PrefBlog

Royal Bank of Canada has announced (on October 25):

a domestic public offering of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series BO.

Royal Bank of Canada will issue 12 million Preferred Shares Series BO priced at $25 per share to raise gross proceeds of $300 million. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 2 million Preferred Shares Series BO at the same offering price.

The Preferred Shares Series BO will yield 4.80 per cent annually, payable quarterly, as and when declared by the Board of Directors of Royal Bank of Canada, for the initial period ending February 24, 2024. Thereafter, the dividend rate will reset every five years at a rate equal to 2.38 per cent over the 5-year Government of Canada bond yield.

Subject to regulatory approval, on or after February 24, 2024, the bank may redeem the Preferred Shares Series BO in whole or in part at par. Holders of Preferred Shares Series BO 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 BP on February 24, 2024 and on February 24 every five years thereafter.

Holders of the Preferred Shares Series BP will be entitled to receive a non-cumulative quarterly floating dividend, as and when declared by the Board of Directors of Royal Bank of Canada, at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 2.38 per cent. Holders of Preferred Shares Series BP will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series BO on February 24, 2029 and on February 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is November 2, 2018.

We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction 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 BO, 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 led by RBC Capital Markets. The expected closing date is November 2, 2018.

We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes.

Thanks to Assiduous Reader dodoi for pointing out I was late posting this announcement.

The new issue is quite expensive according to Implied Volatility Analysis:

Click for Big

According to this analysis, the fair value of the new issue on October 26 is 23.77.

The ludicrously high figure of Implied Volatility is something I take to mean that the underlying assumption of the Black-Scholes model, that of no directionality of prices, is not accepted by the market; the market seems to be taking the view that since things seem rosy now, they will always be rosy and everything will trade near par in the future.

I balk at ascribing a 100% probability to the ‘all issues will be called, or at least exhibit price stability’ hypothesis. There may still be a few old geezers amongst the Assiduous Readers of this blog who can still (faintly) remember the Great Bear Market of 2014-16, in which quite a few similar assumptions made earlier turned out to be slightly inaccurate. The extra cushion implied by an Issue Reset Spread that is well over the market spread is worth something, even if nothing gets called. Or, to put it another way, one can buy a whole lot of downside protection for very little extra money, relative to this issue.

The Bank of Nova Scotia has announced:

a domestic public offering of Non-cumulative 5-Year Rate Reset Preferred Shares Series 40 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 40”).

Scotiabank has agreed to sell 10 million of Preferred Shares Series 40 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 40 at the same offering price.

Scotiabank will issue Preferred Shares Series 40 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, 2024 at an annual rate of $1.2125 per share to yield 4.85% per cent annually.

On January 27, 2024 and on January 27 every five years thereafter, Scotiabank may, at its option, subject to regulatory approval, redeem all or any number of the then outstanding Preferred Shares Series 40 at a redemption price of $25 per share. Thereafter, the dividend rate will reset every five years at a rate equal to 2.43% over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series 40 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 41 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 41”) of Scotiabank on January 27, 2024 and on January 27 every five years thereafter.

Holders of the Preferred Shares Series 41 will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 2.43%, as and when declared by the Board of Directors of Scotiabank. Holders of Preferred Shares Series 41 will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series 40 on January 27, 2029 and on January 27 every five years thereafter.

Closing is expected to occur on October 12, 2018. Scotiabank will make an application to list the Preferred Shares Series 40 as of the closing date on the Toronto Stock Exchange.

Net proceeds of the offering will be used by Scotiabank to fund a portion of the redemption of Non-cumulative 5-Year Rate Reset Preferred Shares Series 20 and Non-cumulative Floating Rate Preferred Shares Series 21 announced on September 25, 2018.

The new issue is quite expensive according to Implied Volatility Analysis:

Click for Big

According to this analysis, the fair value of the new issue on October 2 is 23.43. However, it should be noted that the analysis is forced to do some major extrapolation, as the only other BNS FixedReset NVCC-compliant issues are BNS.PR.E, BNS.PR.G and BNS.PR.H, all of which have Issue Reset Spreads in excess of 400bp.

