PrefBlog

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell eight million Cumulative Redeemable Preference Shares, Series 15 (the “Series 15 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on September 23, 2014.

The holders of Series 15 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding September 1, 2020. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on September 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.68 per cent. The Series 15 Preferred Shares are redeemable by Enbridge, at its option, on September 1, 2020 and on September 1 of every fifth year thereafter.

The holders of Series 15 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 16 (the “Series 16 Preferred Shares”), subject to certain conditions, on September 1, 2020 and on September 1 of every fifth year thereafter. The holders of Series 16 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.68 per cent.

Enbridge 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 million Series 15 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated September 2, 2014. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by TD Securities Inc., CIBC World Markets, RBC Capital Markets, and Scotiabank.

Later, they added:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 15 (the “Series 15 Preferred Shares”), the size of the offering has been increased to 11 million Series 15 Preferred Shares. The aggregate gross proceeds will be C$275 million. Closing of the offering is expected on September 23, 2014.

Of the many very closely related ENB FixedResets available, the new issue is most comparable to ENB.PF.C, 4.40%+264, which closed today at 24.99-19, 9×29, and ENB.PF.E, 4.40%+266, which closed at 25.00-02, 17×19. Not much of a new-issue concession here!

Update, 2014-9-17: Rated Pfd-2(low) [Stable] by DBRS.

Fortis Inc. has announced:

that it has entered into an agreement with a syndicate of underwriters led by Scotiabank and RBC Capital Markets (collectively, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, from Fortis and sell to the public (the “Offering”) 12,000,000 Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M of the Corporation (the “Series M First Preference Shares”). The purchase price of $25.00 per Series M First Preference Share will result in gross proceeds for Fortis of $300,000,000.

Fortis has granted the Underwriters the option to purchase up to an additional 1,800,000 Series M First Preference Shares to cover over-allotments, if any, and for market stabilization purposes, during the 30 days following the closing of the Offering (the “Over-Allotment Option”). If the Over-Allotment Option is exercised in full, the Offering will result in gross proceeds to the Corporation of $345,000,000.

The net proceeds of the Offering will be used to repay a portion of the amounts borrowed by Fortis under its acquisition credit facility in connection with the acquisition of UNS Energy Corporation completed on August 15, 2014.

The holders of Series M First Preference Shares will be entitled to receive fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of the Corporation (the “Board of Directors”), for the initial period commencing on the date of issue and ending on but excluding December 1, 2019 (the “Initial Period”) at a rate of 4.10%, in an amount equal to $1.0250 per Series M First Preference Share per annum paid in equal quarterly instalments. The first of such dividends, if declared, will be payable on December 1, 2014 for the period commencing on the date of issue in the amount of $0.2050 per Series M First Preference Share. The dividend rate will be reset on December 1, 2019 and thereafter every five years at a level of 2.48% above the five‑year Government of Canada Bond yield.

At the end of the Initial Period and every five years thereafter, the holders of Series M First Preference Shares will, subject to certain conditions and the right of the Corporation to redeem those shares, have the option to convert any or all of their Series M First Preference Shares into an equal number of Cumulative Redeemable Floating Rate First Preference Shares, Series N of the Corporation (the “Series N First Preference Shares”). The holders of Series N First Preference Shares will be entitled to receive floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors, at the rate of the three-month Government of Canada Treasury Bill average yield plus 2.48%, reset on a quarterly basis.

The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. Closing is expected to occur on or about September 19, 2014 but not later than October 24, 2014.

They announced later:

that due to strong investor demand it has agreed to increase the aggregate size of its previously announced bought deal offering of Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M (the “Series M First Preference Shares”) from $300,000,000 to $600,000,000 (the “Offering”). The Offering is being made pursuant to an agreement with a syndicate of underwriters led by Scotiabank and RBC Capital Markets (collectively, the “Underwriters”) who have agreed to purchase 24,000,000 Series M First Preference Shares at a price of $25.00 per share.

The Offering will result in gross proceeds to the Corporation of $600,000,000. There will be no over-allotment option on the Offering. All other terms of the Offering are as set forth in the press release relating to the Offering issued by Fortis earlier today.

That’s a whopper! This issue will join FTS’ other three FixedResets:

And according to Implied Volatility analysis, it is cheap relative to the other FTS issues:

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Update, 2014-9-12: Rated Pfd-2(low) [Review Developing] by DBRS.

