Archive for the ‘Better Communication, Please!’ Category

IAF.PR.B To Be Redeemed, Maybe

Monday, June 17th, 2024

iA Financial Corporation Inc. has announced:

that it is considering an offering of Limited Recourse Capital Notes (the “Notes”) under its short form base shelf prospectus dated April 25, 2024 (the “Offering”).

Industrial Alliance Insurance and Financial Services Inc. (TSX: IAF) (“Industrial Alliance”), a subsidiary of the Company, announced that if the Offering is completed it intends to redeem its issued and outstanding Non-Cumulative Class A Preferred Shares Series B (the “Preferred Shares”) pursuant to their terms.

There is no certainty that the Company will ultimately complete the Offering being considered or as to the timing or terms on which such an offering might be completed and no certainty that Industrial Alliance will redeem the Preferred Shares.

The affected issue is IAF.PR.B. This issue closed the day at a price of 24.92, up 17.22% from Friday’s close of 21.26, on volume of 91,010 – large by any non-new-issue standards, and huge by the standards of this sleepy little preferred.

I’m pretty mad about this. I presume that word got out about the potential redemption of IAF.PR.B from the ‘intended use of proceeds’ section of whatever pre-marketting material’s going around, assuming that nobody who was approached had already figured out that IAF.PR.B was a prime candidate for a redemption of this nature. It is, after all, one of the last (if not the last) preferred shares issued by an actual insurer rather than an insurance holding company.

So why didn’t Industrial Alliance get a trading halt on the issue prior to all this? Other companies have been scrupulous in announcing their intention to try to refinance a preferred issue on the day before going to market. And, given that Industrial Alliance did not do this, why didn’t CIRO halt trading ‘pending an announcement from the company’? The price had gained about $1 from the opening by about 1pm; after that it really took off. It was something like 45-60 minutes before the announcement finally appeared on the company website.

How’s this from CIRO’s/IIROC’s website?

If IIROC staff notice erratic price moves in stocks, they will contact the issuer to see if it has information to explain the movement. Staff may ask the company to issue a news release if they believe that material information is leaking into the market or if they believe rumours are affecting the stock price.

Bad work, Industrial Alliance! Bad work, CIRO!

Update, 2024-6-18 This just in, although it is dated 2024-6-17 … must have been very late last night or not posted until this morning … iA Financial Corporation Inc. has announced:

that it intends to issue $350 million aggregate principal amount of 6.921% Limited Recourse Capital Notes Series 2024-1 (Subordinated Indebtedness) (the “Notes”) due September 30, 2084 (the “Offering”).

The Offering is expected to close on or about June 25, 2024. The Company intends to use the net proceeds from the sale of the Notes for general corporate purposes, which may include investments in subsidiaries and repayment of indebtedness.

The Notes will mature on September 30, 2084. Interest on the Notes at the rate of 6.921% per annum will be payable in semi-annual installments in arrears on March 31 and September 30 in each year, commencing on September 30, 2024 and continuing until September 30, 2029. Starting on September 30, 2029 and on every fifth anniversary of such date thereafter until September 30, 2079 (each such date an “Interest Reset Date”), the interest rate on the Notes will be reset at an interest rate per annum equal to the prevailing 5-year Government of Canada Yield on the business day prior to such Interest Reset Date, plus 3.600%.

In connection with the issuance of the Notes, the Company will issue 350,000 Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series B (the “Series B Shares”). These shares will be held by Computershare Trust Company of Canada, as trustee of iA Financial Corporation LRCN Trust (the “Limited Recourse Trust”). In the event of a non-payment of interest or of the principal amount on the Notes when due, the recourse of each holder of Notes shall be limited to that holder’s pro rata share of the assets of the Limited Recourse Trust, which assets will consist of the Series B Shares, except in certain limited circumstances.

