ALA: Outlook Negative, says S&P

December 16th, 2015

Standard and Poor’s has announced:

  • •We are revising our outlook on AltaGas Ltd. to negative from stable.
  • •We are also affirming our ratings, including our ‘BBB’ long-term corporate credit rating, on the company.
  • •We base the outlook revision on weaker forecast financial metrics at the lower end of the “significant” financial risk profile.
  • •The negative outlook reflects our view of the company’s weaker financial metrics, given the low commodity environment and high leverage due to ongoing capital programs and recent acquisitions.


We are forecasting lower cash flows and higher leverage due to ongoing capital programs and recent acquisitions. Our forecast financial metrics have fallen as a result, with funds from operations (FFO)-to-debt in the low end of the “significant” category (12%-15%) over the next two years. However, we still expect the financial metrics to improve as new gas gathering and processing facilities are brought into service and the GWF Energy Holdings LLC (GWF) acquisition starts contributing cash flow for a full year in 2016.

We view AltaGas’ business risk profile as “strong.” We expect about one-third of cash flow from very low-risk regulated utility subsidiaries, a third from midstream gathering and processing, and the rest from highly contracted unregulated power.

We view the financial risk profile as “significant” based on the medial volatility cash flow leverage table. Although we expect credit metrics to improve as contracted projects come online to contribute full-year cash flows and capital expenditures start to decline in 2017, the company has little cushion to absorb weaker-than-expected cash flows over the next two years.

The negative outlook reflects Standard & Poor’s view that AltaGas’ financial metrics are at the lower end of the “significant” category and has little cushion to absorb weaker-than-expected cash flows over the next two years. We are expecting metrics to continue to improve in 2016 and 2017 as the company realizes full-year cash flows from completed projects and the GWF acquisition.

AltaGas is the proud issuer of ALA.PR.A, ALA.PR.B, ALA.PR.E, ALA.PR.G and ALA.PR.I. DBRS continues to rate the issues Pfd-3 with a stable trend following a confirmation 2015-10-12.

TRP.PR.C To Be Extended

December 16th, 2015

TransCanada Corporation has announced:

that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 5 (Series 5 Shares) on January 30, 2016. As a result, subject to certain conditions, the holders of Series 5 Shares have the right to choose one of the following options with regard to their shares:
1.To retain any or all of their Series 5 Shares and continue to receive a fixed rate quarterly dividend; or
2.To convert, on a one-for-one basis, any or all of their Series 5 Shares into Cumulative Redeemable First Preferred Shares, Series 6 (Series 6 Shares) of TransCanada and receive a floating rate quarterly dividend.

The dividend rate applicable to the Series 5 Shares for the five-year period commencing on January 30, 2016 to, but excluding, January 30, 2021 will equal the Government of Canada five-year bond yield on December 31, 2015 plus 1.54 per cent. The dividend rate applicable to the Series 6 Shares for the three-month period commencing on January 30, 2016 to, but excluding, April 30, 2016 will equal the Government of Canada 90-day treasury bill rate on December 31, 2015 plus 1.54 per cent. Both rates will be calculated according to the terms of the prospectus supplement dated June 17, 2010, and announced by way of a news release on December 31, 2015.

Beneficial owners of Series 5 Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 5 p.m. (EDT) on January 15, 2016. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.

The foregoing conversions are subject to the conditions that: (i) if TransCanada determines that there would be less than one million Series 5 Shares outstanding after January 30, 2016, then all remaining Series 5 Shares will automatically be converted into Series 6 Shares on a one-for-one basis on January 30, 2016, and (ii) alternatively, if TransCanada determines that there would be less than one million Series 6 Shares outstanding after January 30, 2016, no Series 5 Shares will be converted into Series 6 Shares. In either case, TransCanada will issue a news release to that effect no later than January 22, 2016.

Holders of the Series 5 Shares and the Series 6 Shares will have the opportunity to convert their shares again on January 30, 2021, and every five years thereafter as long as the shares remain outstanding.

TRP.PR.C is a FixedReset, 4.40%+154, that commenced trading 2010-6-29 after being announced 2010-6-17.

I will report the reset rate when it is announced and recommend whether or not to convert closer to the company’s deadline.

DC.PR.C: Dundee Blinks, Shares Plummet Anyway

December 16th, 2015

The proposed Plan of Arrangement involving DC.PR.C has been covered on PrefBlog in the posts DC.PR.C: Coercive Exchange Offer, DC.PR.C: Coercive Offer Attracts Wider Notice and DC.PR.C: Consider Exercising Dissent Rights To Defeat Management’s Coercive Plan.

This morning, Dundee blinked:

Dundee Corporation (TSX:DC.A)(TSX:DC.PR.C) is today announcing that it continues to seek a collaborative dialogue with its Series 4 Preferred Shareholders in respect of its proposed plan of arrangement. Since the mailing of its Circular, the Corporation has heard from a broader group of beneficial shareholders, including large institutional holders, who have expressed concerns.

The Corporation continues to engage in dialogue with known beneficial shareholders, in order to achieve a favourable result. However there can be no assurance that this dialogue will result in the support necessary for the proposed transaction to become effective. Accordingly, it is possible that, among other things, the proposed transaction terms may be amended or withdrawn.

But the shares plunged anyway, down a stunning 14.50% (close / close) on heavy volume of 68,201 shares:

DCPRC_151216
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They’ve been going in one direction ever since the announcement:

DCPRC_151216_1Mo
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I have no idea how sincere they are or with whom they are negotiating, but the “known beneficial shareholders” will, I’m sure, appreciate a bit of support to strengthen their hand. Don’t delay – vote “No” now and seriously consider exercising your right of dissent. The objective is to obtain a “Special Retraction Right”, as is standard when the maturities of Split Shares are extended, that will allow shareholders to opt to receive the original deal. That’s the main thing. But those who are interested in extending term should demand that the company renew and maintain a public credit rating from two major credit rating agencies – it was almost three years ago that the company cancelled this service which, while being of controversial intrinsic value, serves admirably to focus management’s and directors’ attention during bad times – which is particularly important in the fragmented, retail preferred share market.

December 15, 2015

December 16th, 2015

The equities markets did well today:

The Standard & Poor’s 500 Index capped its first back-to-back gains in more than a month as energy companies led a rally with crude oil, while Federal Reserve officials started a two-day meeting at which they’re widely expected to raise interest rates for the first time since 2006.

The S&P 500 climbed 1.1 percent to 2,043.41 at 4 p.m. in New York, marking its first consecutive increases since Nov. 3. The Dow Jones Industrial Average rose 156.41 points, or 0.9 percent, to 17,524.91, even as 3M’s retreat amounted to about 63 points off the index. The Nasdaq Composite Index rallied 0.9 percent. About 8.1 billion shares traded hands on U.S. exchanges, 12 percent above the three-month average.

Fed officials announce their rate decision tomorrow at 2 p.m. in Washington, and traders are pricing in a 78 percent chance of a liftoff. Data today reinforced expectations for a gradual increase in rates, with the cost of living holding steady in November, underscoring scant inflation that is well below the Fed’s goal. Among the other few economic cues before the rate announcement are reports on housing starts and industrial production Wednesday.

And the junk market is hearing some whispering from bottom feeders:

Amid an almost 6 percent selloff in high-yield debt this year, speculative-grade credit is yielding 3.52 percentage points more than stocks in the Standard & Poor’s 500 Index are earning — the widest spread since 2010, according to data compiled by Bloomberg. Since the start of the 6 1/2-year bull market, junk securities have held an advantage of less than half that — 1.36 percent — over equity counterparts, the data show.

junkEquitySpread_151215
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Tracy Alloway of Bloomberg points out that regulations affecting repos indirectly affect corporate bond liquidity:

While the focus, when it comes to a lack of liquidity in the bond market, has often been placed squarely on the shrinking amount of bonds on dealer-bank balance sheets, a further change to the banking business is arguably exacerbating the recent downward spiral in debt. That change is the shrinking of the repo business, which involves banks lending their balance sheets to clients and is often described as the great lubricator for financial markets.