Pembina Corporation has announced:

that it has entered into an agreement with a syndicate of underwriters co-led by CIBC and Scotiabank (together, the “Underwriters”) pursuant to which the Underwriters have agreed to purchase from Pembina 6,000,000 cumulative redeemable rate reset class A preferred shares, Series 7 (the “Series 7 Preferred Shares”) at a price of $25.00 per share for distribution to the public.

The holders of Series 7 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.125 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 4.50 per cent per annum, for the initial fixed rate period to but excluding December 1, 2019. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on December 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.94 per cent. The Series 7 Preferred Shares are redeemable by Pembina, at its option, on December 1, 2019 and on December 1 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 7 Preferred Shares will have the right to convert their shares into cumulative redeemable floating rate class A preferred shares, Series 8 (the “Series 8 Preferred Shares”), subject to certain conditions, on December 1, 2019 and on December 1 of every fifth year thereafter. The holders of Series 8 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 2.94 per cent.

Pembina has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2,000,000 Series 7 Preferred Shares at a price of $25.00 per share.

Closing of the offering is expected on September 11, 2014, subject to customary closing conditions.

The proceeds from the offering will be used to help fund a portion of Pembina’s proposed purchase of the Vantage pipeline system and the Saskatchewan Ethane Extraction Plant from Mistral Midstream Inc. and other entities controlled by Riverstone Holdings LLC (the “Transaction”), as well as to fund a portion of the remainder of the Company’s 2014 capital expenditure program and for general corporate purposes. The Transaction is subject to regulatory approvals including approval of the National Energy Board and under the Competition Act (Canada) and the Canada Transportation Act, required consents and other customary closing conditions. Further details about the Transaction are set out in a separate press release from Pembina dated today’s date, and which may be found on Pembina’s SEDAR profile atwww.sedar.com. The closing of the offering of the Series 7 Preferred Shares is not conditional on the closing of the Transaction. If the Transaction does not close, the portion of proceeds to be allocated to the Transaction will be reallocated to fund a portion of the remainder of the Company’s 2014 capital expenditure program, and for general corporate purposes.

The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the Company on February 22, 2013 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 rate reset class A preferred shares, Series 7 (the “Series 7 Preferred Shares”), the size of the offering has been increased to 10 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds will be $250 million.

The acquisition of the Vantage Pipeline System was discussed in the Globe:

Pembina said in a separate news release Tuesday that the Vantage ethane pipeline being acquired from Riverstone Holdings LLC provides long-term, fee-for-service cash flow and strategic access to the expanding North Dakota Bakken play.

“We have watched the development of these assets with great interest as they represent an excellent opportunity to expand our footprint into one of the most promising hydrocarbon plays in North America and, as such, the Transaction is a low-risk, logical step-out for Pembina,” company president and chief executive officer Mike Dilger said.

As part of the Vantage transaction, Pembina is also acquirinig Mistral Midstream Inc.’s interest in the Saskatchewan Ethane Extraction Plant, a development-stage, 60-million-cubic-feet-per-day deep cut gas processing facility, as well as pipeline infrastructure currently under construction.

The plant has a long-term ethane sales agreement and a long-term, fee-for-service processing agreement, Pembina said; the facility is expected to produce about 4,500 barrels per day and will connect into Vantage.

Additional capital expenditures of about $100-million are anticipated before the end of 2015 in order to complete construction of the ethane extraction plant and the associated gathering and delivery infrastructure, Pembina said.

DBRS comments:

DBRS notes today that Pembina Pipeline Corporation (Pembina or the Company; rated BBB with a Stable trend by DBRS) has announced that it has entered into an agreement to acquire the Vantage pipeline system (Vantage) and Mistral Midstream Inc.’s interest in the Saskatchewan Ethane Extraction Plant (SEEP) for total consideration of USD 650 million (the Acquisition). DBRS views that the proposed Acquisition is not expected to have a material impact on Pembina’s credit profile in the short term. However, it could have a modestly positive impact on the business risk profile over the long term, reflecting the geographical diversification benefit and relatively stable cash flow from long-term take-or-pay transportation contracts and fee-for-service processing contracts associated with the Acquisition. The proposed Acquisition is subject to regulatory approvals and other customary closing conditions, including the approval of the Toronto Stock Exchange.
…
Based on DBRS’s view of Pembina’s long-term corporate financing strategy and its Acquisition financing plan, DBRS believes that the impact on the financial risk profile is expected to be neutral. Pembina intends to finance the Acquisition with a mix of equity (40%), preferred shares (20%) and debt (40%). This financing plan should not have a material impact on the current debt leverage, cash flow and interest coverage metrics, which improved in the last 12 months ended June 2014, compared with 2013 and previous years’ metrics due to much stronger EBIT and cash flow and marginally lower net debt. In the long term, Pembina is committed to maintaining its debt-to-capital ratio around the 40% range. Overall, DBRS does not consider the financing of the proposed Acquisition to have a material impact on the Company’s financial risk profile.