Subject to the prior approval of the Autorité des marchés financiers, the Company may redeem the Notes during the period from August 31 to and including September 30, commencing in 2029 and every five years thereafter, in whole or in part, on not less than 10 days’ and not more than 60 days’ prior written notice from the Company, at a redemption price which is equal to the aggregate of the principal amount of the Notes to be redeemed and any accrued and unpaid interest on such Notes up to, but excluding, the date of the redemption. The Offering is being done on a best efforts agency basis by a syndicate of agents co-led by CIBC Capital Markets, National Bank Financial Markets and RBC Capital Markets. The Notes will be offered in each of the provinces of Canada under a shelf prospectus supplement (the “Prospectus Supplement”) to the Company’s short form base shelf prospectus dated April 25, 2024 (the “Shelf Prospectus”).

Access to the Prospectus Supplement, the Shelf Prospectus and any amendments to the documents is provided in accordance with securities legislation relating to procedures for providing access to a shelf prospectus supplement, a base shelf prospectus and any amendment to the documents. The Shelf Prospectus is, and the Prospectus Supplement will be (within two business days), accessible on SEDAR+ at

An electronic or paper copy of the Prospectus Supplement, the Shelf Prospectus and any amendment to the documents may be obtained, without charge, from CIBC Capital Markets by contacting, from National Bank Financial Inc. by contacting or RBC Dominion Securities Inc. by contacting, by providing the contact with an email address or address, as applicable.

FTS.PR.K To Reset To 5.469%

Thursday, February 1st, 2024

Fortis Investor Relations has advised:

Good evening,

Thank you for contacting Investor Relations at Fortis Inc.

This notice went out through our CDS yesterday, January 31st, for distribution.

The new rate will be $0.3418125 per Series K Share, payable quarterly on the first day of March, June, September and December of each year during the five-year period from and including March 1, 2024 to but excluding March 1, 2029; and payable if, as and when declared by the board of directors.

As a reminder, holders of Series K pref shares have until February 15, 2024 to provide notice of their election to convert their Series K shares to Series L shares.

Please let us know if you have any additional questions.

Investor Relations

The new rate implies a GOC-5 rate of 3.419%, which is consistent with the PPL.PR.C reset.

FTS.PR.K was issued as a FixedReset, 4.00%+205, that commenced trading 2013-7-13 after being announced 2013-7-9. It reset to 3.929% effective 2019-3-1, after some confusion. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedResets (Discount) subindex on credit concerns. and has been assigned to the FixedReset (Discount) subindex since its upgrade to Pfd-2(low) by DBRS.

The little sweethearts believe that informing CDS is good enough.

Update, 2024-2-2: I have received the following communication from FTS Investor Relations, after chiming in on an investor complaint about their secrecy:

Good morning [REDACTED],

Thank you for contacting Investor Relations at Fortis Inc.

You can find the rate reset information on our website under Investor Relation > Preference Shares. Below is the direct link to the notice in question that is dated January 31st.

Notice for Series K Rate Resets

Please let us know if you have any further questions. We appreciate your feedback and will take it into consideration going forward.


Investor Relations

FTS.PR.H To Reset At 1.835%

Friday, May 8th, 2020

Fortis Inc. has announced (although only on its share information page, not as a press release because these people really are useless):

On June 1, 2020, the quarterly dividend rate to be paid on each Series H Preference share will decrease to $0.11469 from $0.15625, translating into a decrease in the annual dividend rate per share to $0.45876 from $0.6250, due to the reset of the annual dividend on June 1, 2020, under the dividend rate reset provisions applicable to this series.

FTS.PR.H was issued a FixedReset, 4.25%+145, that commenced trading 2010-1-26 after being announced 2010-1-11. In 2015 it reset to 2.50% amid great secrecy as they prefer to maintain selective disclosure through the old boys’ club.