The business has been shrinking in recent years. A huge regulatory overhaul has made repo more expensive in the face of various new mandates, including the leverage ratio and the net stable funding ratio, encouraging banks to pull back on their repo business and helping to push repo rates higher.

generalCollateral_151215
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Barrick announced pricing for its debt tender deal.

Dominion and Anglo Investment Corporation Limited, which is a major vehicle of the Jackman family, has tightened control of E-L Financial, proud issuer of ELF.PR.F, ELF.PR.G and ELF.PR.H:

Dominion and Anglo Investment Corporation Limited (“Dominion and Anglo”) announces that it acquired a further 80,000 Common Shares of E-L Financial Corporation Limited (“E-L Financial”) (TSX:ELF) (TSX:ELF.PR.F) (TSX:ELF.PR.G) (TSX:ELF.PR.H), increasing its ownership from 1,302,323 (32.4%) of the Common Shares to 1,382,323 (34.39%) of the Common Shares. Dominion and Anglo has an informal understanding with other shareholders of E-L Financial under which they act in concert with respect to the voting of securities of E-L Financial held by them. The purchase increases the ownership of Dominion and Anglo and these other shareholders from 2,748,329 (68.38%) of the Common Shares to 2,828,329 (70.37%) of the Common Shares. The purchase was effected through the facilities of the Toronto Stock Exchange for consideration of $680.00 per share.

But guess what, preferred share fans? Santa came early!

santaCash
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It was an extremely strong day for the Canadian preferred share market … I suspect some major player decided to get in now rather than wait for the end of tax-loss selling season, when every other potential buyer will be in the market while the tax-loss sellers enjoy the holidays. PerpetualDiscounts gained 68bp, FixedResets won 430bp and DeemedRetractibles were up 81bp. The Performance Highlights table is, of course, immense, with no less than 31 issues exceeding the 5% change level that is normally indicative of some kind of problem; there were no losers. Volume continued to be extremely heavy.

For those keeping score, TXPR is now down 5.65% on the month to date, but 3.68% above its low of yesterday.

TXPR_151215
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TXPL is down 7.07% on the month to date, but 5.24% above its low of yesterday.