This issue will join PPL’s other three FixedResets:

This illustrates an important point about FixedReset analysis with respect to the interactions between Current Rate, Issue Reset Spread and Price. PPL.PR.E will pay 0.5% more than the new issue until its reset date, despite having a roughly identical Issue Reset Spread. Fifty bp more per annum over the five year term comes to about sixty cents; therefore one would expect PPL.PR.E to be priced roughly $0.60 more than the new issue, since the rates after reset (assuming, of course, that they both do get reset) will be almost identical.

The yields to worst, however, are greatly different, since the premium on PPL.PR.E is enough to make the yield-to-call less than the yield-to-perpetuity, even though the projected yields to perpetuity (4.39% for PPL.PR.E when priced at 25.90; 4.41% for the new issue when priced at 25.00) are almost identical.

It will be most interesting to see how they trade relative to each other once the new issue closes.

Update, 2014-9-4: Pfd-3 from DBRS.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 17 (“Series 17 Preferred Shares”). Manulife will issue 10 million Series 17 Preferred Shares priced at $25 per share to raise gross proceeds of $250 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., RBC Capital Markets and TD Securities and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is August 15, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Holders of the Series 17 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 3.90 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending December 19, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.36 per cent.

Holders of Series 17 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 18 (“Series 18 Preferred Shares”), subject to certain conditions, on December 19, 2019 and on December 19 every five years thereafter. Holders of the Series 18 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.36 per cent.

Manulife intends to use the net proceeds from the offering to partially fund the redemption of Manulife’s Non-cumulative Rate Reset Class 1 Shares Series 1 (the “Series 1 Preferred Shares”) on September 19, 2014.

Later, they added:

that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 17 (“Series 17 Preferred Shares”), the size of the offering has been increased to 14 million shares. The gross proceeds of the offering will now be $350 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., RBC Capital Markets and TD Securities and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is August 15, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Manulife intends to use the net proceeds from the offering to fund the redemption of Manulife’s Non-cumulative Rate Reset Class 1 Shares Series 1 (the “Series 1 Preferred Shares”) on September 19, 2014.

This issue is priced in-line with extant issues, according to Implied Volatility theory:

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I continue to be puzzled about why the Implied Volatility for MFC FixedResets is so high.

TransAlta Corporation has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets, CIBC and Scotiabank for distribution to the public 6,000,000 Cumulative Redeemable Rate Reset First Preferred Shares, Series G (the “Series G Shares”). The Series G Shares will be issued at a price of $25.00 per Series G Share, for aggregate gross proceeds of $150 million. Holders of the Series G Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 5.30% annually for the initial period ending September 30, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.80%.

Holders of Series G Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Floating Rate Reset First Preferred Shares, Series H (the “Series H Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every five years thereafter. Holders of the Series H 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 3.80%.

TransAlta Corporation has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 2,000,000 Series G Shares at the same offering price. The Series G Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of TransAlta Corporation dated December 9, 2013. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the offering will be used for general corporate purposes in support of our business, to reduce short term indebtedness and to fund capital investments of the Corporation and its affiliates. The offering is expected to close on or about August 15, 2014.

This issue will join the extant issues:

The issue looks quite expensive according to Implied Volatility Theory, which estimates its fair value at about 24.45:

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About half of this calculated richness is due to today’s tumble in the extant issues – the last bids on 2014-8-5 were 18.87, 22.28 and 24.40, respectively. Plugging those bids into the model results in a Spread of 311bp, Volatility of 19%, a better fit to the curve, and a theoretical price of 24.73 for the new issue.

Equitable Group Inc. has announced:

that it has agreed to issue 2,800,000 Non-cumulative 5-Year Rate Reset Preferred Shares Series 3 (the “Series 3 Preferred Shares”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc. and Scotiabank for distribution to the public. The Series 3 Preferred Shares will be issued at a price of $25.00 per share, for aggregate gross proceeds of $70,000,000. Holders of the Series 3 Preferred Shares will be entitled to receive non-cumulative preferential quarterly fixed dividends yielding 6.35% annually for the initial period ending September 30, 2019. 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 4.78%.

