bank has agreed to sell the Preferred Shares Series 22 to a syndicate of underwriters led by Scotia Capital Inc. on a bought deal basis. The Bank has granted to the underwriters an option to purchase up to an additional 2 million Preferred Shares Series 22 at closing, which option is exercisable by the underwriters any time up to 48 hours before closing.

Closing is expected to occur on or after September 9, 2008.

Issue: Bank of Nova Scotia Non-Cumulative 5-Year Rate Reset Preferred Shares Series 22

Size: 8-million shares (=$200-million), greenshoe for 2-million shares (=$50-million) exercisable before closing.

Initial Dividend: 5.00% p.a., paid quarterly, until the first Exchange Date

Subsequent Dividends: 5-year Canadas +188bp, reset on Exchange Dates

Exchange Date: January 26, 2014 and every five years thereafter.

Exchange Option: Exchangeable to and from Series 23, which pays 3-month bills + 188bp, on Exchange Dates, reset quarterly.

Redemption: Series 22 (5-year-rate) redeemable every Exchange Date at $25.00. Series 23 (floater) is redeemable every Exchange Date at $25.00 and at all other times at $25.50.

Scotia’s second issue paid 5.00%+170; their first issue paid 5.00%+205. Well … if I do add them to HIMIPref™, at least I’ll have a variety of resets to analyze! And this is a Good Thing.

I have written an article on the analysis of Fixed-Resets.

TD Bank has announced:

that it has entered into an agreement with a group of underwriters led by TD Securities Inc. for an issue of 10 million non-cumulative 5-Year Rate Reset Class A Preferred Shares, Series Y (the “Series Y Shares”), carrying a face value of $25.00 per share, to raise gross proceeds of $250 million. TD intends to file in Canada a prospectus supplement to its January 11, 2007 base shelf prospectus in respect of this issue.

TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series Y 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 $300 million should this option be exercised in full.

The Series Y Shares will yield 5.10% annually, payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending October 31, 2013. Thereafter, the dividend rate will reset every five years at a level of 168 basis points over the then five-year Government of Canada bond yield.

Holders of the Series Y Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series Z (the “Series Z Shares”), subject to certain conditions, on October 31, 2013, and on October 31 every five years thereafter. Holders of the Series Z 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 168 basis points.

The issue is anticipated to qualify as Tier 1 capital for TD and the expected closing date is July 16, 2008.

So … now there are seven of these Fixed-Reset Thingies. This joins the previous TD deal with this structure, which was 5.00%+160, now trading as TD.PR.S

Issue: The Toronto-Dominion Bank Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series Y

Size: 10-million shares @ $25 (= $250-million), greenshoe of 2-million shares (=$50-million) exercisable up to two business days before closing.

Ratings: DBRS, Pfd-1; S&P: P-1(low); Moody’s: Aa2

Exchange Dates: October 31, 2013 and every five years thereafter.

Dividend: 5.10% until first exchange date, then 5-Year Canadas +168bp

Exchangeable: On every exchange date to series Z, which pay 90-day T-bills +168bp, calculated quarterly

Redemption: Every Exchange Date at 25.00. Series Z are redeemable every exchange date at $25.00 and at $25.50 at all other times.

Closing: July 16, 2008

Boy … these things sure seem popular, eh? And I will admit, so far my disdain has been thrown back in my face. But I still don’t like ’em.

Update, 2013-9-26: Trades as TD.PR.Y

It’s been a long time since an investment grade Operating Retractible issue came out!

Issue: Brookfield Asset Management 5.00% Cumulative Class A Preference Shares, Series 21

Size: 6-million shares @ $25.00 (= $150-million); Greenshoe for 1-million shares (= $25-million) exercisable prior to closing.

Dividends: $1.25 p.a.; Long first dividend of $0.3299 planned for September 30

Redemption: Redeemable at $25.00 on and after 2013-6-30; Company may substitute common shares at greater 95% of market or $2

Retraction: Retractible into common at greater of 95% of market and $2. Company may elect to substitute cash.

Ratings: S&P: P-2; DBRS: Pfd-2(low)

Closing: 2008-6-25

Other BAM retractibles are BAM.PR.H, BAM.PR.I and BAM.PR.J

More later.

Later, More: Comparables – at intra-day prices – are:

The BAM.PR.H are interesting … callable at 25.75 commencing 2008-9-30, redemption price declines by $0.25 annually until 2011-9-30, callable at $25.00 thereafter; retractible into shares commencing 2012-3-31; yield until the softMaturity 2012-3-30 is 4.76%.

The new issue is nice – it’s very nice to see a new issue eligible for the OpRet index! – but appears to be no more than fairly priced relative to the extant BAM retractibles.