TXPL_151215
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HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 4.98 % 6.06 % 35,128 16.58 1 3.0189 % 1,558.0
FixedFloater 7.39 % 6.54 % 36,155 15.57 1 0.7048 % 2,641.7
Floater 4.34 % 4.41 % 84,987 16.61 4 3.5910 % 1,761.3
OpRet 4.87 % 4.27 % 27,384 0.70 1 0.0000 % 2,734.3
SplitShare 4.87 % 5.85 % 83,582 1.87 6 0.2237 % 3,174.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2237 % 2,476.8
Perpetual-Premium 5.88 % 5.97 % 91,219 13.86 7 0.0866 % 2,464.8
Perpetual-Discount 5.84 % 5.91 % 103,412 13.96 33 0.6836 % 2,452.4
FixedReset 5.40 % 4.88 % 260,807 15.12 79 4.2975 % 1,912.7
Deemed-Retractible 5.28 % 5.33 % 135,712 5.31 33 0.8071 % 2,541.0
FloatingReset 2.86 % 4.53 % 67,455 5.67 11 0.7549 % 2,064.3
Performance Highlights
Issue Index Change Notes
BAM.PR.N Perpetual-Discount 1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.14
Evaluated at bid price : 19.14
Bid-YTW : 6.23 %
SLF.PR.B Deemed-Retractible 1.09 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.37
Bid-YTW : 6.99 %
GWO.PR.G Deemed-Retractible 1.12 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.55
Bid-YTW : 6.66 %
GWO.PR.F Deemed-Retractible 1.21 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-01-14
Maturity Price : 25.00
Evaluated at bid price : 25.10
Bid-YTW : -2.10 %
BAM.PF.H FixedReset 1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 23.14
Evaluated at bid price : 24.95
Bid-YTW : 4.92 %
CM.PR.O FixedReset 1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.21
Evaluated at bid price : 17.21
Bid-YTW : 4.78 %
PWF.PR.R Perpetual-Discount 1.29 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 23.20
Evaluated at bid price : 23.60
Bid-YTW : 5.90 %
TD.PR.Z FloatingReset 1.35 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.77
Bid-YTW : 4.54 %
BMO.PR.R FloatingReset 1.38 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.00
Bid-YTW : 4.32 %
SLF.PR.E Deemed-Retractible 1.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.23
Bid-YTW : 7.42 %
ELF.PR.G Perpetual-Discount 1.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 20.15
Evaluated at bid price : 20.15
Bid-YTW : 6.01 %
SLF.PR.C Deemed-Retractible 1.41 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.09
Bid-YTW : 7.47 %
SLF.PR.D Deemed-Retractible 1.42 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.96
Bid-YTW : 7.56 %
TD.PR.S FixedReset 1.45 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.08
Bid-YTW : 4.35 %
PVS.PR.E SplitShare 1.46 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-10-31
Maturity Price : 25.00
Evaluated at bid price : 24.30
Bid-YTW : 6.07 %
HSB.PR.D Deemed-Retractible 1.46 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-01-14
Maturity Price : 25.00
Evaluated at bid price : 24.95
Bid-YTW : 4.83 %
BNS.PR.B FloatingReset 1.52 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.38
Bid-YTW : 4.89 %
ELF.PR.H Perpetual-Discount 1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.67
Evaluated at bid price : 23.02
Bid-YTW : 6.07 %
BNS.PR.Y FixedReset 1.60 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.00
Bid-YTW : 6.70 %
CU.PR.I FixedReset 1.65 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 23.04
Evaluated at bid price : 24.65
Bid-YTW : 4.50 %
GWO.PR.H Deemed-Retractible 1.71 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.41
Bid-YTW : 7.02 %
NA.PR.Q FixedReset 1.74 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.01
Bid-YTW : 4.20 %
SLF.PR.G FixedReset 1.75 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 14.50
Bid-YTW : 9.11 %
BAM.PF.E FixedReset 1.82 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.38
Evaluated at bid price : 17.38
Bid-YTW : 5.14 %
TRP.PR.F FloatingReset 1.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 13.02
Evaluated at bid price : 13.02
Bid-YTW : 4.53 %
CM.PR.P FixedReset 1.89 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 16.75
Evaluated at bid price : 16.75
Bid-YTW : 4.80 %
W.PR.H Perpetual-Discount 1.91 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.14
Evaluated at bid price : 22.42
Bid-YTW : 6.24 %
NA.PR.W FixedReset 1.91 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 16.51
Evaluated at bid price : 16.51
Bid-YTW : 4.91 %
BMO.PR.Z Perpetual-Discount 1.96 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.52
Evaluated at bid price : 22.85
Bid-YTW : 5.51 %
NA.PR.S FixedReset 2.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.10
Evaluated at bid price : 17.10
Bid-YTW : 4.93 %
GWO.PR.I Deemed-Retractible 2.10 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.38
Bid-YTW : 7.32 %
W.PR.J Perpetual-Discount 2.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.36
Evaluated at bid price : 22.63
Bid-YTW : 6.30 %
RY.PR.Z FixedReset 2.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.50
Evaluated at bid price : 17.50
Bid-YTW : 4.54 %
MFC.PR.H FixedReset 2.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.35
Bid-YTW : 6.12 %
BMO.PR.T FixedReset 2.40 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.07
Evaluated at bid price : 17.07
Bid-YTW : 4.69 %
RY.PR.H FixedReset 2.45 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.55
Evaluated at bid price : 17.55
Bid-YTW : 4.58 %
BNS.PR.P FixedReset 2.50 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.76
Bid-YTW : 4.04 %
CIU.PR.C FixedReset 2.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 13.33
Evaluated at bid price : 13.33
Bid-YTW : 4.03 %
TRP.PR.H FloatingReset 2.58 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 9.93
Evaluated at bid price : 9.93
Bid-YTW : 4.33 %
MFC.PR.F FixedReset 2.72 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.95
Bid-YTW : 9.68 %
TRP.PR.A FixedReset 2.81 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 15.00
Evaluated at bid price : 15.00
Bid-YTW : 4.68 %
TD.PF.B FixedReset 2.95 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.45
Evaluated at bid price : 17.45
Bid-YTW : 4.61 %
BAM.PF.F FixedReset 2.98 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.00
Evaluated at bid price : 19.00
Bid-YTW : 5.01 %
BAM.PR.E Ratchet 3.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 25.00
Evaluated at bid price : 13.65
Bid-YTW : 6.06 %
BMO.PR.W FixedReset 3.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.02
Evaluated at bid price : 17.02
Bid-YTW : 4.66 %
BIP.PR.A FixedReset 3.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.97
Evaluated at bid price : 18.97
Bid-YTW : 5.77 %
BNS.PR.Q FixedReset 3.18 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.04
Bid-YTW : 4.61 %
RY.PR.M FixedReset 3.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.33
Evaluated at bid price : 18.33
Bid-YTW : 4.72 %
TRP.PR.G FixedReset 3.26 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.30
Evaluated at bid price : 19.30
Bid-YTW : 4.88 %
PWF.PR.T FixedReset 3.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 21.42
Evaluated at bid price : 21.76
Bid-YTW : 3.80 %
BMO.PR.Q FixedReset 3.31 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.68
Bid-YTW : 6.44 %
RY.PR.J FixedReset 3.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.55
Evaluated at bid price : 18.55
Bid-YTW : 4.78 %
BAM.PF.G FixedReset 3.49 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.25
Evaluated at bid price : 19.25
Bid-YTW : 4.97 %
BNS.PR.Z FixedReset 3.52 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.84
Bid-YTW : 7.36 %
HSE.PR.G FixedReset 3.71 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.15
Evaluated at bid price : 18.15
Bid-YTW : 6.03 %
TD.PF.A FixedReset 3.73 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.79
Evaluated at bid price : 17.79
Bid-YTW : 4.53 %
CU.PR.C FixedReset 3.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.01
Evaluated at bid price : 18.01
Bid-YTW : 4.50 %
HSE.PR.E FixedReset 3.84 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.40
Evaluated at bid price : 18.40
Bid-YTW : 5.96 %
TD.PF.C FixedReset 3.95 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.39
Evaluated at bid price : 17.39
Bid-YTW : 4.62 %
RY.PR.L FixedReset 3.98 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.80
Bid-YTW : 4.08 %
TD.PF.E FixedReset 4.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.76
Evaluated at bid price : 19.76
Bid-YTW : 4.67 %
HSE.PR.C FixedReset 4.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.00
Evaluated at bid price : 17.00
Bid-YTW : 5.95 %
BAM.PR.B Floater 4.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 10.70
Evaluated at bid price : 10.70
Bid-YTW : 4.41 %
BAM.PR.C Floater 4.48 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 10.50
Evaluated at bid price : 10.50
Bid-YTW : 4.50 %
BAM.PR.X FixedReset 4.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 13.36
Evaluated at bid price : 13.36
Bid-YTW : 5.10 %
GWO.PR.N FixedReset 4.63 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.10
Bid-YTW : 10.21 %
TRP.PR.E FixedReset 4.66 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.42
Evaluated at bid price : 18.42
Bid-YTW : 4.60 %
RY.PR.I FixedReset 4.67 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.55
Bid-YTW : 4.27 %
FTS.PR.G FixedReset 4.76 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 16.50
Evaluated at bid price : 16.50
Bid-YTW : 4.62 %
BAM.PF.A FixedReset 4.80 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.55
Evaluated at bid price : 18.55
Bid-YTW : 5.11 %
BAM.PF.B FixedReset 5.05 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.67
Evaluated at bid price : 17.67
Bid-YTW : 5.01 %
VNR.PR.A FixedReset 5.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.66
Evaluated at bid price : 18.66
Bid-YTW : 4.97 %
BMO.PR.Y FixedReset 5.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.55
Evaluated at bid price : 19.55
Bid-YTW : 4.57 %
TRP.PR.C FixedReset 5.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 11.70
Evaluated at bid price : 11.70
Bid-YTW : 4.97 %
SLF.PR.I FixedReset 5.42 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.25
Bid-YTW : 7.03 %
BMO.PR.M FixedReset 5.64 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.77
Bid-YTW : 3.80 %
BNS.PR.R FixedReset 5.73 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.82
Bid-YTW : 4.26 %
TD.PF.D FixedReset 5.76 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.28
Evaluated at bid price : 19.28
Bid-YTW : 4.67 %
BAM.PR.R FixedReset 5.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 14.95
Evaluated at bid price : 14.95
Bid-YTW : 5.19 %
SLF.PR.H FixedReset 5.92 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 16.45
Bid-YTW : 8.47 %
BAM.PR.T FixedReset 5.93 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 15.73
Evaluated at bid price : 15.73
Bid-YTW : 5.03 %
TRP.PR.D FixedReset 6.23 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.57
Evaluated at bid price : 17.57
Bid-YTW : 4.75 %
FTS.PR.K FixedReset 6.32 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.00
Evaluated at bid price : 18.00
Bid-YTW : 4.19 %
BAM.PR.K Floater 6.60 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 10.66
Evaluated at bid price : 10.66
Bid-YTW : 4.43 %
MFC.PR.K FixedReset 6.73 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.25
Bid-YTW : 7.41 %
BMO.PR.S FixedReset 6.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.90
Evaluated at bid price : 17.90
Bid-YTW : 4.58 %
BAM.PR.Z FixedReset 7.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.90
Evaluated at bid price : 18.90
Bid-YTW : 5.09 %
FTS.PR.M FixedReset 7.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.62
Evaluated at bid price : 19.62
Bid-YTW : 4.38 %
CM.PR.Q FixedReset 7.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 19.10
Evaluated at bid price : 19.10
Bid-YTW : 4.72 %
MFC.PR.L FixedReset 7.32 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.47
Bid-YTW : 7.35 %
TRP.PR.B FixedReset 7.62 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 11.30
Evaluated at bid price : 11.30
Bid-YTW : 4.57 %
IAG.PR.G FixedReset 7.63 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.45
Bid-YTW : 6.39 %
MFC.PR.M FixedReset 7.88 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.75
Bid-YTW : 7.34 %
MFC.PR.J FixedReset 8.11 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.00
Bid-YTW : 6.50 %
HSE.PR.A FixedReset 8.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 11.50
Evaluated at bid price : 11.50
Bid-YTW : 5.42 %
IFC.PR.C FixedReset 8.86 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.05
Bid-YTW : 7.06 %
MFC.PR.N FixedReset 8.90 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.85
Bid-YTW : 7.19 %
MFC.PR.G FixedReset 9.09 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.52
Bid-YTW : 6.38 %
IFC.PR.A FixedReset 9.22 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.64
Bid-YTW : 9.05 %
MFC.PR.I FixedReset 9.70 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.03
Bid-YTW : 6.09 %
FTS.PR.H FixedReset 11.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 14.20
Evaluated at bid price : 14.20
Bid-YTW : 4.02 %
Volume Highlights
Issue Index Shares
Traded
Notes
W.PR.K FixedReset 241,305 New issue settled today.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.81
Evaluated at bid price : 24.10
Bid-YTW : 5.41 %
GWO.PR.N FixedReset 119,159 Scotia crossed 10,000 at 12.67. RBC sold blocks of 58,700 and 20,000 to anonymous, both at 13.05.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.10
Bid-YTW : 10.21 %
BAM.PF.A FixedReset 77,694 Scotia crossed 30,000 at 18.10.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 18.55
Evaluated at bid price : 18.55
Bid-YTW : 5.11 %
MFC.PR.F FixedReset 72,914 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.95
Bid-YTW : 9.68 %
CM.PR.O FixedReset 69,950 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 17.21
Evaluated at bid price : 17.21
Bid-YTW : 4.78 %
BAM.PR.R FixedReset 63,185 Scotia crossed 22,300 at 14.76.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 14.95
Evaluated at bid price : 14.95
Bid-YTW : 5.19 %
There were 87 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BAM.PR.G FixedFloater Quote: 12.86 – 14.50
Spot Rate : 1.6400
Average : 0.9694