The ludicrously high figure of Implied Volatility is something I take to mean that the underlying assumption of the Black-Scholes model, that of no directionality of prices, is not accepted by the market; the market seems to be taking the view that since things seem rosy now, they will always be rosy and everything will trade near par in the future.

I balk at ascribing a 100% probability to the ‘all issues will be called, or at least exhibit price stability’ hypothesis. There may still be a few old geezers amongst the Assiduous Readers of this blog who can still (faintly) remember the Great Bear Market of 2014-16, in which quite a few similar assumptions made earlier turned out to be slightly inaccurate. The extra cushion implied by an Issue Reset Spread that is well over the market spread is worth something, even if nothing gets called. Or, to put it another way, one can buy a whole lot of downside protection for very little extra money, relative to this issue.

Bank of Montreal has announced:

a domestic public offering of $300 million of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 44 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares Series 44”). The offering will be underwritten on a bought-deal basis by a syndicate of underwriters led by BMO Capital Markets. The Bank has granted to the underwriters an option to purchase up to an additional $100 million of the Preferred Shares Series 44 exercisable at any time up to 48 hours before closing.

The Preferred Shares Series 44 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 to November 25, 2023, as and when declared by the Board of Directors of the Bank, payable in the amount of $0.303125 per share, to yield 4.85 per cent annually.

Subject to regulatory approval, on November 25, 2023 and on November 25 of every fifth year thereafter, the Bank may redeem the Preferred Shares Series 44 in whole or in part at par. On November 25, 2023, 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 2.68 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 44 into an equal number of Non-Cumulative Floating Rate Class B Preferred Shares Series 45 (Non-Viability Contingent Capital (NVCC)) (“Preferred Shares Series 45”) on November 25, 2023, and on November 25 of every fifth year thereafter. Holders of the Preferred Shares Series 45 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 2.68 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 45 into an equal number of Preferred Shares Series 44 on November 25, 2028, and on November 25 of every fifth year thereafter.

The anticipated closing date is September 17, 2018. The net proceeds from the offering will be used by the Bank for general banking purposes.

The new issue is quite expensive according to Implied Volatility Analysis:

Click for Big

According to this analysis, the fair value of the new issue on September 6 is 24.22.

The ludicrously high figure of Implied Volatility is something I take to mean that the underlying assumption of the Black-Scholes model, that of no directionality of prices, is not accepted by the market; the market seems to be taking the view that since things seem rosy now, they will always be rosy and everything will trade near par in the future.

I balk at ascribing a 100% probability to the ‘all issues will be called, or at least exhibit price stability’ hypothesis. There may still be a few old geezers amongst the Assiduous Readers of this blog who can still (faintly) remember the Great Bear Market of 2014-16, in which quite a few similar assumptions made earlier turned out to be slightly inaccurate. The extra cushion implied by an Issue Reset Spread that is well over the market spread is worth something, even if nothing gets called.

Or, to put it another way, one can buy a whole lot of downside protection for very little extra money, relative to this issue. For instance, BMO.PR.D, FixedReset, 4.40%+317, is bid at 25.13 (theoretical fair value of 25.33, according to the above analysis, which ignores the interim dividend shortfall). You’re giving up about $0.10 p.a. in dividends until it resets 2022-8-25, sure, but you’re getting a significant amount of protection in the event of a market downturn, and more dividend afterwards. Is it worth it? Well, that will depend a lot on your aversion to loss … I’m just saying that buying the same amount of protection costs more in most other series of FixedResets.

As noted by Assiduous Reader FletcherLynd, 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 20 (the “Series 20 Shares”).

TD has entered into an agreement with a group of underwriters led by TD Securities Inc. to issue, on a bought deal basis, 10 million Series 20 Shares at a price of $25.00 per share to raise gross proceeds of $250 million. TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 20 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 20 Shares will yield 4.75% annually, with dividends payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending October 31, 2023. Thereafter, the dividend rate will reset every five years at a level of 2.59% over the then five-year Government of Canada bond yield.

Subject to regulatory approval, on October 31, 2023 and on October 31 every 5 years thereafter, TD may redeem the Series 20 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 20 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares (NVCC), Series 21 (the “Series 21 Shares”), on October 31, 2023, and on October 31 every five years thereafter. Holders of the Series 21 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 2.59%.

