Category: New Issues

Capital Power Corporation has announced:

that it will issue 6,000,000 Cumulative Minimum Rate Reset Preference Shares, Series 7 (the “Series 7 Shares”) at a price of $25.00 per Series 7 Share (the “Offering”) for aggregate gross proceeds of $150 million on a bought deal basis with a syndicate of underwriters, co-led by TD Securities Inc. and CIBC Capital Markets. In addition, Capital Power has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase up to an additional 2,000,000 Series 7 Shares on the same terms, for additional gross proceeds of up to $50 million.

The Series 7 Shares will pay fixed cumulative dividends of $1.50 per share per annum, yielding 6.00% per annum, payable on the last business day of March, June, September and December of each year, as and when declared by the board of directors of Capital Power, for the initial period ending December 31, 2021. Based on an October 4, 2016 closing, the first quarterly dividend of $0.3616 per share is expected to be paid on December 30, 2016. The dividend rate will be reset on December 31, 2021 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 5.26%, provided that, in any event, such rate shall not be less than 6.00%. The Series 7 Shares are redeemable by Capital Power, at its option, on December 31, 2021 and every five years thereafter.

Holders of Series 7 Shares will have the right to convert all or any part of their shares into Cumulative Floating Rate Preference Shares, Series 8 (the “Series 8 Shares”), subject to certain conditions, on December 31, 2021 and every five years thereafter. Holders of Series 8 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 5.26%, as and when declared by the board of directors of Capital Power.

Net proceeds of the offering will be used to reduce indebtedness under Capital Power’s credit facilities.

Standard & Poor’s, a division of the McGraw Hill Companies, Inc. has assigned a provisional rating of P-3 for the Series 7 Shares and DBRS Limited has assigned a preliminary rating of Pfd-3 (low) for the Series 7 Shares.

The Series 7 Shares will be issued pursuant to a prospectus supplement to Capital Power’s short form base shelf prospectus dated May 3, 2016. This prospectus supplement will be filed with securities regulatory authorities in Canada. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

I don’t get it, frankly. This issue looks horrifically expensive. Look at the Implied Volatility analysis, for instance:

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So look, there’s the new issue, way over on the right hand side with an Expected Future Current Yield of 6.00% – that’s the lowest of all the CPX outstanding FixedResets: CPX.PR.A, 6.18%; CPX.PR.C, 6.59%; CPX.PR.E, 6.57%.

So look, you can pick up over half a point in yield AND have lower call risk AND have increased leverage with respect to future increases in GOC-5 by buying CPX.PR.C or CPX.PR.E. These issues are even relatively liquid – relative to other junk issues – trading about $100,000-worth every day. Why wouldn’t you just buy on the secondary market?

All I can think of is:

• Liquidity: You can put a million dollars to work with one ‘phone call. Doing this on the secondary market would require you to do some work, like a peon.
• The Minimum Reset: I don’t understand how it could possibly be so valuable, but it takes two to make a market!

This should have been posted on August 22, but it seems that I neglected my duties…

Westcoast Energy Inc. has announced:

that it has entered into an agreement with a syndicate of underwriters co-led by TD Securities Inc. and CIBC Capital Markets. The underwriters have agreed to buy 8 million Cumulative 5-Year Minimum Rate Reset Redeemable First Preferred Shares, Series 12 (the “Series 12 First Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $200,000,000. The proceeds are expected to be used to fund capital expenditures and for general corporate purposes.

The Corporation has granted the underwriters an option to purchase up to 2 million additional Series 12 First Preferred Shares at the offering price, exercisable until 48 hours prior to closing, which, if fully exercised, would increase the total gross proceeds of the Series 12 First Preferred Share offering to $250,000,000.

The Series 12 First Preferred Shares will be issued to the public at a price of $25.00 per share and holders will be entitled to receive fixed cumulative preferential cash dividends, payable by quarterly instalments for an initial period of five years, as and when declared by the Board of Directors of the Corporation, at a rate of $1.30 per share per annum, to yield 5.20% annually. Thereafter, the dividend rate will reset every five years to the sum of the then current 5-Year Government of Canada Bond yield and 4.52%, provided that, in any event, such rate shall not be less than 5.20%. On October 15, 2021, and on October 15 of every fifth year thereafter, the Corporation may redeem the Series 12 First Preferred Shares in whole or in part at par.