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 25.00
Evaluated at bid price : 12.86
Bid-YTW : 6.54 %

MFC.PR.H FixedReset Quote: 21.35 – 22.33
Spot Rate : 0.9800
Average : 0.5651

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.35
Bid-YTW : 6.12 %

PWF.PR.P FixedReset Quote: 13.01 – 13.75
Spot Rate : 0.7400
Average : 0.4394

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 13.01
Evaluated at bid price : 13.01
Bid-YTW : 4.58 %

MFC.PR.M FixedReset Quote: 18.75 – 19.61
Spot Rate : 0.8600
Average : 0.5880

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.75
Bid-YTW : 7.34 %

SLF.PR.I FixedReset Quote: 19.25 – 20.00
Spot Rate : 0.7500
Average : 0.4837

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.25
Bid-YTW : 7.03 %

BNS.PR.P FixedReset Quote: 23.76 – 24.48
Spot Rate : 0.7200
Average : 0.4757

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.76
Bid-YTW : 4.04 %

W.PR.K Closes Better Than Expected On Disappointing Volume

December 16th, 2015

Westcoast Energy Inc. has announced:

that it has closed its previously announced public offering (the “Offering”) of Cumulative 5-Year Minimum Rate Reset Redeemable First Preferred Shares, Series 10 (the “Series 10 First Preferred Shares”). The Offering was conducted through a syndicate of underwriters co-led by BMO Capital Markets and Scotiabank (collectively, the “Underwriters”).

In connection with closing, the Underwriters exercised the previously granted option (the “Over-Allotment Option”) to purchase an additional 15% of the Series 10 First Preferred Shares at the offering price. As a result of the exercise in full of the Over-Allotment Option, the Corporation issued 4,600,000 Series 10 First Preferred Shares at a price of $25.00 per share for total gross proceeds of $115,000,000. The Series 10 First Preferred Shares will begin trading on the TSX today under the symbol W.PR.K. The proceeds are expected to be used to refinance upcoming debt maturities and for general corporate purposes.

The Series 10 First Preferred Shares were offered only in the provinces of Canada by means of a short form prospectus of the Corporation dated December 7, 2015.

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

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

W.PR.K is a FixedReset, 5.25%+426M525, announced November 24. At the close on November 24, the TXPL Total Return Index Value was 802.86; at the close December 15, this index stood at 746.11, a decline of about 7.1%. By that standard, the decline of less than 4% in W.PR.K from issue price looks pretty good! Purists will object that TXPL contains a lot of junk and W.PR.K is investment grade (at least, according to DBRS); purists will also object that W.PR.K has a floor on reset and is therefore even less comparable with the index. Purists can suck eggs.

The issue will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

The issue traded 241,305 shares in a range of 23.75-37 before closing at 24.10-15, 19×9. Vital statistics are:

W.PR.K FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-15
Maturity Price : 22.81
Evaluated at bid price : 24.10
Bid-YTW : 5.41 %

DC.PR.C: Consider Exercising Dissent Rights To Defeat Management’s Coercive Plan

December 16th, 2015

Assiduous Reader prefman alerted me in the comments to the post “DC.PR.C: Coercive Exchange Offer” that the Notice of Special Meeting of Holders of First Preference Shares, Series 4 of Dundee Corporation to be held on January 7, 2016 and Management Information Circular has been published on Dundee’s website.

Update, 2015-12-16: The company announced the mailing of the information circular and published some FAQs on December 10.

Simultaneously, the market has shown distinct distasted for the plan by giving the issue a good thumping: it closed today at 14.62 with a VWAP of 14.75, which compares to par value of 17.84. The performance of the issue since the November 24 announcement and the Globe story on December 4 doesn’t look very good!

DCPRC_151215_1Mo
Click for Big

One thing that is made clear in the Information Circular is that widespread dissent can be fatal to the plan:

Completion of the Arrangement is conditional on the occurrence of the following, each of which may be waived
by the Company to the extent permitted under applicable law:

  • • Approval of the Arrangement Resolution. The Arrangement Resolution is approved by not less than two-thirds (662/3%) of the votes cast by the holders of Series 4 Preferred Shares who vote in respect of the Arrangement Resolution in person or by proxy at the Meeting;
  • • Interim Order and Final Order. The Interim Order and the Final Order shall have each been obtained on terms acceptable to the Company, and shall not have been set aside or modified in a manner unacceptable to the Company;
  • • TSX Approval. The approval of the TSX (including the approval of the TSX for the listing and posting for trading of the Series 5 Preferred Shares to be issued pursuant to the Arrangement on the TSX) is obtained on terms acceptable to the Company;
  • • Dissent Rights. Dissent Rights shall not have been validly exercised and not withdrawn with respect to more than 10% of the issued and outstanding Series 4 Preferred Shares;
  • • Legality. No applicable law, constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgement, decree ruling or other similar requirement shall be in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company from consummating the Arrangement; and
  • • Board of Directors of the Company. The Board of Directors not having determined not to proceed with the Arrangement.

So while a “no” vote of just over one-third is required to defeat the plan, a “dissent” of just over 10% is sufficient to defeat it.

The company maintains its cheerful outlook:

The Company has received substantial support for the Arrangement based on confidential consultations with representatives of significant holders of the Series 4 Preferred Shares.

… but the meaning of the phrase “substantial support” is rendered dubious by the price action of the issue since the announcement, the fact that the company is including a very substantial payment to advisors who are able to obtain favourable votes, and the fact that the company is not allowing holders to get out on the original terms. Assiduous Readers of PrefBlog will know that such an offer is de rigueur when Split Share Corporations extend term (see, for example, the “Special Retraction Rights” offered on the past FTN.PR.A term extension) and that I get very upset when a Special Retraction is not part of the deal.

Dissent rights may be exercised as follows (emphasis in original removed):

A Beneficial Shareholder who wishes to exercise Dissent Rights should immediately contact the Intermediary with whom the Beneficial Shareholder deals in respect of its Series 4 Preferred Shares and either: (i) instruct the Intermediary to exercise the Dissent Rights on the Beneficial Shareholder’s behalf (which, if the Series 4 Preferred Shares are registered in the name of CDS or other clearing agency, may require that such Series 4 Preferred Shares first be re-registered in the name of the Intermediary), or (ii) instruct the Intermediary to re-register such Series 4 Preferred Shares in the name of the Beneficial Shareholder, in which case the Beneficial Shareholder would be able to exercise the Dissent Rights directly.

A Registered Series 4 Preferred Shareholder who wishes to dissent must provide a written notice of dissent (the “Dissent Notice”) to the Company at 1 Adelaide St. East, Suite 2100, Toronto, Ontario, Canada, M5C 2V9, Attention: Lili Mance, to be received not later than 9:00 a.m. (Toronto time) on January 5, 2016 (or, in the case of any adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of such adjourned or postponed meeting). Failure to properly exercise Dissent Rights may result in the loss or unavailability of the right to dissent.

The filing of a Dissent Notice does not deprive a Registered Series 4 Preferred Shareholder of the right to vote
at the Meeting.

Once dissent has been exercised, we get into the whole back and forth ritual that is such a complete waste of time and money for all concerned:

Within ten days after the holders of Series 4 Preferred Shares adopt the Arrangement Resolution, the Company is required to notify each Dissenting Shareholder that the Arrangement Resolution has been adopted. Such notice is not required to be sent to any holder of Series 4 Preferred Shares who voted FOR the Arrangement
Resolution or who has withdrawn its Dissent Notice.