AZP.PR.B / AZP.PR.C : Net Conversion of 12% to FixedResets

Friday, January 3rd, 2020

AZP.PR.B used to be CZP.PR.B, which used to be EPP.PR.B, and throughout these changes was a FixedReset, 7.00%+418, which commenced trading 2009-11-2 after being announced 2009-10-13. You can’t tell your players without a programme! Notice of extension was provided in November, 2014, and it reset to 5.57% effective 2014-12-31. I recommended in favour of conversion and the conversion rate was 42%. The company announced the extension to 2024 on 2019-11-14. An erroneous announcement of a reset to 5.67% was announced 2019-12-2 but it was later announced that AZP.PR.B will reset at 5.739% effective January 1, 2020.

AZP.PR.C resulted from the partial conversion of AZP.PR.B and commenced trading 2014-12-31.

Atlantic Power can’t be bothered to issue a press release or otherwise indicate on their website just what the results of the conversion option were (just like 2014), but there is information available on TMXMoney, maybe.

According to the TMX Money page for AZP.PR.C (the FloatingReset), there are 1,077,391 shares outstanding (down from 1,661,906). There are reporting 2,504,131 AZP.PR.B outstanding (up from 2,338,094).

In its 2018 Annual Financial Statements (inconveniently available via SEDAR with a search for “Atlantic ower Corporation Feb 28 2019 18:10:49 ET Audited annual financial statements – English PDF 2381 K”, since neither the company nor the regulators want you reading this stuff – who do you think you are?) the company states:

We also purchased and cancelled 5,000 and 164,790 of the Series 2 and 3 Shares at Cdn$17.99 and Cdn$17.89 per share for Cdn$0.1 million and Cdn$2.9 million, respectively for a total cost of $8.0 million. A $7.9 million gain on the redemption was recorded as a component of income attributable to preferred shares of a subsidiary company in the year ended December 31, 2018. From December 31, 2018 through February 27, 2019, we purchased the maximum limit of 427,500 shares of Series 1 Preferred Shares, 27,777 of Series 2 Preferred Shares and the maximum limit of 148,311 Series 3 Preferred Shares at a total cost of Cdn$9.2 million

… so obviously the company knows a bargain when it sees one! If only they were more prolific with their press releases!

So the 2014-12-31 proportion of AZP.PR.B was 58% and the 2019-12-31 proportion is 70%. So call it a net conversion to FixedResets of 12%.

So that’s a conversion rate of about 42%. In my post just before the decision deadline, I recommended conversion.

Fortis Tight-Lipped Regarding Apparent FTS.PR.K Reset Rate Discrepancy

Friday, March 8th, 2019

In the post FTS.PR.K : No Conversion to FloatingReset, I noted:

My eMail of inquiry – sent on three successive days – also included the question:

The 3.925% rate for FTS.PR.K implies that the five-year Canada rate, as defined in the prospectus, was 1.875%, whereas your competitors’ calculations implied that this rate was 1.879%. For greater certainty, please confirm the exact date and time for which you obtained the relevant rate from Bloomberg.

Fortis Investor Relations tells me they’ll be getting back to me.

This question was triggered by the earlier observation:

It is of interest to note that the Government of Canada 5-Year yield implied by this rate is 1.875%, whereas the rates of the resets for PPL.PR.C, ENB.PR.P and ENB.PR.J each imply a rate of 1.879%. As far as I can tell, the methodology for getting each of the four rates is identical and specified to be at the same time on the same day. Once Fortis has published the rate officially, I’ll ask them about it. I don’t think it’s just a rounding difference – from the prospectus:

“Annual Fixed Dividend Rate” means, for any Subsequent Fixed Rate Period, the rate of interest (expressed as a percentage rounded to the nearest one hundred-thousandth of one percent (with 0.000005% being rounded up)) equal to the sum of the Government of Canada Bond Yield on the applicable Fixed Rate Calculation Date plus 2.05%.

All of this followed their very unusual selective disclosure of the reset rate to their friends in the brokerage industry.

So on the afternoon of March 6, having heard nothing from them in a week, I sent the following eMail to Fortis Investor Relations:

Have you yet been able to obtain the requested information confirming the effective date and time of the Government of Canada Five Year rate information obtained from Bloomberg?


