Press Clippings

Desperately Seeking Value

Andrew Allentuck was kind enough to both me and Malachite Aggressive Preferred Fund in his Financial Post article today, Desperately Seeking Value:

Some managers add value to market returns. James Hymas’s Toronto-based Malachite Aggressive Preferred Fund, for example, produced a 14.8% average annual gain for the five years ended Jan. 31, 2012 vs. the 4.15% average annual gain of its benchmark, the BMO Capital Markets 50 Index.

His fees, which start at 1.34% of net asset value and drop as amounts invested grow, are below average.

.His style is the rigorous fundamental analysis used for fixed income assets – balance sheets, study of corporate capital structure, and a good deal of what one might call iconoclastic beliefs in the market. His territory, preferred shares, is usually ignored by other managers. But his returns show that a maverick manager who does not follow the market can perform well for clients.

There’s a rather good picture of me with the article:


Click for Big
Perfect for Sorority parties!

Those who are fixated on the phrase produced a 14.8% average annual gain for the five years ended Jan. 31, 2012 vs. the 4.15% average annual gain of its benchmark are reminded that the five year period to 2012-1-31 included the Credit Crunch, when market conditions were perfect for my investment style. While I certainly hope to continue delivering performance that earns my fee, I do not expect to see such ideal conditions ever again. See Annualized Performance to Fourth Quarter for a good historical overview.

Update: The on-line version posted on canada.com has the picture that was printed in the paper:


Click for very big
Issue Comments

LFE.PR.A Holders to Vote on Secret Resolution!

Canadian Life Companies Split Corp has announced:

that a special meeting of the holders of the Company’s Preferred Shares and Class A Shares will be held at 10:00 a.m. (Eastern standard time) on April 16, 2012. The purpose of the meeting is to consider a special resolution to approve a reorganization of the Company which includes among other things, a capital reorganization of the Preferred Shares and extending the mandatory termination date for the Company from December 1, 2012 to December 1, 2018. Shareholders of record at the close of business on March 6, 2012 will be provided with the notice of meeting and management information circular in respect of the meeting and will be entitled to vote at the meeting. Details of the matters to be voted on at the special meeting will be provided in the management information circular for the meeting to be mailed to shareholders on or about March 16, 2012.

The Company invests in a portfolio of four publicly traded Canadian life insurance companies as follows: Great-West Life, Industrial Alliance, Manulife Financial and Sun Life Financial. Shares held within the portfolio are expected to range between 10-30% in weight but may vary at any time.

A capital reorganization of the Preferred Shares, eh? Not too surprising seeing as the company’s NAV is only 11.64 as of February 15. We will see on March 16 just what exactly capital reorganization of the Preferred Shares entails, but the fact that the directors were too embarrassed to write it down in the press release is not a good sign.

LFE.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-4(low) by DBRS. LFE.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Market Action

February 21, 2012

The Greek crisis is resolved! Or is it?:

Seven months of negotiations ended in the pre-dawn hours in Brussels with Greece winning 130 billion euros ($172 billion) in aid it needs to avoid a March bankruptcy. Any respite may prove temporary after it signed up to a program of austerity and economic reform aimed at slashing debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year.

Even with investors and central bankers chipping in to relieve the debt burden, economists from Citigroup Inc. to Commerzbank AG concluded Greece may again fail to deliver amid a fifth year of recession, looming elections and social unrest. The upshot could be the removal of aid and renewed debate over the merits of fresh assistance before year-end as policy makers shift toward doing more to inoculate the rest of Europe.

I think all they’re doing is providing the incubator for the next Hitler. I wonder what this one will be like. Fortunately, Greece isn’t as large or industrialized or revanchist as 1930 Germany … except for maybe Macedonia.

The internal report isn’t too cheery:

Experts from the European Commission, the European Central Bank and the International Monetary Fund highlighted the risks and questioned the assumption that Greece will be able to return to capital markets in the coming years.

“There is a fundamental tension between the program objectives of reducing debt and improving competitiveness, in that the internal devaluation needed to restore Greece’s competitiveness will inevitably lead to a higher debt to GDP ratio in the near term,” the analysis said.