A Dissenting Shareholder who has not withdrawn its Dissent Notice prior to the Meeting must then, within twenty days after receipt of notice that the Arrangement Resolution has been adopted, or if the Dissenting Shareholder does not receive such notice, within twenty days after learning that the Arrangement Resolution has been adopted, send to the Company, care of the Company’s transfer agent, Computershare Investor Services Inc. (the “Transfer Agent”) at its Toronto office located at 100 University Avenue, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1, a written notice containing his or her name and address, the number of Series 4 Preferred Shares in respect of which it, he or she dissents (the “Dissenting Shares”), and a demand for payment of the fair value of such Series 4 Preferred Shares (the “Demand for Payment”). Within thirty days after sending a Demand for Payment, the Dissenting Shareholder must send to the Company, care of the Transfer Agent, certificates representing the Series 4 Preferred Shares in respect of which he or she dissents.

The Company will or will cause the Transfer Agent to endorse on the applicable Series 4 Preferred Share certificates received from a Dissenting Shareholder a notice that the holder is a Dissenting Shareholder and will forthwith return such Series 4 Preferred Share certificates to the Dissenting Shareholder.

Failure to strictly comply with the requirements set forth in section 185 of the OBCA, as modified by the Plan of Arrangement and Interim Order, may result in the loss of any right to dissent.

One of the many things about the Way We Do Business In Canada that appalls me is the fact that notices such as this continue to babble about certificates. Why does this bother me? Well, let’s look at the original prospectus, available on SEDAR, a public document to which I am not entitled to link because the regulators have no intention or interest in furthering the interests of investor-taxpayer scum. You will have to search for “Dundee Corporation Jun 21 2006 14:01:56 ET Final short form prospectus – English -PDF 336 K”. It will be recalled that this issue was issued as DBC.PR.A; the symbol changed to DC.PR.A, and then DC.PR.C was issued as partial consideration for DC.PR.A. As stated in the original prospectus:

BOOK-BASED SYSTEM

Registration of interests in and transfers of the Series 1 Shares will only be made through the book-based system administered by CDS. On or about the date of closing of this offering, the Corporation will deliver to CDS a certificate evidencing the aggregate number of Series 1 Shares subscribed for under this offering. Series 1 Shares must be purchased, transferred and surrendered for redemption, conversion or retraction through a participant in CDS (a ‘‘CDS Participant’’). All rights of an owner of Series 1 Shares must be exercised through, and all payments or other property to which such owner is entitled will be made or delivered by, CDS or the CDS Participant through which the owner holds Series 1 Shares. Upon a purchase of any Series 1 Shares, the owner will receive only the customary confirmation. References in this short form prospectus to a holder of Series 1 Shares mean, unless the context otherwise requires, the owner of the beneficial interest in such shares.

The ability of a beneficial owner of Series 1 Shares to pledge such shares or otherwise take action with respect to such owner’s interest in such shares (other than through a CDS Participant) may be limited due to the lack of a physical certificate.

The Corporation has the option to terminate registration of the Series 1 Shares through the book-based system, in which event certificates for Series 1 Shares in fully registered form will be issued to the beneficial owners of such shares or their nominees.

When we prudently check the Management Information Circular for the conversion to DC.PR.C [SEDAR, Dundee Corporation Apr 18 2013 16:57:07 ET Management information circular – English PDF 7227 K], we find:

As soon as practicable following the Effective Time, the global certificate formerly representing the Dundee Series 1 Preference Shares registered in the name of CDS will be withdrawn from CDS and replaced with a global certificate representing the Dundee New Series 4 Preference Shares and a global certificate representing the DREAM Series 1 Preference Shares.

So … ain’t no certificates. The politicians can’t be bothered to make a minor change in the law to acknowledge the existence of the 21st century, and the regulators can’t be bothered to make sure that circulars of this type have any degree of relationship to reality. It’s nice work, if you can get it.

So, basically, read the information circular carefully, tell your custodial broker what you want to do, and keep written records of all conversations.

So what happens then?

The Company is required, not later than seven days after the later of the Effective Date or the date on which a Demand for Payment is received from a Dissenting Shareholder, to send to each Dissenting Shareholder who has sent a Demand for Payment an Offer to Pay for its Dissenting Shares in an amount considered by the Board of Directors to be the fair value of the Series 4 Preferred Shares, accompanied by a statement showing the manner in which the fair value was determined. Every Offer to Pay for Series 4 Preferred Shares must be on the same terms. The Company must, subject to applicable law, pay for the Dissenting Shares of a Dissenting Shareholder within ten days after an Offer to Pay has been accepted by a Dissenting Shareholder, but any such offer lapses if the Company does not receive an acceptance within thirty days after the Offer to Pay has been made.

If the Company fails to make an Offer to Pay for Dissenting Shares, or if a Dissenting Shareholder fails to accept an Offer to Pay that has been made, the Company may, within fifty days after the Effective Date or within such further period as a court may allow, apply to a court to fix a fair value for the Dissenting Shares. If the Company fails to apply to a court, a Dissenting Shareholder may apply to a court for the same purpose within a further period of twenty days or within such further period as a court may allow. A Dissenting Shareholder is not required to give security for costs in such an application.

If the Company or a Dissenting Shareholder makes an application to court, the Company will be required to notify each affected Dissenting Shareholder of the date, place and consequences of the application and of its right to appear and be heard in person or by counsel. Upon an application to a court, all Dissenting Shareholders who have not accepted an Offer to Pay will be joined as parties and be bound by the decision of the court. Upon any such application to a court, the court may determine whether any person is a Dissenting Shareholder who should be joined as a party, and the court would then be expected to fix a fair value for the Dissenting Shares of all Dissenting Shareholders. The final order of a court would be expected to be rendered against the Company in favour of each Dissenting Shareholder for the amount of the fair value of its Dissenting Shares as fixed by the court. The court may, in its discretion, allow a reasonable rate of interest on the amount
payable to each Dissenting Shareholder from the Effective Date until the date of payment.

So, if there’s no agreement on what constitutes fair value, it will go to court. In many cases, as I understand it, the court will decide that Fair Value is what everybody else took, which [since it got this far in the first place] will be the new, extended-term shares. However, a good argument could be made that Fair Value is represented by the original deal: you either get your $17.64 in June, 2016, or you get discounted DC.A Subordinate Voting Shares in lieu, if the company would rather pay you that way.

It’s a tangled web and one that is not without risk – by dissenting, a holder is giving up the Consent Payment, for instance, which is one reason why the company is abusing its investors by making the consent payment so high. There may be costs associated with the court case, if the company makes a derisory “Fair Value” offer. On the other hand, the market is clearly showing its distaste for the plan by marking down the market value of DC.PR.C and the current highlighting of junk bond liquidity woes may make institutional holders more diligent in their protection of their investors’ interests.

I make no recommendation; I do investment analysis, not investment law! However, from an investment perspective, I suggest that the dissenting route is worthy of consideration.

December 14, 2015

December 15th, 2015

Mohamed A. El-Erian commented on the Third Avenue fund closure:

The scale of the accident increases significantly if individual managers within the asset class have ventured to more exotic and less liquid securities in search of returns. I don’t mean to say that it isn’t worthwhile to pursue such investments, especially when underpinned by solid credit research. It is, but in the proper context and size. Such investments can be particularly dangerous to an open-fund structure during periods of market dislocations if a significant part of the investor base acts on the belief that daily liquidity for exit is available at a decent valuation.

Depending on how far the situation deteriorates, price overshoots can take valuations well beyond what is warranted by credit and economic fundamentals, as well as fuel contagion within the asset class. Then, investor outflows are likely to accelerate further, putting pressure on both liquid and illiquid names. And even though the turmoil can create attractive investment opportunities, fresh cash takes time to engage.

The greater the dislocation of the asset class, the higher the risk of spillovers to other types of investments, starting with the asset classes that share the same characteristics of credit, default and liquidity risks.

Broker-dealers will be less willing and able to act as stabilizers by stepping up with their own balance sheets. Both regulatory and market forces have limited their appetite for this countercyclical role. In addition, their willingness to accumulate such inventory decreases as we get closer to the close of their fiscal year (which, for many, is December).

There’s one casualty already:

Third Avenue Management is parting ways with Chief Executive Officer David M. Barse after he announced plans last week to freeze redemptions in its troubled high-yield mutual fund, the Wall Street Journal reported, citing unidentified people familiar with the matter.