This was sent again as a possible duplicate in the afternoon of March 7.

The response received in the afternoon of March 8 is:

Thank you for following-up on your request. I will check with the Treasury department again regarding your question.

I will be back in touch when I have the information.

Further updates of this saga will provided.

FTN.PR.A Dividend Rate is 5.50% until December 1, 2019

Tuesday, February 12th, 2019

It will be recalled that FTN.PR.A increased its dividend to 5.50% in September, 1997, effective for their fiscal year beginning December 1, 2017.

I am now advised by their Investor Relations department that:

The Company may reset the Preferred share rate with each fiscal year. Any change to the current rate must be announced no later than September 30th each year.

The Preferred share rate is subject to a minimum, established with any five year termination date extensions. The current minimum rate is 5.25% annually up until the December 1, 2020 termination date

The latest Annual Information Form (AIF) states that at a meeting held on May 14, 2014, shareholders gave their approval to allow the Company to have the “right” to establish the rate of dividends to be paid on the Preferred shares annually, commencing December 1, 2015.

The AIF further states the Company “may” determine the rate each fiscal year, thus a news release is only required if a change is made.

Therefore to clarify, the annual rate of 5.5% announced on September 29, 2017 (effective December 1, 2017), remains in place unless announced otherwise by a news release.

We do apologize for any confusion.

Well, it seems a little slap-dash to me. Their announcement of the boost specified an end-date and nothing about ‘until further notice’; none of their many press releases announce the decision.

But there you have it, they’ll continue to pay 5.50% at least until 2019-12-1. After that, nobody knows, but there is a minimum rate of 5.25% effective until maturity, 2020-12-1.

FTS.PR.K Reset Rate to Remain Secret

Monday, February 4th, 2019

I sent three eMails of inquiry (on 1/31, 2/1 and 2/4) to Fortis Investor Relations regarding the reset rate for FTS.PR.K:

Will the captioned security be redeemed? Or will the dividend rate be reset, with a conversion option? Will there be a press release, similar to the press releases of your competitors for capital, Enbridge and Pembina Pipelines, with respect to their issues resetting on the same date?

I finally got a reply today well after the close of business:

Good Evening Mr. Hymas,

Thank you for contacting Fortis Inc. Fortis does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series K of the Corporation (the “Series K Shares”) on March 1, 2019.

Subject to certain conditions set out in the prospectus supplement of the Corporation dated July 9, 2013 to the base shelf prospectus of the Corporation dated May 10, 2012 relating to the issuance of the Series K Shares, the holders of the Series K Shares have the right to convert all or part of their Series K Shares, on a one-for-one basis, into Cumulative Redeemable Floating Rate First Preference Shares, Series L of the Corporation (the “Series L Shares”) on March 1, 2019 (the “Conversion Date”). This prospectus is on the Fortis website.

You should check CDS Advisory Bulletins for ongoing corporate actions relating to the conversion and/or redemption of Series K first preference shares. Furthermore, Fortis will be announcing the new dividend rate for the Series K upon the board of directors approval and declaration, which should occur around mid-February.

If you have any further questions please let me know.

There is a lot to complain about here.

First is the question of timing:

Fortis will be announcing the new dividend rate for the Series K upon the board of directors approval and declaration, which should occur around mid-February.

I note from the prospectus:

The holders of Series K First Preference Shares will have the right, at their option, to convert any or all of their Series K First Preference Shares into an equal number of Cumulative Redeemable Floating Rate First Preference Shares, Series L of the Corporation (the “Series L First Preference Shares”), subject to certain conditions, on March 1, 2019, and on March 1 every fifth year thereafter (each, a “Series K Conversion Date”).

The conversion of the Series K First Preference Shares may be effected by delivery to the Corporation of written notice thereof not earlier than the 30th day prior to, but not later than 5:00 p.m. (Toronto time) on the 15th day preceding, a Series K Conversion Date.