The Company has granted to the underwriters an over-allotment option, exercisable for a period of 30 days following closing of the offering, to purchase up to an additional 200,000 Series 3 Preferred Shares which, if exercised in full, would increase the gross offering size to $75,000,000. The Series 3 Preferred Shares will be offered in all provinces and territories of Canada by way of a supplement to the Company’s existing short form base shelf prospectus dated June 24, 2014.

“Preferred shares have long formed a fundamental part of our Bank’s efficient capital structure and of our strategy of supporting growth with non-dilutive forms of capital,” said Andrew Moor, President and CEO of Equitable Group and its wholly owned subsidiary, Equitable Bank. “This attractive offering will keep our capital position well above most industry benchmarks as we deliver profitable growth across our lines of business.”

Holders of Series 3 Preferred Shares will have the right, at their option, to convert their Series 3 Preferred Shares into Non-cumulative Floating Rate Preferred Shares Series 4 of the Company (the “Series 4 Preferred Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to receive non-cumulative preferential quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 4.78%.

The proceeds of this offering will be used by the Company to acquire Basel III compliant Non-cumulative 5-Year Rate Reset Preferred Shares Series 3 of Equitable Bank (the “Bank”), which will form part of the Bank’s Tier I capital base. The Bank will in turn use the proceeds for corporate purposes and to redeem its existing Series 1 Preferred Shares, subject to the receipt of all necessary regulatory approvals. The Company likewise intends to redeem its currently outstanding Non-cumulative 5-year Rate Reset Preferred Shares Series 1 on September 30, 2014 in accordance with the terms of such shares.

“Equitable’s capital ratios have consistently exceeded minimum regulatory standards as a result of years of disciplined capital allocation,” said Tim Wilson, Chief Financial Officer of Equitable Group and Equitable Bank. “Giving effect to the issuance of Series 3 and the redemption of Series 1, on a pro forma basis our Total and Tier I Capital Ratios would improve by 80 basis points to 17.4% and 14.6% respectively on an all-in basis, based on our reported position at the end of our first quarter.”

The offering is expected to close on or about August 8, 2014. The Company will make an application to list the Series 3 Preferred Shares and Series 4 Preferred Shares on the Toronto Stock Exchange.

It’s kind of an interesting issue, because it’s being issued by the holding company with proceeds being invested in virtually identical private shares of the operating company. The OpCo’s shares will be NVCC-compliant, but the HoldCo’s shares are unregulated and do not have a forced-conversion-to-equity clause; thus, it is possible that the OpCo’s shares could be converted into OpCo common while the HoldCo’s shares still represent a $25 claim on HoldCo. While I’m sure that in such a case that this claim would not be trading at par, it sounds like a good thing, even if all it ever does is make the lawyers rich.

It is also interesting that the coupon of this issue, at 6.35%, is lower than the initial coupon on the issue it is refunding, EQB.PR.A, issued as ETC.PR.A. However, the Issue Reset Spread on the issue is higher, 478bp as opposed to 453bp. How times change!

This issue is unrated and will not be tracked by HIMIPref™. This is not because I worship the Credit Rating Agencies and am unable to do anything without them; it is because I feel that a public announcement by the CRAs of imminent downgrades do an admirable job of concentrating the minds of management and the directors on fixing the problem. Such announcements by Hymas Investment Management Inc. or Joe Blogger do not carry the same weight.

Update, 2016-3-9: This trades as EQB.PR.C

The Toronto-Dominion Bank has announced:

a domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (the “Series 3 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 3 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 3 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 3 Shares will yield 3.80% annually, payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending July 31, 2019. Thereafter, the dividend rate will reset every five years at a level of 2.27% over the then five-year Government of Canada bond yield.

Subject to regulatory approval, on July 31, 2019 and on July 31 every 5 years thereafter, TD may redeem the Series 3 Shares, in whole or in part, at $25.00 per share. Subject to TD’s right of redemption, holders of the Series 3 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”), subject to certain conditions, on July 31, 2019, and on July 31 every five years thereafter. Holders of the Series 4 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 2.27%.

The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

Later, they added:

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 3 (the “Series 3 Shares”), the size of the offering has been increased to 20 million Series 3 Shares. The gross proceeds of the offering will now be $500 million. The offering will be underwritten by a group of underwriters led by TD Securities Inc.

The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

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It is difficult to come to any conclusions regarding the Implied Volatility. The two issues with the highest Issue Reset Spreads, TD.PR.I and TD.PR.K, have been called for redemption and otherwise the issues available for calculation are not well distributed – the low-spread issues are not NVCC-compliant, while the higher-spread issues are.