Barse was let go and isn’t allowed back in the building, the newspaper said, citing a security guard at the firm’s New York headquarters. Daniel Gagnier, a spokesman for Third Avenue, declined to comment when reached by Bloomberg. Barse didn’t respond to messages left at his home over the weekend.

A C.D.Howe paper by Craig Alexander and Paul Jacobson titled Mortgaged to the Hilt: Risks From The Distribution of Household Mortgage Debt has some interesting things to say:

The National Balance Sheet Accounts show the dramatic rise of household mortgage debt growth since 1999, jumping from $375 billion to $1.16 trillion in 2014. The increasing size of mortgages was clearly tied to rising demand and soaring cost for residential real estate. From 1999 to 2014, national average resale home prices soared by 158 percent, requiring larger mortgages for many buyers.

According to the national average data from the National Balance Sheet Accounts, mortgage debt as a share of disposable income climbed from 66 percent in 1999 to 99 percent in 2012 and reached 104 percent in 2014. But, these economy-wide averages understate the degree of financial risk for those that carried mortgages because they divide the value of mortgages across the income of households with and without mortgages.

The SFS data show that primary mortgages have increased significantly. The primary mortgage debt-to-disposable income ratio has climbed from 144 percent of income in 1999 to 204 percent in 2012. However, this also understates the degree of financial risk for a significant minority of households. The share of exceptionally high mortgage-leverage households has increased. This can be seen in the ratio of primary residence mortgage debt to after-tax income across mortgaged households. In 1999, 12.6 percent of households had mortgages that exceeded 300 percent of disposable income (Figure 1). By 2012, the share had reached 27.4 percent. And, the share of households with mortgages at 500 percent or more of disposable income has climbed from 3.4 percent in 1999 to 10.8 percent in 2012. The underlying story is that as older, smaller mortgages were paid off, they were replaced by larger new mortgages reflecting the increase in home prices that has far outpaced household income growth.

And it looks like OSFI’s contemplating making mortgage applications even more of a paperwork nightmare than they are already:

Canada’s banking and insurance regulator highlighted fraudulent mortgage practices as a key threat to the country’s financial system, prompting consultations with lenders over how to ensure that the system can withstand a severe housing market downturn.

“It has come to light that institutions have been, I would say inadvertently, making mortgages to people whose income has been falsified,” said Jeremy Rudin, superintendent of financial institutions.

“One of things we’ve been doing is encouraging sound risk management. And as we set out in our guideline on mortgage underwriting, income verification – checking to make sure the borrower has the ability to carry the loan – is an important part of sound underwriting.”

Decisions, decisions…:

As the Treasury Department ponders which American woman should be featured on the $10 bill, an abundance of ideas is delaying the decision until next year.

The department is taking additional time to consider a range of options after receiving more suggestions than originally expected, the Treasury said Friday in an e-mailed statement. Secretary Jacob Lew is now expected to announce the choice in 2016.

I vote for Scarlett Johansson, nude.

But such happy thoughts are interrupted by warning stickers that might be put on preferred share buy confirmations soon:

cliffWarning
Click for Big

It was an utterly appalling day for the Canadian preferred share market, with PerpetualDiscounts down 84bp, FixedResets losing 194bp and DeemedRetractibles off 44bp. What can I say about the Performance Highlights table. “It is long”? How does that sound? Volume was enormous again.

For those keeping score, TXPR is now down 9.00% on the month to date and is now 1.07% below the low of October 14.

TXPR_151214
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TXPL is down about 11.70% on the month to date and is 2.50% below the low the October 14.

TXPL_151214
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For as long as the FixedReset market is so violently unsettled, I’ll keep publishing updates of the more interesting and meaningful series of FixedResets’ Implied Volatilities. This doesn’t include Enbridge because although Enbridge has a large number of issues outstanding, all of which are quite liquid, the range of Issue Reset Spreads is too small for decent conclusions. The low is 212bp (ENB.PR.H; second-lowest is ENB.PR.D at 237bp) and the high is a mere 268 for ENB.PF.G.

Remember that all rich /cheap assessments are:
» based on Implied Volatility Theory only
» are relative only to other FixedResets from the same issuer
» assume constant GOC-5 yield
» assume constant Implied Volatility
» assume constant spread

Here’s TRP:

impVol_TRP_151214
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TRP.PR.E, which resets 2019-10-30 at +235, is bid at 17.60 to be $1.26 rich, while TRP.PR.C, resetting 2016-1-30 at +154, is $1.08 cheap at its bid price of 11.10.

impVol_MFC_151214
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Most expensive is MFC.PR.H, resetting at +313bp on 2017-3-19, bid at 20.85 to be 0.73 rich, while MFC.PR.G, resetting at +290bp on 2016-12-19, is bid at 18.81 to be 0.68 cheap.

impVol_BAM_151214
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The cheapest issue relative to its peers is BAM.PR.R, resetting at +230bp on 2016-6-30, bid at 14.12 to be $1.04 cheap. BAM.PF.G, resetting at +284bp on 2020-6-30 is bid at 18.60 and appears to be $0.79 rich.

impVol_FTS_151214
Click for Big

FTS.PR.K, with a spread of +205bp, and bid at 16.93, looks $0.82 expensive and resets 2019-3-1. FTS.PR.G, with a spread of +213bp and resetting 2018-9-1, is bid at 15.75 and is $0.79 cheap.

pairs_FR_151214
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Investment-grade pairs predict an average three-month bill yield over the next five-odd years of -0.09%, with no outliers. There is one junk outlier below -1.00% and one above +1.00%. Note the vertical axis of this graph has been changed.

pairs_FF_151214
Click for Big

Shall we just say that this exhibits a high level of confidence in the continued rapacity of Canadian banks?