Holders will have the right to elect to convert all or any of their Series 12 First Preferred Shares into an equal number of Cumulative Floating Rate Redeemable First Preferred Shares, Series 13 (the “Series 13 First Preferred Shares”) on October 15, 2021, and on October 15 of every fifth year thereafter. Holders of the Series 13 First Preferred Shares will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of the Corporation, equal to the sum of the then current 3-month Government of Canada Treasury Bill yield and 4.52%. On October 15, 2026, and on October 15 of every fifth year thereafter, the Corporation may redeem the Series 13 First Preferred Shares in whole or in part at par. On any other date after October 15, 2026, the Corporation may redeem the Series 13 First Preferred Shares in whole or in part by the payment of $25.50 for each share to be redeemed.

The offering is being made only in the provinces of Canada under the Corporation’s short form base shelf prospectus dated March 18, 2016, and a prospectus supplement to such short form prospectus. The closing date of the offering is expected to be on or about August 30, 2016.

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction. All sales will be made through registered securities dealers in jurisdictions where the offering has been qualified for distribution.

Westcoast Energy Inc. is an indirect subsidiary of Spectra Energy Corp.

They later announced:

that as a result of strong demand for its previously announced offering it has agreed to increase the size of the offering to 12 million Cumulative 5-Year Minimum Rate Reset Redeemable First Preferred Shares, Series 12 (the “Series 12 First Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $300,000,000. There will not be an underwriters’ option as was previously granted. The Series 12 Preferred Shares are being offered on a bought deal basis by a syndicate of underwriters co-led by TD Securities Inc. and CIBC Capital Markets.

The proceeds are expected to be used to fund capital expenditures and for general corporate purposes.

The Bank of Nova Scotia has announced:

a domestic public offering of Non-cumulative 5-Year Rate Reset Preferred Shares Series 38 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 38”).

Scotiabank has agreed to sell 12 million of Preferred Shares Series 38 to a syndicate of underwriters led by Scotia Capital Inc. on a bought deal basis. Scotiabank has granted the Underwriters an option, exercisable in whole or in part up to 48 hours before closing, to purchase up to an additional 2 million Preferred Shares Series 38 at the same offering price.

Scotiabank will issue Preferred Shares Series 38 priced at $25 per share and holders will be entitled to receive a non-cumulative quarterly fixed dividend, as and when declared by the Board of Directors of Scotiabank, for the initial period ending on and including January 26, 2022 at an annual rate of $1.2125 per share to yield 4.85% per cent annually.

On January 27, 2022 and on January 27 every five years thereafter, Scotiabank may, at its option, with the prior approval of the Superintendent of Financial Institutions (Canada), redeem all or any number of the then outstanding Preferred Shares Series 38 at a redemption price which is equal to par. Thereafter, the dividend rate will reset every five years at a rate equal to 4.19% over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series 38 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 39 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 39”) of Scotiabank on January 27, 2022 and on January 27 every five years thereafter.

Holders of the Preferred Shares Series 39 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 4.19%, as and when declared by the Board of Directors of Scotiabank. Holders of Preferred Shares Series 39 will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series 38 on January 27, 2027 and on January 27 every five years thereafter.

Closing is expected to occur on or after September 16, 2016. This domestic public offering is part of Scotiabank’s ongoing and proactive management of its Tier 1 capital structure.

Net proceeds from this transaction will be added to Scotiabank’s funds and will be used for general business purposes.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of Non-cumulative 5-Year Rate Reset Preferred Shares Series 38 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 38”), 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 of investment dealers led by Scotia Capital Inc.

Closing is expected to occur on or after September 16, 2016. This domestic public offering is part of Scotiabank’s ongoing and proactive management of its Tier 1 capital structure. Scotiabank intends to file a prospectus supplement to its July 7, 2016 base shelf prospectus in respect of this issue.

Net proceeds from this transaction will be added to Scotiabank’s funds and will be used for general business purposes.