The expected closing date is September 13, 2018. TD will make an application to list the Series 20 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 20 (the “Series 20 Shares”), the size of the offering has been increased to 16 million Series 20 Shares. The gross proceeds of the offering will now be $400 million. The offering will be underwritten by a group of underwriters led by TD Securities Inc.

The expected closing date is September 13, 2018. TD will make an application to list the Series 20 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

The new issue is quite expensive according to Implied Volatility Analysis:

Click for Big

According to this analysis, the fair value of the new issue on September 4 is 24.38.

The ludicrously high figure of Implied Volatility is something I take to mean that the underlying assumption of the Black-Scholes model, that of no directionality of prices, is not accepted by the market; the market seems to be taking the view that since things seem rosy now, they will always be rosy and everything will trade near par in the future.

I balk at ascribing a 100% probability to the ‘all issues will be called, or at least exhibit price stability’ hypothesis. There may still be a few old geezers amongst the Assiduous Readers of this blog who can still (faintly) remember the Great Bear Market of 2014-16, in which quite a few similar assumptions made earlier turned out to be slightly inaccurate. The extra cushion implied by an Issue Reset Spread that is well over the market spread is worth something, even if nothing gets called.

Or, to put it another way, one can buy a whole lot of downside protection for very little extra money, relative to this issue. For instance, TD.PF.E, FixedReset, 3.70%+287, is bid at 24.92 (theoretical fair value of 25.06, according to the above analysis, which ignores the interim dividend shortfall). You’re giving up about $0.25 p.a. in dividends until it resets 2020-10-31, sure, but you’re getting a significant amount of protection in the event of a market downturn, and a bit more dividend afterwards. Is it worth it? Well, that will depend a lot on your aversion to loss … I’m just saying that buying the same amount of protection costs more in most other series of FixedResets.

National Bank of Canada has announced (on May 31):

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 42 (non-viability contingent capital (NVCC)) (the “Series 42 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 42 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 42 Preferred Shares will yield 4.95% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending November 15, 2023. The first of such dividends, if declared, shall be payable on November 15, 2018. Thereafter, the dividend rate will reset every five years at a level of 277 basis points over the then 5-year Government of Canada bond yield. Subject to regulatory approval, National Bank may redeem the Series 42 Preferred Shares in whole or in part at par on November 15, 2023 and on November 15 every five years thereafter.

Holders of the Series 42 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares series 43 (non-viability contingent capital (NVCC)) (the “Series 43 Preferred Shares”), subject to certain conditions, on November 15, 2023, and on November 15 every five years thereafter. Holders of the Series 43 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 277 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 11, 2018. National Bank intends to file in Canada a prospectus supplement to its November 21, 2016 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 42 (non-viability contingent capital (NVCC)) (the “Series 42 Preferred Shares”), the underwriters have exercised their option to purchase an additional 2,000,000 Series 42 Preferred Shares. The size of the offering has been increased to 12 million shares for gross proceeds of $300 million. The offering will be underwritten by a syndicate led by National Bank Financial Inc. The expected closing date is on or about June 11, 2018.

The new issue is ridiculously expensive according to Implied Volatility Analysis:

Click for Big

According to this analysis, the fair value of the new issue on June 1 is 23.91.

Global Dividend Growth Split Corp, which commenced marketing in late April has released its final prospectus on SEDAR (as usual, the Canadian Securities Administrators will not allow me to link to this public document. Search for “Global Dividend Growth Split Corp. May 23 2018 22:26:01 ET Final long form prospectus – English PDF 832 K”)”):