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 5.13 % 6.24 % 33,251 16.36 1 -0.3759 % 1,512.4
FixedFloater 7.44 % 6.59 % 33,611 15.52 1 -0.6226 % 2,623.3
Floater 4.49 % 4.61 % 85,427 16.24 4 -0.9656 % 1,700.2
OpRet 4.87 % 4.25 % 28,516 0.70 1 0.0000 % 2,734.3
SplitShare 4.88 % 5.85 % 84,172 1.88 6 -0.5928 % 3,167.3
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.5928 % 2,471.3
Perpetual-Premium 5.88 % 5.95 % 91,987 13.85 7 -0.0750 % 2,462.6
Perpetual-Discount 5.88 % 5.96 % 102,618 13.90 33 -0.8390 % 2,435.7
FixedReset 5.63 % 5.06 % 254,121 14.65 78 -1.9400 % 1,833.9
Deemed-Retractible 5.32 % 5.88 % 135,492 7.03 33 -0.4371 % 2,520.7
FloatingReset 2.88 % 4.62 % 64,478 5.67 11 -1.0367 % 2,048.8
Performance Highlights
Issue Index Change Notes
GWO.PR.N FixedReset -7.26 % A little bit real, but not quite as bad as it looks. The issue traded 32,758 shares in a range of 12.87-77 before closing at 12.52-75, 2×3 … so while the bid is reasonable compared to the offer, the offer is below the low for the day, which is less reasonable. The last trade of the day was at 13.04, timestamped 3:58, for 100 shares. VWAP was 13.23.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 12.52
Bid-YTW : 10.80 %
HSE.PR.A FixedReset -6.68 % Quite real enough! The issue traded 19,609 shares today in a range of 10.61-40 before closing at 10.61-02, 2×4. There were six trades totalling 900 shares timestamped 3:59 done at 10.61. VWAP was 10.99.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 10.61
Evaluated at bid price : 10.61
Bid-YTW : 5.88 %
W.PR.J Perpetual-Discount -6.54 % Not real. The issue traded 1,100 shares today in a range of 23.10-26 before closing at 22.16-08, 6×6. The last trade of the day was for 100 shares at 23.10, timestamped 3:47. VWAP was 23.22. I have not checked whether this lamentable state of affairs is due to inadequate Toronto Stock Exchange reporting or inadequate Toronto Stock Exchange supervision of market-makers.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.92
Evaluated at bid price : 22.16
Bid-YTW : 6.43 %
W.PR.H Perpetual-Discount -6.46 % Not real, as the issue traded 1,335 shares in a range of 22.92-50 before closing at 22.56-80, 12×10. It will be noted that here I am reporting a 22.56 closing bid and using a 22.00 bid for calculation purposes. Well, all I can say is that the 22.00 is what I have bought from the Toronto Exchange at great expense, and the 22.56 is what they report on their website. I suppose the National Best Bid was on another exchange.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.75
Evaluated at bid price : 22.00
Bid-YTW : 6.36 %
TRP.PR.C FixedReset -6.01 % It looks like this issue was targeted by the seller who took the market down late in the day, as the last twenty-four trades all list “anonymous” as the seller. These trades started at 3:51 at a price of 11.13 and lasted until 3:59 at 11.12 – most of the trades were executed above these levels. These trades totalled 3,000 shares, vs. 28,104 on the day. The day’s VWAP was 11.53.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 11.10
Evaluated at bid price : 11.10
Bid-YTW : 5.24 %
BIP.PR.B FixedReset -4.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.91
Evaluated at bid price : 22.40
Bid-YTW : 6.17 %
PWF.PR.P FixedReset -4.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 12.90
Evaluated at bid price : 12.90
Bid-YTW : 4.62 %
TRP.PR.D FixedReset -4.50 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.54
Evaluated at bid price : 16.54
Bid-YTW : 5.06 %
CIU.PR.C FixedReset -4.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 13.00
Evaluated at bid price : 13.00
Bid-YTW : 4.14 %
BMO.PR.S FixedReset -4.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.77
Evaluated at bid price : 16.77
Bid-YTW : 4.90 %
BNS.PR.Z FixedReset -4.01 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.20
Bid-YTW : 7.99 %
HSE.PR.C FixedReset -4.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.32
Evaluated at bid price : 16.32
Bid-YTW : 6.20 %
PWF.PR.T FixedReset -3.79 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.07
Evaluated at bid price : 21.07
Bid-YTW : 3.96 %
TRP.PR.A FixedReset -3.70 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 14.59
Evaluated at bid price : 14.59
Bid-YTW : 4.81 %
MFC.PR.F FixedReset -3.69 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.58
Bid-YTW : 10.04 %
IFC.PR.A FixedReset -3.57 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 14.32
Bid-YTW : 10.28 %
MFC.PR.I FixedReset -3.43 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.17
Bid-YTW : 7.36 %
TRP.PR.B FixedReset -3.31 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 10.50
Evaluated at bid price : 10.50
Bid-YTW : 4.92 %
BNS.PR.R FixedReset -3.30 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.53
Bid-YTW : 5.30 %
MFC.PR.G FixedReset -3.19 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.81
Bid-YTW : 7.57 %
BAM.PR.R FixedReset -2.69 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 14.12
Evaluated at bid price : 14.12
Bid-YTW : 5.50 %
BNS.PR.Y FixedReset -2.65 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.70
Bid-YTW : 6.98 %
BMO.PR.Y FixedReset -2.57 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 18.56
Evaluated at bid price : 18.56
Bid-YTW : 4.82 %
PVS.PR.D SplitShare -2.54 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2021-10-08
Maturity Price : 25.00
Evaluated at bid price : 21.85
Bid-YTW : 7.25 %
BMO.PR.T FixedReset -2.51 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.67
Evaluated at bid price : 16.67
Bid-YTW : 4.80 %
BMO.PR.W FixedReset -2.48 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.52
Evaluated at bid price : 16.52
Bid-YTW : 4.81 %
CU.PR.C FixedReset -2.47 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.36
Evaluated at bid price : 17.36
Bid-YTW : 4.67 %
CM.PR.P FixedReset -2.43 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.44
Evaluated at bid price : 16.44
Bid-YTW : 4.90 %
RY.PR.I FixedReset -2.39 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.50
Bid-YTW : 5.11 %
FTS.PR.H FixedReset -2.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 12.77
Evaluated at bid price : 12.77
Bid-YTW : 4.48 %
CM.PR.Q FixedReset -2.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.81
Evaluated at bid price : 17.81
Bid-YTW : 5.06 %
CU.PR.I FixedReset -2.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 22.89
Evaluated at bid price : 24.25
Bid-YTW : 4.59 %
BMO.PR.M FixedReset -2.17 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.50
Bid-YTW : 4.81 %
NA.PR.W FixedReset -2.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.20
Evaluated at bid price : 16.20
Bid-YTW : 5.01 %
TRP.PR.E FixedReset -2.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.60
Evaluated at bid price : 17.60
Bid-YTW : 4.82 %
PWF.PR.A Floater -2.16 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 11.75
Evaluated at bid price : 11.75
Bid-YTW : 4.05 %
RY.PR.L FixedReset -2.13 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.85
Bid-YTW : 4.82 %
NA.PR.Q FixedReset -2.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.60
Bid-YTW : 4.52 %
SLF.PR.H FixedReset -2.02 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.53
Bid-YTW : 9.25 %
TD.PF.E FixedReset -1.96 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 19.00
Evaluated at bid price : 19.00
Bid-YTW : 4.86 %
RY.PR.M FixedReset -1.93 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.76
Evaluated at bid price : 17.76
Bid-YTW : 4.88 %
BNS.PR.Q FixedReset -1.93 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.33
Bid-YTW : 5.19 %
RY.PR.J FixedReset -1.91 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.95
Evaluated at bid price : 17.95
Bid-YTW : 4.94 %
BMO.PR.Z Perpetual-Discount -1.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 22.09
Evaluated at bid price : 22.41
Bid-YTW : 5.62 %
TD.PR.Z FloatingReset -1.87 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.48
Bid-YTW : 4.78 %
MFC.PR.N FixedReset -1.87 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.31
Bid-YTW : 8.37 %
MFC.PR.J FixedReset -1.86 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.50
Bid-YTW : 7.57 %
CM.PR.O FixedReset -1.85 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.00
Evaluated at bid price : 17.00
Bid-YTW : 4.85 %
RY.PR.A Deemed-Retractible -1.75 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.21
Bid-YTW : 5.13 %
TRP.PR.F FloatingReset -1.69 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 12.78
Evaluated at bid price : 12.78
Bid-YTW : 4.62 %
HSE.PR.G FixedReset -1.69 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.50
Evaluated at bid price : 17.50
Bid-YTW : 6.26 %
BAM.PR.Z FixedReset -1.67 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.65
Evaluated at bid price : 17.65
Bid-YTW : 5.45 %
BIP.PR.A FixedReset -1.60 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 18.40
Evaluated at bid price : 18.40
Bid-YTW : 5.95 %
FTS.PR.G FixedReset -1.56 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 15.75
Evaluated at bid price : 15.75
Bid-YTW : 4.85 %
IAG.PR.G FixedReset -1.55 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.00
Bid-YTW : 7.40 %
SLF.PR.J FloatingReset -1.55 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 12.72
Bid-YTW : 10.26 %
TRP.PR.H FloatingReset -1.53 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 9.68
Evaluated at bid price : 9.68
Bid-YTW : 4.44 %
TD.PF.B FixedReset -1.51 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.95
Evaluated at bid price : 16.95
Bid-YTW : 4.75 %
TD.PF.C FixedReset -1.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.73
Evaluated at bid price : 16.73
Bid-YTW : 4.80 %
ELF.PR.H Perpetual-Discount -1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 22.37
Evaluated at bid price : 22.66
Bid-YTW : 6.17 %
GWO.PR.F Deemed-Retractible -1.39 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.80
Bid-YTW : 6.02 %
BAM.PR.X FixedReset -1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 12.78
Evaluated at bid price : 12.78
Bid-YTW : 5.34 %
PVS.PR.C SplitShare -1.37 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2017-12-10
Maturity Price : 25.00
Evaluated at bid price : 24.41
Bid-YTW : 6.21 %
NA.PR.S FixedReset -1.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.75
Evaluated at bid price : 16.75
Bid-YTW : 5.03 %
BNS.PR.P FixedReset -1.32 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.18
Bid-YTW : 4.49 %
FTS.PR.I FloatingReset -1.30 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 11.40
Evaluated at bid price : 11.40
Bid-YTW : 4.17 %
CIU.PR.A Perpetual-Discount -1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 20.10
Evaluated at bid price : 20.10
Bid-YTW : 5.78 %
RY.PR.O Perpetual-Discount -1.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.50
Evaluated at bid price : 21.80
Bid-YTW : 5.66 %
TD.PR.Y FixedReset -1.25 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.00
Bid-YTW : 4.60 %
GWO.PR.G Deemed-Retractible -1.24 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.30
Bid-YTW : 6.81 %
TD.PF.F Perpetual-Discount -1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.60
Evaluated at bid price : 21.93
Bid-YTW : 5.65 %
BAM.PF.H FixedReset -1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 23.04
Evaluated at bid price : 24.65
Bid-YTW : 4.99 %
MFC.PR.M FixedReset -1.19 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.38
Bid-YTW : 8.39 %
BNS.PR.D FloatingReset -1.16 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.86
Bid-YTW : 7.30 %
TD.PF.A FixedReset -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.15
Evaluated at bid price : 17.15
Bid-YTW : 4.70 %
BMO.PR.R FloatingReset -1.14 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.70
Bid-YTW : 4.56 %
BAM.PF.A FixedReset -1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.70
Evaluated at bid price : 17.70
Bid-YTW : 5.36 %
GWO.PR.I Deemed-Retractible -1.09 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.96
Bid-YTW : 7.61 %
FTS.PR.J Perpetual-Discount -1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.07
Evaluated at bid price : 21.07
Bid-YTW : 5.69 %
RY.PR.F Deemed-Retractible -1.06 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.30
Bid-YTW : 5.06 %
IFC.PR.C FixedReset 1.10 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.50
Bid-YTW : 8.22 %
RY.PR.P Perpetual-Discount 1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 24.04
Evaluated at bid price : 24.40
Bid-YTW : 5.47 %
MFC.PR.K FixedReset 1.79 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.10
Bid-YTW : 8.30 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.Z FixedReset 94,695 GMP bought blocks of 18,400 and 16,900 from National at 17.25.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.10
Evaluated at bid price : 17.10
Bid-YTW : 4.65 %
TRP.PR.A FixedReset 69,180 RBC crossed 50,400 at 15.25.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 14.59
Evaluated at bid price : 14.59
Bid-YTW : 4.81 %
TRP.PR.F FloatingReset 59,315 RBC crossed 53,000 at 12.60.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 12.78
Evaluated at bid price : 12.78
Bid-YTW : 4.62 %
TRP.PR.D FixedReset 56,782 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.54
Evaluated at bid price : 16.54
Bid-YTW : 5.06 %
BAM.PF.H FixedReset 54,415 Nesbitt crossed 25,000 at 24.85.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 23.04
Evaluated at bid price : 24.65
Bid-YTW : 4.99 %
NA.PR.S FixedReset 53,016 Nesbitt crossed 29,000 at 16.90.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.75
Evaluated at bid price : 16.75
Bid-YTW : 5.03 %
There were 82 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BIP.PR.B FixedReset Quote: 22.40 – 23.40
Spot Rate : 1.0000
Average : 0.5767