“Given the risks, the Greek program may thus remain accident-prone, with questions about sustainability hanging over it.”

However, the Europeans are trying very hard to prove the truth of the maxim: Don’t invest in European sovereigns unless you’ve got a little bit of insider pull:

Euro-area central banks will swap the Greek bonds in their investment portfolios for similar securities to avoid enforced losses during a debt restructuring, a euro-area official said.

The swap will happen today and is identical to one the European Central Bank carried out last week with the Greek bonds acquired in its asset-purchase program, the official said. The new Greek bonds will be immune to collective action clauses, or CACs, ensuring central banks don’t incur any losses when a private-sector debt write-down takes place, the official said on condition of anonymity. A spokesman for the Frankfurt-based ECB declined to comment.

The Canadian preferred share market came back a little today,with PerpetualPremiums winning 13bp, FixedResets gaining 7bp and DeemedRetractibles up 5bp. Reasonable volatility, with the Performance Highlights table skewed towards the upside and to insurance issues. Volume was a little above average.

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 0.00 % 0.00 % 0 0.00 0 0.4817 % 2,387.3
FixedFloater 4.62 % 4.00 % 38,366 17.32 1 -1.6276 % 3,373.1
Floater 2.80 % 3.03 % 58,003 19.60 3 0.4817 % 2,577.7
OpRet 4.90 % 2.76 % 59,881 1.25 6 -0.2490 % 2,499.3
SplitShare 5.30 % -0.90 % 81,978 0.80 4 0.1905 % 2,664.7
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.2490 % 2,285.4
Perpetual-Premium 5.40 % 3.52 % 114,833 0.19 26 0.1326 % 2,195.5
Perpetual-Discount 5.17 % 5.21 % 74,890 15.06 4 0.3506 % 2,389.0
FixedReset 5.07 % 2.86 % 211,753 2.28 65 0.0696 % 2,374.5
Deemed-Retractible 4.96 % 3.81 % 199,140 2.96 45 0.0543 % 2,285.6
Performance Highlights
Issue Index Change Notes
SLF.PR.H FixedReset -1.96 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.55
Bid-YTW : 4.58 %
BAM.PR.G FixedFloater -1.63 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 21.60
Evaluated at bid price : 20.55
Bid-YTW : 4.00 %
GWO.PR.G Deemed-Retractible 1.00 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.25
Bid-YTW : 5.08 %
CIU.PR.A Perpetual-Premium 1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 24.42
Evaluated at bid price : 24.71
Bid-YTW : 4.65 %
BAM.PR.N Perpetual-Discount 1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 23.15
Evaluated at bid price : 23.59
Bid-YTW : 5.09 %
MFC.PR.D FixedReset 1.25 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.00
Evaluated at bid price : 26.65
Bid-YTW : 3.43 %
MFC.PR.B Deemed-Retractible 1.39 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.32
Bid-YTW : 5.52 %
PWF.PR.A Floater 1.40 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 21.54
Evaluated at bid price : 21.80
Bid-YTW : 2.39 %
PWF.PR.K Perpetual-Premium 1.56 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 24.16
Evaluated at bid price : 24.68
Bid-YTW : 5.03 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.D Deemed-Retractible 74,555 TD crossed 50,000 at 25.56.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-02-24
Maturity Price : 25.00
Evaluated at bid price : 25.56
Bid-YTW : 3.91 %
TD.PR.I FixedReset 65,417 TD crossed 50,000 at 27.05.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-31
Maturity Price : 25.00
Evaluated at bid price : 27.13
Bid-YTW : 2.79 %
MFC.PR.D FixedReset 58,725 RBC crossed 13,000 at 26.72.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.00
Evaluated at bid price : 26.65
Bid-YTW : 3.43 %
RY.PR.Y FixedReset 53,476 RBC crossed 49,100 at 27.25.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-11-24
Maturity Price : 25.00
Evaluated at bid price : 27.16
Bid-YTW : 2.83 %
RY.PR.P FixedReset 51,755 TD crossed 50,000 at 26.77.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-24
Maturity Price : 25.00
Evaluated at bid price : 26.72
Bid-YTW : 2.71 %
BMO.PR.J Deemed-Retractible 50,102 Nesbitt crossed 22,400 at 25.70.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-02-25
Maturity Price : 25.00
Evaluated at bid price : 25.65
Bid-YTW : 3.81 %
There were 36 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: 20.55 – 21.00
Spot Rate : 0.4500
Average : 0.2966