The investment objectives for the Preferred Shares are to provide their holders with fixed cumulative preferential quarterly cash
distributions and to return the original issue price of $10.00 to holders on June 30, 2021 (the ‘‘Maturity Date’’), subject to extension for successive terms of up to five years as determined by the board of directors of the Company. See ‘‘Investment Objectives’’. The quarterly cash distribution will be $0.1250 per Preferred Share ($0.50 per annum or 5.0% per annum) on the issue price of $10.00 per Preferred Share until June 30, 2021. See ‘‘Distribution Policy’’.
…
Closing of the Offering is expected to occur on or about June 15, 2018, but no later than 90 days after a receipt for this prospectus has been issued (the ‘‘Closing Date’’).
…
No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) in respect of a cash distribution by the Company, the NAV per Unit would be less than $15.00.
…
Assuming that the gross proceeds of the Offering are $75 million and fees and expenses are as presented in this prospectus, in order to achieve the Company’s targeted annual distributions for the Class A Shares and the Preferred Shares while maintaining a stable NAV per Unit, the Company will be required to generate an average annual total return (comprised of net realized capital gains, option premiums and dividends) on the Portfolio of approximately 9.2%. The Portfolio currently generates dividend income of 3.2% per annum net of withholding taxes and would be required to generate an additional 6.1% per annum from other sources to return and distribute such amounts.
…
The Preferred Shares will be redeemed by the Company on the Maturity Date. The redemption price payable by the Company for a Preferred Share on that date will be equal to the lesser of (i) $10.00 plus any accrued and unpaid distributions thereon and (ii) the NAV of the Company on that date divided by the total number of Preferred Shares then outstanding.
…
Holders of Preferred Shares whose Preferred Shares are surrendered for [monthly] retraction will be entitled to receive a retraction price per Preferred Share (the “Preferred Share Retraction Price”) equal to 96% of the lesser of (i) the Net Asset Value per Unit determined as of such Retraction Date, less the cost to the Company of the purchase of a Class A Share for cancellation; and (ii) $10.00.

There is also a press release (link address adjusted 2018-6-15).

Those familiar with Split Share Credit Quality will recognize that the computed return of 9.2% required to meet the portfolio objectives is highly optimistic. The significant cash drag on the portfolio introduces material sequence of return risk and the long-term results will be highly dependent upon the variation of returns as well as their time-weighted average value.

And some will remember my views on Split Share Capital Units … although some will point out that special circumstances can alter cases.

Middlefield Group has announced:

on behalf of E Split Corp. (the “Company”), is pleased to announce that it has filed a preliminary prospectus in relation to an initial public offering of preferred shares and class A shares.

The Company will invest in common shares of Enbridge Inc., a North American oil and gas pipeline, gas processing and natural gas distribution company.

The Company’s investment objectives for the:

Class A shares are to provide holders with:
(i) non-cumulative monthly cash distributions; and
(ii) the opportunity for capital appreciation through exposure to the portfolio

Preferred shares are to:
(i) provide holders with fixed cumulative preferential quarterly cash distributions; and
(ii) return the original issue price of $10.00 to holders upon maturity.

The initial target distribution yield for the class A shares is 8% per annum based on the original subscription price (or $0.10 per month or $1.20 per annum).

The initial target distribution yield for the preferred shares is 5.25% per annum based on the original subscription price (or $0.13125 per quarter or $0.525 per annum).

Middlefield Capital Corporation, the advisor, will provide investment management advice to the Company.

Prospective purchasers investing in E Split Corp. have the option of paying for: (i) preferred shares or class A shares in cash; or (ii) units comprised of one preferred share and one class A share or class A shares by exchanging securities of issuers listed in the preliminary prospectus. Prospective purchasers under the exchange option are required to deposit their exchange eligible securities prior to 5:00 p.m. (Toronto time) on June 8, 2018, in the manner described in the preliminary prospectus.

The syndicate of agents is being co-led by CIBC Capital Markets and RBC Capital Markets, and includes BMO Capital Markets, Scotiabank, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., National Bank Financial Inc., Raymond James Ltd., Industrial Alliance Securities, Manulife Securities Incorporated, Desjardins Securities Inc., Mackie Research Capital Corporation, and Middlefield Capital Corporation.

A preliminary prospectus containing important information relating to these securities has been filed with securities commissions or similar authorities in each of the provinces of Canada. The preliminary prospectus is still subject to completion or amendment. Copies of the preliminary prospectus may be obtained from any of the agents named above using the contact information for such agent. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.

DBRS provisionally rates the issue Pfd-3(high):

DBRS Limited (DBRS) assigned a provisional rating of Pfd-3 (high) to the Preferred Shares to be issued by E Split Corp. (the Company), which will be managed by Middlefield Limited (the Manager). Middlefield Capital Corporation will provide investment management advice to the Company. The Company will issue the Preferred Shares and Class A Shares at an issue price of $10.00 per Preferred Share and $15.00 per Class A Share. The Preferred Shares and Class A Shares will be issued on the basis that an equal number of Preferred Shares and Class A Shares will be outstanding at all times. Thus one Preferred Share and one Class A Share will comprise one unit (the Unit). The Maturity Date will be on June 30, 2023. The term of the Company may be extended beyond the redemption date for additional terms of five years each as determined by the Company’s board of directors.