This is Scotia’s third NVCC-compliant issue, so we can attempt some very cautious Implied Volatility Analysis:

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On the one hand, it appears to be fairly priced against the two other NVCC issues, with an Implied Volatility of 9%. However, most other series have Implied Volatility in excess of 20% and therefore show steeper curves when analyzed in this fashion, which suggests either than the new issue is cheap, or the other two issues (BNS.PR.E and BNS.PR.G) are rich. Take your pick! However, the NVCC non-compliant issues are very clearly differentiated from the compliant issues, so that’s something!

The Toronto-Dominion Bank has announced:

a domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares (non-viability contingent capital (NVCC)), Series 14 (the “Series 14 Shares”).

TD has entered into an agreement with a group of underwriters led by TD Securities Inc. to issue, on a bought deal basis, 12 million Series 14 Shares at a price of $25.00 per share to raise gross proceeds of $300 million. TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 14 Shares. This option is exercisable in whole or in part by the underwriters at any time up to two business days prior to closing.

The Series 14 Shares will yield 4.85% annually, with dividends payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending October 31, 2021. Thereafter, the dividend rate will reset every five years at a level of 4.12% over the then five-year Government of Canada bond yield.

Subject to regulatory approval, on October 31, 2021 and on October 31 every 5 years thereafter, TD may redeem the Series 14 Shares, in whole or in part, at $25.00 per share. Subject to TD’s right of redemption and certain other conditions, holders of the Series 14 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares (NVCC), Series 15 (the “Series 15 Shares”), on October 31, 2021, and on October 31 every five years thereafter. Holders of the Series 15 Shares will be entitled to receive quarterly floating rate dividends, as and when declared by the Board of Directors of TD, equal to the three-month Government of Canada Treasury bill yield plus 4.12%.

The expected closing date is September 8, 2016. TD will make an application to list the Series 14 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares (non-viability contingent capital (NVCC)), Series 14 (the “Series 14 Shares”), the size of the offering has been increased to 40 million Series 14 Shares. The gross proceeds of the offering will now be $1 billion. The offering will be underwritten by a group of underwriters led by TD Securities Inc.

The expected closing date is September 8, 2016. TD will make an application to list the Series 14 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

Supersize me!

Implied Volatility analysis shows that the new issue is fairly priced relative to extant issues:

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… provided one accepts that the calculated Implied Volatility value is OK. I claim that it isn’t – that the Implied Volatility of the spread should be in the high single digits and that therefore one can expect the curve to flatten, which implies that the high-spread issues are preferable. On the other hand, I also claim that spreads are currently far too high (a directional bias that contradicts the assumptions of Implied Volatility) and will decline substantially in the future, which implies that deeply discounted low-spread issues are preferable. So take your choice.

The issue attracted notice from David Berman in the Globe:

After five years, the yield on the new preferred shares will be 4.12 percentage points above the five-year bond yield, down more than half a percentage point.

For investors who love the idea of generating regular income in an environment where income is hard to find, the lower yields and reset rates are disappointing.

But TD is merely responding to market conditions. While preferred shares were a tough sell at the start of the year, the market appears more receptive today.
…
Yields may be down. But investor interest is heating up.

There were also some comments from Assiduous Readers.

Here’s a chart comparing the yield (median YTW) of the FixedReset subindex with the five-year Canada yield, taken from PrefLetter. We are a long way from normalizing!

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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 the issuance on a bought deal basis of 10 million non-cumulative 5-year rate reset first preferred shares series 36 (non-viability contingent capital (NVCC)) (the “Series 36 Preferred Shares”) at a price of $25.00 per share, to raise gross proceeds of $250 million.

National Bank has granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 36 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 gross proceeds raised under the offering will be $300 million should this option be exercised in full.

The Series 36 Preferred Shares will yield 5.40% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending August 15, 2021. The first of such dividends, if declared, shall be payable on November 15, 2016. Thereafter, the dividend rate will reset every five years at a level of 466 basis points over the then 5-year Government of Canada bond yield. Subject to regulatory approval, National Bank may redeem the Series 36 Preferred Shares in whole or in part at par on August 15, 2021 and on August 15 every five years thereafter.

Holders of the Series 36 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares series 37 (non-viability contingent capital (NVCC)) (the “Series 37 Preferred Shares”), subject to certain conditions, on August 15, 2021, and on August 15 every five years thereafter. Holders of the Series 37 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 466 basis points.