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 21.60
Evaluated at bid price : 20.55
Bid-YTW : 4.00 %

GWO.PR.M Deemed-Retractible Quote: 26.18 – 26.59
Spot Rate : 0.4100
Average : 0.2624

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 26.18
Bid-YTW : 5.33 %

BAM.PR.K Floater Quote: 17.07 – 17.49
Spot Rate : 0.4200
Average : 0.2937

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-21
Maturity Price : 17.07
Evaluated at bid price : 17.07
Bid-YTW : 3.10 %

MFC.PR.C Deemed-Retractible Quote: 22.76 – 23.08
Spot Rate : 0.3200
Average : 0.2058

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.76
Bid-YTW : 5.68 %

PWF.PR.I Perpetual-Premium Quote: 25.46 – 25.80
Spot Rate : 0.3400
Average : 0.2305

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-04-30
Maturity Price : 25.00
Evaluated at bid price : 25.46
Bid-YTW : -1.96 %

RY.PR.C Deemed-Retractible Quote: 25.71 – 26.02
Spot Rate : 0.3100
Average : 0.2081

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-11-24
Maturity Price : 25.00
Evaluated at bid price : 25.71
Bid-YTW : 3.80 %

Market Action

February 17, 2012

Greece is preparing a collective action clause:

The Greek government is drawing up legislation that could be used to impose losses on investors who don’t support the debt swap that’s part of the country’s new bailout package, said two euro-region officials familiar with the situation.

The law may be introduced to parliament in Athens in the coming days, said one of the officials, who spoke on condition of anonymity because the deliberations are confidential. Euro region finance ministers are prepared to back the use of so- called collective action clauses if a voluntary debt swap doesn’t draw enough participation, the other person said.

Collective action will trigger payments on Credit Default Swaps. But here’s the really disgraceful part:

The European Central Bank is swapping its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring, three euro-area officials said.

The Frankfurt-based ECB is exchanging its Greek bonds for bonds of an identical structure and nominal value, the only difference being that they would be exempt from so-called collective action clauses, the officials said late yesterday on condition of anonymity. One said the bonds have a face value of about 50 billion euros ($65 billion).

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 8bp, FixedResets off 1bp and DeemedRetractibles also gaining 8bp. There was good volatility, with all three Floaters listed in the Performance Highlights on the losing side. Volume was average.