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.91
Evaluated at bid price : 22.40
Bid-YTW : 6.17 %

W.PR.J Perpetual-Discount Quote: 22.16 – 23.08
Spot Rate : 0.9200
Average : 0.5539

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.92
Evaluated at bid price : 22.16
Bid-YTW : 6.43 %

W.PR.H Perpetual-Discount Quote: 22.00 – 22.80
Spot Rate : 0.8000
Average : 0.4906

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 21.75
Evaluated at bid price : 22.00
Bid-YTW : 6.36 %

BMO.PR.S FixedReset Quote: 16.77 – 17.30
Spot Rate : 0.5300
Average : 0.3183

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 16.77
Evaluated at bid price : 16.77
Bid-YTW : 4.90 %

CIU.PR.C FixedReset Quote: 13.00 – 13.79
Spot Rate : 0.7900
Average : 0.5804

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 13.00
Evaluated at bid price : 13.00
Bid-YTW : 4.14 %

CM.PR.Q FixedReset Quote: 17.81 – 18.46
Spot Rate : 0.6500
Average : 0.4432

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2045-12-14
Maturity Price : 17.81
Evaluated at bid price : 17.81
Bid-YTW : 5.06 %

PrefLetter: December Errata

December 15th, 2015

Assiduous Reader AC writes in and says:

I think an error was made on page 54 … the table of sub investment grade fixed resets… gets to LB.pr>h and then just repeats that… can you please correct?

Well, he’s quite right. The first column of the table – with the ticker symbols – simply repeats itself after reaching LB.PR.H.

For the correction, with the proper symbols for each row, please click here for the PDF.

December PrefLetter Released!

December 14th, 2015

The December, 2015, edition of PrefLetter has been released and is now available for purchase as the “Previous edition”. Those who subscribe for a full year receive the “Previous edition” as a bonus.

The regular appendices reporting on DeemedRetractibles and FixedResets are included.

PrefLetter may now be purchased by all Canadian residents.

Until further notice, the “Previous Edition” will refer to the December, 2015, issue, while the “Next Edition” will be the January, 2016, issue, scheduled to be prepared as of the close January 8 and eMailed to subscribers prior to market-opening on January 11.

PrefLetter is intended for long term investors seeking issues to buy-and-hold. At least one recommendation from each of the major preferred share sectors is included and discussed.

Note: My verbosity has grown by such leaps and bounds that it is no longer possible to deliver PrefLetter as an eMail attachment – it’s just too big for my software! Instead, I have sent passwords – click on the link in your eMail and your copy will download.

Note: The PrefLetter website has a Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter eMails sometimes runs afoul of spam filters. If you have not received your copy within fifteen minutes of a release notice such as this one, please double check your (company’s) spam filtering policy and your spam repository – there are some hints in the post Sympatico Spam Filters out of Control. If it’s not there, contact me and I’ll get you your copy … somehow!

Note: There have been scattered complaints regarding inability to open PrefLetter in Acrobat Reader, despite my practice of including myself on the subscription list and immediately checking the copy received. I have had the occasional difficulty reading US Government documents, which I was able to resolve by downloading and installing the latest version of Adobe Reader. Also, note that so far, all complaints have been from users of Yahoo Mail. Try saving it to disk first, before attempting to open it.

Note: There have been other scattered complaints that double-clicking on the links in the “PrefLetter Download” email results in a message that the password has already been used. I have been able to reproduce this problem in my own eMail software … the problem is double-clicking. What happens is the first click opens the link and the second click finds that the password has already been used and refuses to work properly. So the moral of the story is: Don’t be a dick! Single Click!

Note: Assiduous Reader DG informs me:

In case you have any other Apple users: you need to install a free App from the apple store called “FileApp”. It comes with it’s own tutorial and allows you to download and save a PDF file.

However, Assiduous Reader Adrian informs me in the comments to the January 2015 release:

Some nitpicking for DG:
FileApp costs $1.19 in the Apple Store.

FFN.PR.A: 15H1 Semi-Annual Report

December 14th, 2015

North American Financial 15 Split Corp. has released its Semi-Annual Report to May 31, 2015.

Figures of interest are:

MER: 1.31% of the whole unit value

Average Net Assets: We need this to calculate portfolio yield. No change in Number of Units Outstanding, so just calculate as [129.2-million (NAV at beginning of period) + 126.6-million (NAV at end of period)] / 2 = 127.9-million.

Underlying Portfolio Yield: Dividends received (net of withholding) of 1.874-million times two because it’s only half a year divided by average net assets of 127.9-million is 2.93%

Income Coverage: Net Investment Income of 982,591 divided by Preferred Share Distributions of 1,978,585 is 50%.