Category: New Issues

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.

And now there are six!

Actually, I detect a move in the right direction with this issue. The most recent fixed-reset was from National Bank, 5.375%+205 and the penultimate was TD, 5.00% +160; the Canada 5-year is now at 3.52%, up 6bp from yesterday. As the initial 5-year rate creeps up, I get more interested … but I’m not willing to buy just yet! Not with, for instance, BMO.PR.J closing at 19.83-95 last night, with a bid-Yield-to-Worst of 5.73% and the chance for a capital gain of 25% if yields fall.

Issue: Bank of Montreal Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 16

Size: 10-million shares @25 (= $250-million); greenshoe of 2-million shares (=$50-million) exercisable prior to closing.

Exchange Dates: August 25, 2013 and every five years thereafter.

Dividends: 5.20% (=$1.30) p.a.; resets to 5-year Canadas +165bp every exchange date.

Exchange: Every Exchange Date to and from Series 17 Floaters, which pay 90-bills + 165, reset quarterly.

Redemption: Every Exchange Date at $25.00 for Resets; Floaters redeemable at $25 each Exchange Date and at $25.50 at all other times.

Ratings: S&P: P-1(low); DBRS: Pfd-1; Moody’s: Aa3

Closing: 2008-6-23

Loblaw Companies has announced:

a domestic public offering of 9 million cumulative redeemable convertible Second Preferred Shares, Series A (the “Preferred Shares Series A”) at a price of $25.00 per share, to yield 5.95% per annum, for an aggregate gross amount of $225 million.

Loblaw has agreed to sell the Preferred Shares Series A to a syndicate of underwriters co-led by RBC Dominion Securities Inc. and CIBC World Markets Inc. on a bought deal basis. Loblaw has granted to the underwriters an option to purchase an additional $75 million of the Preferred Shares Series A at any time up to 48 hours prior to closing.

The Preferred Shares Series A will be offered by way of prospectus supplement under the short form base shelf prospectus of Loblaw Companies Limited dated June 5, 2008. 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 Loblaw Companies Limited and used for general corporate purposes. The offering is expected to close on or about June 20, 2008.

Issue: Loblaw Companies Limited 5.95% Cumulative Redeemable Second Preferred Shares, Series A

Size: 9-million shares @ $25 (= $225-million) + greenshoe of 3-million shares (= $75-million) exercisable prior to closing.

Dividends: $1.4875 p.a., payable quarterly; long first dividend of $0.5394 payable 2008-10-31

Redemption: Redeemable at $25.75 commencing 2013-7-31; redemption price declines to $25.50 commencing 2014-7-31; declines to $25.00 if redeemed on or after 2015-7-31. Redemption price may be satisfied with shares of Loblaw at 95% of market (as defined).

Retraction: At $25 into shares of Loblaw at 95% of market (as defined), commencing 2015-7-31. Company can substitute cash at its option.

Ratings: S&P: P-3(high); DBRS Pfd-3 (negative trend)

Closing: 2008-6-20

Well, it’s certainly nice to see an operating-retractible issue offered in size; sadly, the ratings will keep it out of the HIMIPref™ indices and many portfolios. More later.

Update: This issue looks expensive.

And thick and fast they came at last, and more and more and more! National Bank has announced:

a public offering of 7 million, non-cumulative 5-year rate reset first preferred shares Series 21 (the “Preferred Shares Series 21”) at a price of $25.00 per share, for an aggregate amount of $175 million.

Holders of Preferred Shares Series 21 will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending August 15, 2013 of 5.375% per annum, as and when declared by the Board of Directors of National Bank. Thereafter, the dividend rate will reset every five years at a level of 205 basis points over the 5-year Government of Canada bond yield. Holders will, subject to certain conditions, have the option to convert all or any part of their Preferred Shares Series 21 to non-cumulative floating rate first preferred shares Series 22 (the “Preferred Shares Series 22”) of National Bank on August 16, 2013 and on August 16, every five years thereafter. Holders of the Preferred Shares Series 22 will be entitled to receive a non-cumulative quarterly floating dividend equal to the 90-day Canadian Treasury Bill rate plus 205 basis points, as and when declared by the Board of Directors of National Bank.

National Bank has agreed to sell the Preferred Shares Series 21 to a syndicate of underwriters led by National Bank Financial Inc. on a bought deal basis. National Bank has granted to the underwriters an option to purchase up to an additional $26.25 million of the Preferred Shares Series 21 at any time up to 30 days after closing.

Issue: National Bank of Canada Non-Cumulative 5-Year Rate Reset Preferred Shares Series 21

Amount: 7-million shares @ $25.00 = $175-million

Greenshoe: 1,050,000 shares @ $25 = $26,250,000 up to thirty days after closing.

Initial Dividend: 5.375%, changes every Exchange Date

Subsequent Dividend: 5-Year Canadas + 205bp, determined 30 days prior to Exchange Dates

Exchangeable: To Series 22 Floaters, pay 90-day Canada T-Bills + 205, determined quarterly

Exchange Dates: August 15, 2013 and every five years thereafter

Redemption: Series 21 Resets redeemable every exchange date at $25.00. Series 22 Floaters at $25.00 on every exchange date and at $25.50 at all other times.

Rank: On parity with all other First Preferred Shares, senior to common, junior to everything else.

Ratings: S&P: P-2(High); DBRS: Pfd-1(low); Moody’s: A1

Don’t like ’em! The Big Black Mark against this structure is that it can be called in only five years. I’ve published my thoughts on the matter … but some people like ’em and they certainly seem to be selling well.

Update, 2013-8-14: This issue, NA.PR.N, was called for redemption on the first Exchange Date

And now there are four.

Hard on the heels of their second quarter report comes a new issue announcement:

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 Preferred Shares, Series S (the “Series S Shares”), carrying a face value of $25.00 per share, to raise gross proceeds of $200 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 S 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 S Shares will yield 5.00% per cent annually, payable quarterly, as and when declared by the Board of Directors of the TD, for the initial period ending July 31, 2013. Thereafter, the dividend rate will reset every five years at a level of 160 basis points over the then five-year Government of Canada bond yield.
Holders of the Series S Shares will have the right to convert their shares into Non-cumulative Floating Rate Preferred Shares, Series T (the “Series T Shares”), subject to certain conditions, on July 31, 2013, and on July 31 every five years thereafter. Holders of the Series T 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 160 basis points.
The issue qualifies as Tier 1 capital for TD and the expected closing date is June 11, 2008.

Issue: Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series S

Size: 8-million shares @ $25.00 = $200-million

Greenshoe: 2-million shares (= $50-million) up to two days prior to closing.

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

Dividends: 5.00% until first Exchange Date; reset to 5-Year Canadas + 160bp every exchange date.

Convertible: Back & forth between Series T Floaters every exchange date. Series T pays 90-day T-Bills + 160bp

Exchange Date: July 31, 2013 and every five years thereafter

Redemption: Series S & Series T redeemable every exchange date at $25.00. Series T redeemable any other time at $25.50.

Rank: Parri Passu with all other preferreds, senior to common

Closing: June 11, 2008

Well … if I didn’t like the other ones, I’m not going to like these ones! But it looks like the structure is popular, so I guess I’d better start going over the HIMIPref™ code and determining just what will need to be done before I can add them to the universe.

As I’ve stated before … I’ll be adding the class to HIMIPref™ as soon as there are enough outstanding so that one could reasonably expect to execute profitable trades within the class.

Update, 2013-6-22: This trades as TD.PR.S