So March 1, 2019, is a Series K Conversion Date and the deadline for notification of conversion is the 15th day preceding this date, which is February 14, which is “around mid-February”. So the deadline for notification of conversion and the public announcement of the new rate will occur more or less simultaneously.

However, we may also note, from the prospectus, that:

“Fixed Rate Calculation Date” means, for any Subsequent Fixed Rate Period, the 30th day prior to the first day of such Subsequent Fixed Rate Period.

“Subsequent Fixed Rate Period” means, for the initial Subsequent Fixed Rate Period, the period commencing on March 1, 2019 to, but excluding, March 1, 2024 and, for each succeeding Subsequent Fixed Rate Period, the period commencing on the first day of March immediately following the end of the immediately preceding Subsequent Fixed Rate Period to, but excluding, March 1 in the fifth year thereafter.

The Corporation will, on the Fixed Rate Calculation Date, give written notice of the Annual Fixed Dividend Rate for the ensuing Subsequent Fixed Rate Period to the registered holders of the then outstanding Series K First Preference Shares.

So we may assume that Fortis has followed the letter of the prospectus and has already notified the “registered holders” of FTS.PR.K of the reset rate.

One thing sometimes forgotten when discussing “registered holders” nowadays is that there is usually exactly one registered holder: the depositary, which maintains accounts for each of its participants (brokerages) which in turn maintain accounts for each of their customers. This is called a “book based” system and is described in the prospectus, from which the following is extracted:

Except as otherwise provided below, the Series K First Preference Shares and the Series L First Preference Shares will be issued in a “book entry only” form and must be purchased or transferred through participants (“Participants”) in the depository service of CDS Clearing and Depository Services Inc. (“CDS”) or its nominee which include securities brokers and dealers, banks and trust companies. On the Closing Date, the Corporation will cause a global certificate representing the Series K First Preference Shares to be delivered to, and registered in the name of, CDS or its nominee. Except as otherwise provided below, no purchaser of Series K First Preference Shares or Series L First Preference Shares will be entitled to a certificate or other instrument from the Corporation or CDS evidencing that purchaser’s ownership, and no purchaser will be shown on the records maintained by CDS except through a book entry account of a Participant acting on behalf of the purchaser. Each purchaser of Series K First Preference Shares or Series L First Preference Shares will receive a customer confirmation of purchase from the registered dealer from which the Series K First Preference Shares or Series L First Preference Shares are purchased in accordance with the practices and procedures of the dealer. The practices of registered dealers may vary, but generally customer confirmations are issued promptly after execution of a customer order.

So what this means is that CDS has been notified, at which point Fortis has taken no further action to disseminate the information; refusing even to answer direct questions to their Investor Relations Department.

This is ridiculous. This is selective disclosure – perhaps not in law, but for all practical purposes this means that CDS (an entity controlled by the Toronto Stock Exchange) and the brokerages (who are “participants” in CDS) are getting notification of the news and are then advising clients at some later time when they damn well choose.

As far as interested investors and advisors are concerned, I’ve looked up how to get access to the CDS Advisory Bulletins:

The Advisory Bulletins service provides issuers an additional facility to communicate extraordinary details related to pending, ongoing or completed entitlements and corporate actions.

Delivery: Web, MT564/MT568 (ISO 15022)

Depending upon the nature of the message, the details of the bulletin will also be delivered via MT564 – Entitlements Notification and MT568 – Entitlements Narrative message.

Pricing: $1,125

Access the product sheet.

Contact us for pricing and other information

Non – CDS Participant Inquiries for CDS Innovation /TMX Datalinx

CDS Participant & Issuer Inquiries
Client Relationship Managers

I have written to the Exchange:

What is the cost to subscribe to the captioned service? May these bulletins be purchased individually?

There is nothing filed regarding this matter on SEDAR, that bastion of brokerage privilege. Fortis seems very eager to pad the profits of TMX Group Limited!