Bank of Montreal has announced:

a Basel III-compliant domestic public offering of $300 million of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 31 (the “Preferred Shares Series 31”). The offering will be underwritten on a bought-deal basis by a syndicate of underwriters led by BMO Capital Markets.

The Preferred Shares Series 31 will be issued to the public at a price of $25.00 per share. Holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending November 25, 2019, as and when declared by the board of directors of the Bank, payable in the amount of $0.2375 per share, to yield 3.80 per cent annually.

Subject to regulatory approval, on or after November 25, 2019, the Bank may redeem the Preferred Shares Series 31 in whole or in part at par. On November 25, 2019, the dividend rate will reset and will reset thereafter every five years to be equal to the 5-Year Government of Canada Bond Yield plus 2.22 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 31 into an equal number of Non-Cumulative Floating Rate Class B Preferred Shares Series 32 (“Preferred Shares Series 32”) on November 25, 2019, and on November 25 of every fifth year thereafter. Holders of the Preferred Shares Series 32 will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the board of directors of the Bank, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.22 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 32 into an equal number of Preferred Shares Series 31 on November 25, 2024, and on November 25 of every fifth year thereafter.

The anticipated closing date is July 30, 2014. The net proceeds from the offering will be used by the Bank for general corporate purposes.

The Implied Volatility calculation for BMO FixedResets is very interesting – it appears that the slope of the three NVCC-compliant issues is much less than the 40% calculation that is obtained when all issues, including those which are not NVCC-compliant and therefore virtually certain to be called on one of the next two possible dates – are thrown into the mix.

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Of course, the range of Issue Reset Spreads for the NVCC compliant issues is very small, and the issue price has been used for the new issue calculations, so one cannot draw many conclusions just yet, but … we will see!

Holy Smokes, Enbridge just keeps pounding them out!

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell ten million Cumulative Redeemable Preference Shares, Series 13 (the “Series 13 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on July 17, 2014.

The holders of Series 13 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding June 1, 2020. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on June 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.66 per cent. The Series 13 Preferred Shares are redeemable by Enbridge, at its option, on June 1, 2020 and on June 1 of every fifth year thereafter.

The holders of Series 13 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 14 (the “Series 14 Preferred Shares”), subject to certain conditions, on June 1, 2020 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 Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.66 per cent.

Enbridge 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 offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by CIBC World Markets, RBC Capital Markets, TD Securities, and Scotiabank.

That’s a nice long first coupon – there may be some dividend capture possibilities in November!

Later, they announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 13 (the “Series 13 Preferred Shares”), the size of the offering has been increased to 14 million Series 13 Preferred Shares. The aggregate gross proceeds will be C$350 million. Closing of the offering is expected on July 17, 2014.

Update, 2014-7-11: Rated Pfd-2(low) [Stable] by DBRS.

AltaGas Ltd. has announced:

that it will issue 6,000,000 Cumulative Redeemable Rate Reset Preferred Shares, Series G (the “Series G Preferred Shares”), at a price of $25.00 per Series G Preferred Share (“the Offering”) for aggregate gross proceeds of $150 million on a bought deal basis. The Series G Preferred Shares will be offered to the public through a syndicate of underwriters co-led by RBC Capital Markets, Scotiabank and TD Securities Inc.

Holders of the Series G Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend for the initial period ending on but excluding September 30, 2019 (the “Initial Period”) at an annual rate of 4.75%, 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 September 30, 2014 and shall be $0.2896 per Series G Preferred Share. The dividend rate will reset on September 30, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.06%. The Series G Preferred Shares are redeemable by AltaGas, at its option, on September 30, 2019 and on September 30 of every fifth year thereafter.

Holders of Series G Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Floating Rate Preferred Shares, Series H (the “Series H Preferred Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every fifth year thereafter. Holders of Series H 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 3.06%, as and when declared by the Board of Directors of AltaGas.

The Offering is expected to close on or about July 3, 2014. Net proceeds will be used to reduce outstanding indebtedness and for general corporate purposes. AltaGas has granted to the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing of the Offering, to purchase up to an additional 2,000,000 Series G Preferred Shares at a price of $25.00 per share.

The Series G 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 August 23, 2013. The Offering is only made by way of a prospectus. The prospectus contains important detailed information about the securities being offered. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

This looks like it is being issued with some concession to the market – ALA.PR.E, which is a FixedReset 5.00%+317, closed today at 25.46-55, 2×21, on heavy volume.