The net proceeds of the offering will be used for general corporate purposes and added to National Bank’s capital base. The expected closing date is on or about June 13, 2016. National Bank intends to file in Canada a prospectus supplement to its December 1, 2014 base shelf prospectus in respect of this issue.

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 first preferred shares series 36 (non-viability contingent capital (NVCC)) (the “Series 36 Preferred Shares”), the size of the offering has been increased to 16 million shares. The gross proceeds of the offering will now be $400 million. The offering will be underwritten by a syndicate led by National Bank Financial Inc. The expected closing date is on or about June 13, 2016.

The net proceeds of the offering will be used for general corporate purposes and added to National Bank’s capital base.

As has so often been the case recently, using Implied Volatility analysis to determine whether the pricing of this issue is rich or cheap yields ambiguous results:

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The new issue fits in very well with the line determined by the three extant NVCC-compliant issues, but the Implied Volatility is very high. Thus, if one believes that spreads are very high and will eventually regress to more usual levels, one will buy the low-spread low-price issues in order to capture the expected capital gain. However, if one believes that current conditions represent the new normal (with low GOC-5 yields and spreads that are high relative to historical norms) then one will buy the high-spread high-price issues in order to avoid the capital loss that one expects on the low-spread issues as Implied Volatility declines and the curve flattens.

Thanks to Assiduous Readers FletcherLynd, brian and klargenf, who discussed this issue in the comments to New Issue: NA FixedReset, 5.60%+490 (which was NA’s previous new issue).

Pembina Pipeline Corporation has announced:

that it has entered into an agreement with a syndicate of underwriters co-led by RBC Capital Markets and Scotiabank (together, the “Underwriters”) pursuant to which the Underwriters have agreed to purchase from Pembina 6,000,000 cumulative redeemable minimum rate reset class A preferred shares, Series 13 (the “Series 13 Preferred Shares”) at a price of $25.00 per share for distribution to the public.

The holders of Series 13 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.4375 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 5.75 percent per annum, for the initial fixed rate period to but excluding June 1, 2021. The first quarterly dividend payment date is scheduled for September 1, 2016. The dividend rate will reset on June 1, 2021 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 4.96 percent, provided that, in any event, such rate shall not be less than 5.75 percent per annum. The Series 13 Preferred Shares are redeemable by Pembina, at its option, on June 1, 2021 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 13 Preferred Shares will have the right to convert their shares into cumulative redeemable floating rate class A preferred shares, Series 14 (the “Series 14 Preferred Shares”), subject to certain conditions, on June 1, 2021 and on June 1 of every fifth year thereafter. The holders of Series 14 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 4.96 percent.

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 13 Preferred Shares at a price of $25.00 per share.

Closing of the offering is expected on April 27, 2016, subject to customary closing conditions.

The Company intends to use the net proceeds from the offering of Series 13 Preferred Shares for capital expenditures and working capital requirements in connection with the Company’s 2016 capital program and to reduce indebtedness under the Company’s credit facilities.

The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the Company on March 18, 2015 in each of the provinces of Canada.

They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable minimum rate reset class A preferred shares, Series 13 (the “Series 13 Preferred Shares”), the size of the offering has been increased to 10,000,000 Series 13 Preferred Shares, for aggregate gross proceeds of $250 million. The offering no longer includes the previously granted underwriters’ option. The syndicate of underwriters is being co-led by RBC Capital Markets and Scotiabank.

No prizes will be awarded for noticing that this issue is very similar to PPL.PR.K, a FixedReset, 5.75%+500M575, that commenced trading 2016-1-15 after being announced 2016-1-6. PPL.PR.K closed today at 25.36-65, 12×10, so this new issue looks to have a decent concession in it.

Implied Volatility analysis reveals that the issue is reasonably priced against the curve, but that the curve has a very high implied volatility:

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Thus, as has often been the case lately – if you believe that the current level of spreads to GOC-5 is unnaturally high and will decline, you’ll buy the lower-spread issues, to capture the capital gain on narrowing. If you believe that current conditions are the new normal, you’ll buy the new issue, to avoid losses when implied volatility declines and the curve flattens.

Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners, has announced:

that it has agreed to issue to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank, for distribution to the public, six million Cumulative Minimum Rate Reset Class AAA Preference Shares, Series CC (the “Preferred Shares, Series CC”). The Preferred Shares, Series CC will be issued at a price of C$25.00 per share, for aggregate proceeds of C$150 million. Holders of the Preferred Shares, Series CC will be entitled to receive a cumulative quarterly fixed dividend yielding 6.00% annually for the initial period ending June 30, 2021. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of (i) the five-year Government of Canada bond yield plus 5.18% and (ii) 6.00%.

Holders of Preferred Shares, Series CC will have the right, at their option, to convert their shares into Cumulative Floating Rate Class AAA Preference Shares, Series DD (the “Preferred Shares, Series DD”), subject to certain conditions, on June 30, 2021 and on June 30 every five years thereafter. Holders of Preferred Shares, Series DD will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 5.18%.

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 2,000,000 Preferred Shares, Series CC at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$200 million.

The Preferred Shares, Series CC will be offered in all provinces of Canada by way of a supplement to Brookfield Office Properties’ existing Canadian short form base shelf prospectus dated November 13, 2014.

The net proceeds of the issue will be used for general corporate purposes which may include the redemption of existing preferred shares. The offering is expected to close on or about April 27, 2016.

Implied Volatility analysis tells a rather peculiar tale:

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The Implied Volatility is extremely low, which is particularly surprising in light of the fact that calculations for most other series result in a value that is extremely high. This suggests that lower-spread issues should be favoured. The very wide range of Expected Future Current Yield is also surprising – BPO.PR.N resets at +307 on 2016-6-30, which implies a dividend rate of 3.84% at the current level of GOC-5, which is an annual rate of $0.96, which, based on its current bid price of $15.00, implies an Expected Future Current Yield of 6.40%, well in excess of the new offering.

TransCanada Corporation has announced:

that it will issue 12 million cumulative redeemable minimum rate reset first preferred shares, series 13 (the “Series 13 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 co-led by TD Securities Inc., BMO Capital Markets and Scotiabank.

The holders of Series 13 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.375 per share, payable quarterly on the last business day of February, May, August and November, as and when declared by the board of directors of TransCanada. The Series 13 Preferred Shares will yield 5.50 per cent per annum for the initial fixed rate period ending May 31, 2021 with the first dividend payment date scheduled for May 31, 2016. The dividend rate will reset on May 31, 2021 and on the last business day of May in every fifth year thereafter to a rate equal to the sum of the then five-year Government of Canada bond yield plus 4.69 per cent, provided that, in any event, such rate shall not be less than 5.50 per cent per annum. The Series 13 Preferred Shares are redeemable by TransCanada, at its option, on May 31, 2021 and on the last business day of May in every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 13 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 14 (the “Series 14 Preferred Shares”), subject to certain conditions, on May 31, 2021 and on the last business day of May in every fifth year thereafter. The holders of Series 14 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 4.69 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 13 Preferred Shares at a price of $25.00 per share.

The anticipated closing date is April 20, 2016. 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 13 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 23, 2015. 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.

They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable minimum rate reset first preferred shares, series 13 (the “Series 13 Preferred Shares”), the size of the offering has been increased to 20 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds of the offering will now be $500 million. The syndicate of underwriters is co-led by TD Securities Inc., BMO Capital Markets and Scotiabank.

Note that (as pointed out by Assiduous Reader FletcherLynd) the company is on Review-Developing by DBRS and Outlook-Negative by S&P.

Implied Volatility analysis must be taken with a grain of salt since the Issue Reset Spread for the new issue (469bp) is so much higher than that of the previous high for this issuer (TRP.PR.G, +296). In addition, this is the first TRP issue with a floor on the reset rate.

However, the fit is reasonable and the Implied Volatility, while very high, is in line with other series:

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So on the one hand, it’s a decent (although not especially good) fit. On the other hand, the Implied Volatility is unreasonably high (I would expect that the long term value for implied volatility would be in the high single-digits). So it boils down to what we’ve been seeing a lot of lately: if you believe that current conditions are the new normal, you’ll like the new issue. If you believe that Market Reset Spreads are currently elevated, you like the lower-spread issues.