I’m sure Fortis is operating within the letter of the laws and regulations and I’m sure they’ve got large legal bills to prove it. But I consider the lack of immediate public disclosure – which is standard for its competitors, I can’t think of a single other exception to this practice off the top of my head – to be contrary to the spirit of the regulations.

Given the obsession of Fortis management with keeping this information strictly under wraps, to the extent of refusing to answer a direct question regarding the reset rate when selective disclosure has already been made, I am unable to publish a formal recommendation regarding whether FTS.PR.K security holders should convert or hold their shares.

New Issue: PVS Split Share, 4.90%, 7-year

Thursday, November 15th, 2018

It is my understanding that:

Partners Value Split Corp. has entered into an agreement to sell six million Class AA preferred shares Series 9 to a syndicate of underwriters led by Scotiabank, BMO Capital Markets , CIBC Capital Markets , RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 9 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $150,000,000 . The Series 9 Preferred Shares will carry a fixed coupon of 4.90% and will have a final maturity of February 28, 2026 . The Series 9 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA preferred shares Series 3.

The Company 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 9 Preferred Shares at the same offering price, which, if exercised, would increase the gross offering size to $200,000,000 . Closing of the offering is expected to occur on or about November 26, 2018.

Adil Mawani , Chief Financial Officer, will be available at (647) 503-6513 to answer any questions regarding the offering.

In line with the company’s usual contempt for the investors who provide it with capital, there is no press release published on the company’s web-page, nor is there any information available on Marketwired, where they have previously grudgingly published announcements, so it doesn’t appear that Adil Mawani has any greater desire to do a competent job than any of the other clowns at PVS. Feel free to call him and ask if the company will ever do something right.

Amazingly, there’s an actual term-sheet on SEDAR, searchable (but the regulators will get very upset if you link to it) with the description “Partners Value Split Corp. Nov 15 2018 13:29:09 ET Marketing materials – English PDF 16 K”.

There is also a provisional rating announcement from DBRS:

DBRS Limited (DBRS) assigned a provisional rating of Pfd-2 (low) to the Class AA Preferred Shares, Series 9 (the Series 9 Preferred Shares) to be issued by Partners Value Split Corp. (the Company) that will rank pari passu with the existing Class AA Preferred Shares, Series 3 (the Series 3 Preferred Shares); the Class AA Preferred Shares, Series 6 (the Series 6 Preferred Shares); the Class AA Preferred Shares, Series 7 (the Series 7 Preferred Shares); and the Class AA Preferred Shares, Series 8 (the Series 8 Preferred Shares; collectively, the Class AA Preferred Shares).

Proceeds from the Series 9 Preferred Share offering will be used to fund the redemption of the Series 3 Preferred Shares no later than their scheduled maturity date of January 10, 2019. The Series 9 Preferred Shares will be entitled to fixed quarterly cumulative preferential dividends on the expected issue price of $25.00. The maturity date for the Series 9 Preferred Shares is set to February 28, 2026.

The Company owns a portfolio (the Portfolio) of Class A Limited Voting Shares (the BAM Shares) of Brookfield Asset Management Inc. (BAM; rated A (low) with a Stable trend by DBRS). Dividends received from the Portfolio are used to fund the payment of interest on the Debentures to the extent that any have been issued and to fund the payment of dividends on the Class AA Preferred Shares. There were 700 Debentures issued on November 9, 2018, as a result of the retraction of 700 Series 8 Preferred Shares.

Holders of the Junior Preferred Shares, Series 1 (the Junior Preferred Shares) are entitled to receive quarterly noncumulative cash distributions at an annual rate of 5% when declared by the board of directors. There is $200 million worth of Junior Preferred Shares currently outstanding. Holders of the Capital Shares of the Company will only receive excess dividend income after interest on the Debentures, Class AA Preferred Share distributions, Junior Preferred Share Distributions and other Company expenses have been paid. Any capital appreciation of the BAM Shares will benefit the holders of the Capital Shares. All series of Class AA Preferred Shares rank senior to the Capital Shares, the Class AAA Preferred Shares and the Junior Preferred Shares and on a pari passu basis with all other Class AA Preferred Shares with respect to payment of dividends and repayment of principal.