The Preferred Shares will be entitled to fixed quarterly cumulative preferential cash distributions of $0.13125 (or $0.525 annually) per share, representing a 5.25% per-annum return on the issue price of $10.00. Holders of the Class A Shares will receive regular monthly non-cumulative distributions targeted to be $0.10 (or $1.20 annually) per Class A Share to yield 8.00% per annum on the issue price of $15.00. No distributions will be paid on the Class A Shares if (1) the distributions payable on the Preferred Shares are in arrears or (2) in respect of a cash distribution by the Company, the net asset value (NAV) per Unit is less than $15.00.

Net proceeds from the offering will be used to invest in a portfolio comprising common shares of Enbridge Inc. (rated BBB (high) with a Stable trend by DBRS; the Portfolio) in accordance with the Company’s investment objectives, strategy and restrictions. Up to 10% of the Portfolio may be invested in securities of any other issuer as determined by the Manager. The Company will not for a period of more than 30 consecutive days have less than 90% of the value of the total assets of the Company (excluding cash and cash equivalents) comprising common shares of Enbridge Inc.

Middlefield is best known for its stealth redemption of STW.PR.A at the peak of the Credit Crunch.

Intact Financial Corporation has announced (although not yet on their website):

that it has entered into an agreement with a syndicate of underwriters led by TD Securities Inc. together with BMO Capital Markets, CIBC Capital Markets and National Bank Financial pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 8,000,000 Non-Cumulative Rate Reset Class A Shares, Series 7 (the “Series 7 Preferred Shares”) from Intact for sale to the public at a price of $25.00 per Series 7 Preferred Share, representing aggregate gross proceeds of $200 million.

Intact has granted the underwriters an underwriters’ option to purchase up to an additional 2,000,000 Series 7 Preferred Shares at the same offering price exercisable in whole or in part, at any time before 8:30am on the date that is two (2) business days prior to closing. Should the underwriters’ option be fully exercised, the total gross proceeds of the Series 7 Preferred Shares offering will be $250 million. The net proceeds will be used for general corporate purposes.

The holders of Series 7 Preferred Shares will be entitled to receive fixed non-cumulative preferential cash dividends, as and when declared by the Board of Directors of Intact, on a quarterly basis (with the first quarterly dividend, covering the period from issuance to September 30, 2018, to be paid on September 28, 2018), for the initial fixed rate period ending on June 30, 2023, based on an annual rate of 4.90%. The dividend rate will be reset on June 30, 2023 and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus 2.55%.

Holders of the Series 7 Preferred Shares will have the right, at their option, to convert their Series 7 Preferred Shares into Non-cumulative Floating Rate Class A Shares, Series 8 (the “Series 8 Preferred Shares”), subject to certain conditions, on June 30, 2023 and on June 30 every five years thereafter. The holders of Series 8 Preferred Shares will be entitled to receive floating rate non-cumulative preferential cash dividends, as and when declared by the Board of Directors of Intact, at a rate equal to the 90-day Canadian Treasury Bill rate plus 2.55%.

DBRS Limited has assigned a provisional rating of Pfd-2 for the Series 7 Preferred Shares.

The Series 7 Preferred Shares will be offered for sale to the public in each of the provinces and territories of Canada pursuant to a prospectus supplement to be filed with the Canadian securities regulatory authorities. The offering is scheduled to close on or about May 29, 2018.

As this issue is not NVCC compliant, it will be analyzed as having a Deemed Retraction. Note, however, that this carries more uncertainty than it does with most other insurers because Intact is a P&C insurer, not a life company.

This issue was announced almost simultaneously with a new issue from Emera Incorporated, a FixedReset 4.90%+254M490. Barry Critchley remarks:

While the two deals shared similar terms, investors treated them differently. By early afternoon only Intact’s order was completely filled. But sources indicated investors could still post expressions of interest for the Emera offering. On TD Investing’s website, the offering is indicated as open.