The Company has issued a limited number of Class A Voting Shares that rank senior to the Class AA Preferred Shares in respect of capital upon the dissolution, winding up or insolvency of the Company. As of June 30, 2018, there were $100 worth of such shares outstanding.

Following the redemption of the Series 3 Preferred Shares, the downside protection available to the Class AA Preferred Shares is expected to be approximately 85% (based on the closing price of BAM shares as of October 29, 2018) and the dividend coverage ratio is expected to be approximately 2.0 times (x; based on the Canadian dollar and U.S. dollar exchange rate as of October 29, 2018). BAM declares its dividends in U.S. dollars; consequently, there is the risk that an appreciating Canadian dollar will cause the dividend coverage ratio to fall below 1.0x. In the event of a shortfall, the Company may sell some of the BAM Shares, engage in security lending or write covered call options to generate sufficient income to satisfy its obligations to pay the Class AA Preferred Shares dividends. If the Company chooses to lend its holdings, the Portfolio would be exposed to the potential losses in the event that the borrower defaults on its obligations to return the borrowed securities.

The main constraints to the ratings are the following:

(1) The downside protection available to holders of the Class AA Preferred Shares depends solely on the market value of the BAM Shares held in the Portfolio, which will fluctuate over time.

(2) There is a lack of diversification, as the Portfolio is entirely made up of BAM Shares.

(3) Changes in the dividend policy of BAM may result in reductions in Class AA Preferred Shares dividend coverage.

(4) As BAM declares dividends in U.S. dollars, the Company is exposed to foreign currency risk relating to the Canadian-U.S. exchange rate, specifically the appreciation of the Canadian dollar versus the U.S. dollar. This may have a negative impact on the dividend coverage ratio of the Class AA Preferred Shares, as these dividends are paid in Canadian dollars.

(5) Downside protection available to the Class AA Preferred Shares may be negatively affected by the retraction of the Junior Preferred Shares.

PVS.PR.F Soft on Modest Volume

Monday, September 18th, 2017

Partners Value Split Corp. has announced (although not yet on their website; maybe not ever on their website, since the lazy turds haven’t even published the new issue announcement yet):

the completion of its previously announced issue of 6,000,000 Class AA Preferred Shares, Series 8 (the “Series 8 Preferred Shares”) at an offering price of $25.00 per Series 8 Preferred Share, raising gross proceeds of $150,000,000. The Series 8 Preferred Shares carry quarterly fixed cumulative preferential dividends representing a 4.80% annualized yield on the offering price and have a final maturity of September 30, 2024. The Series 8 Preferred Shares have been listed and posted for trading on the Toronto Stock Exchange under the symbol PVS.PR.F. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA Preferred Shares, Series 5 (the “Series 5 Preferred Shares”) on December 10, 2017 in accordance with the terms of the Series 5 Preferred Shares and to pay a special dividend to holders of the Company’s capital shares.

Prior to the closing of the offering, the Company subdivided the existing capital shares held by Partners Value Investments Inc. so that there are an equal number of preferred shares and capital shares outstanding.

The Company owns a portfolio consisting of 79,740,966 Class A Limited Voting Shares of Brookfield Asset Management Inc. (the “Brookfield Shares”) which is expected to yield quarterly dividends that are sufficient to fund quarterly fixed cumulative preferential dividends for the holders of the Company’s preferred shares and to enable the holders of the Company’s capital shares to participate in any capital appreciation of the Brookfield Shares. Brookfield Asset Management Inc. is a global alternative asset manager with over US$250 billion in assets under management. For more than 100 years Brookfield has owned and operated assets on behalf of shareholders and clients with a focus on property, renewable energy, infrastructure and private equity. Brookfield has a range of public and private investment products and services which leverage its expertise and experience. Brookfield Shares are co-listed on the New York Stock Exchange under the symbol “BAM”, the TSX under the symbol “BAM.A” and the NYSE Euronext under the symbol “BAMA”.

David Clare, Vice President, will be available at (647) 503-6516 to answer any questions regarding the offering.

PVS.PR.F is a SplitShare, 4.80%, maturing 2024-9-30, announced 2017-09-07. It will be tracked by HIMIPref™ and has been assigned to the SplitShare subindex.

The issue traded 234,295 shares today in a range of 24.79-98 before closing at 24.93-94. Vital statistics are:

Maturity Type : Hard Maturity
Maturity Date : 2024-09-30
Maturity Price : 25.00
Evaluated at bid price : 24.93
Bid-YTW : 4.86 %

The issue’s rating has been finalized at Pfd-2(low) by DBRS:

DBRS Limited (DBRS) assigned a new rating of Pfd-2 (low) to the Class AA Preferred Shares, Series 8 (the Series 8 Preferred Shares) to be issued by Partners Value Split Corp. (the Company) and confirmed the ratings of the previously issued Class AA Preferred Shares, Series 3 (the Series 3 Preferred Shares); Class AA Preferred Shares, Series 5 (the Series 5 Preferred Shares); Class AA Preferred Shares, Series 6 (the Series 6 Preferred Shares); Class AA Preferred Shares, Series 7 (the Series 7 Preferred Shares; collectively, the Class AA Preferred Shares) at Pfd-2 (low).

Proceeds from the Series 8 Preferred Share offering will be used to fund the redemptions of the previously issued Series 5 Preferred Shares no later than their scheduled maturity date of December 10, 2017. To the extent that net proceeds from the offering exceed funding requirements associated with the redemptions, the Company will distribute such net proceeds to holders of the Capital Shares as a special dividend.

BBD.PR.B / BBD.PR.D : 32% Net Conversion to FixedFloater

Sunday, August 13th, 2017

Bombardier has made no explicit announcement regarding the results of the interconversion privilege between BBD.PR.B AND BBD.PR.D, possibly because doing so would require a fat government subsidy. However, we can determine what happened by comparing the figures disclosed in their 17Q2 report (or the 2016 Annual Report) with the “Shares Out” field published on the TMX website for BBD.PR.B and BBD.PR.D.

Calculation of Net Conversion
Shares Out Prior
(per 17Q2 report)
9,692,521 2,307,479
Shares Out Now
(per TMX)
5,811,736 6,188,264

Thus we see that there has been a net conversion of 3,880,785 shares from BBD.PR.B (the RatchetRate issue) to BBD.PR.D (the FixedFloater issue), which represents 32% of the total float.

It is also of interest to note that there is nothing on the Bombardier website or on SEDAR regarding the numbers of shares currently outstanding, or regarding the results of the conversion privilege, but the bank-dominated Toronto Stock Exchange knows all about it! This is similar to the selective disclosure noted with respect to the IAG.PR.G conversion results that the regulators are supposed to be so concerned about; but as long as their very important buddies and future employers at the banks are advised, it seems they feel actual investors can go to hell.

Assiduous Readers will recall that in my terminology, BBD.PR.B is a Ratchet Rate preferred, currently paying 100% of Prime, reset quarterly. BBD.PR.D is a FixedFloater which will now pay $0.99575 p.a., or 3.983% of its $25 par value. The latter rate resets every Exchange Date; the next exchange date will be 2022-8-1. Both issues have been relegated to the Scraps subindex since inception on credit concerns.

I previously made no recommendation regarding conversion, on the grounds that the issues were expected to trade at approximately the same price and that investors should choose the alternative best suited for their individual circumstances. The market has decided to make me look like an idiot, with BBD.PR.B being quoted at 10.21-42 and BBD.PR.D at 11.10-28 as of August 11, resulting in a break-even prime rate of 2.95% over the next five years; but we’ll see how long that lasts. It’s the lowest of all the FixedFloater / RatchetRate pairs at the moment:

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