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 0.00 % 0.00 % 0 0.00 0 -1.3204 % 2,375.9
FixedFloater 4.55 % 3.92 % 38,156 17.46 1 0.0000 % 3,428.9
Floater 2.81 % 3.06 % 59,933 19.54 3 -1.3204 % 2,565.3
OpRet 4.89 % 2.65 % 60,403 1.31 6 0.0933 % 2,505.6
SplitShare 5.31 % -0.65 % 82,278 0.81 4 0.5520 % 2,659.6
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0933 % 2,291.1
Perpetual-Premium 5.40 % 3.45 % 115,412 0.93 26 0.0804 % 2,192.6
Perpetual-Discount 5.19 % 5.20 % 77,833 15.09 4 0.1809 % 2,380.7
FixedReset 5.07 % 2.94 % 215,500 2.30 65 -0.0107 % 2,372.9
Deemed-Retractible 4.96 % 3.85 % 200,669 2.62 45 0.0790 % 2,284.4
Performance Highlights
Issue Index Change Notes
SLF.PR.G FixedReset -1.55 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.55
Bid-YTW : 4.19 %
BAM.PR.K Floater -1.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 17.24
Evaluated at bid price : 17.24
Bid-YTW : 3.07 %
BAM.PR.B Floater -1.31 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 17.31
Evaluated at bid price : 17.31
Bid-YTW : 3.06 %
PWF.PR.A Floater -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 21.50
Evaluated at bid price : 21.50
Bid-YTW : 2.45 %
PWF.PR.P FixedReset 1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 23.44
Evaluated at bid price : 25.60
Bid-YTW : 3.04 %
SLF.PR.B Deemed-Retractible 1.04 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.40
Bid-YTW : 5.77 %
BNA.PR.E SplitShare 1.23 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2017-12-10
Maturity Price : 25.00
Evaluated at bid price : 24.55
Bid-YTW : 5.19 %
Volume Highlights
Issue Index Shares
Traded
Notes
SLF.PR.F FixedReset 63,401 RBC crossed 50,100 at 26.45.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-30
Maturity Price : 25.00
Evaluated at bid price : 26.40
Bid-YTW : 3.88 %
ENB.PR.F FixedReset 54,134 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 23.20
Evaluated at bid price : 25.31
Bid-YTW : 3.79 %
BMO.PR.J Deemed-Retractible 46,243 Nesbitt crossed 12,000 at 25.57.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-02-25
Maturity Price : 25.00
Evaluated at bid price : 25.60
Bid-YTW : 3.85 %
TD.PR.I FixedReset 42,111 TD crossed 32,800 at 27.00
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-31
Maturity Price : 25.00
Evaluated at bid price : 27.03
Bid-YTW : 2.94 %
MFC.PR.A OpRet 24,656 RBC crossed 11,000 at 25.46.
YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2015-12-18
Maturity Price : 25.00
Evaluated at bid price : 25.41
Bid-YTW : 3.56 %
BNS.PR.Z FixedReset 22,685 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.97
Bid-YTW : 3.21 %
There were 32 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
CIU.PR.A Perpetual-Premium Quote: 24.44 – 24.85
Spot Rate : 0.4100
Average : 0.2799

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 24.15
Evaluated at bid price : 24.44
Bid-YTW : 4.70 %

HSB.PR.D Deemed-Retractible Quote: 25.55 – 25.89
Spot Rate : 0.3400
Average : 0.2246

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.25
Evaluated at bid price : 25.55
Bid-YTW : 4.67 %

BNS.PR.O Deemed-Retractible Quote: 26.75 – 27.10
Spot Rate : 0.3500
Average : 0.2384

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-04-26
Maturity Price : 26.00
Evaluated at bid price : 26.75
Bid-YTW : 3.11 %

RY.PR.A Deemed-Retractible Quote: 25.41 – 25.65
Spot Rate : 0.2400
Average : 0.1479

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-24
Maturity Price : 25.25
Evaluated at bid price : 25.41
Bid-YTW : 4.09 %

ELF.PR.F Perpetual-Discount Quote: 24.41 – 24.80
Spot Rate : 0.3900
Average : 0.3003

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 24.11
Evaluated at bid price : 24.41
Bid-YTW : 5.48 %

POW.PR.B Perpetual-Premium Quote: 24.85 – 25.13
Spot Rate : 0.2800
Average : 0.1996

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-17
Maturity Price : 24.60
Evaluated at bid price : 24.85
Bid-YTW : 5.44 %

Issue Comments

NBF.PR.A Matures on Schedule

NB Split Corp has announced:

the redemption prices for all outstanding Capital Shares and Preferred Shares as follows:

– Redemption Price per two Capital Shares: $43.94

– Redemption Price per Preferred Share: $32.72

Holders of 34,600 Capital Shares requested delivery of and will receive their pro rata share of National Bank shares in payment for their Capital Shares instead of cash.

All redemption payments are expected to be made on or about February 21, 2012.

DBRS has discontinued the rating.

NBF.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-3(high) by DBRS. NBF.PR.A was not tracked by HIMIPref™.

Market Action

February 16, 2012

The Europeans are going to solve all their problems by monetizing the Greek default:

European governments are considering cutting interest rates on emergency loans to Greece and using contributions from the European Central Bank to plug a new financing gap in the second bailout program for Athens, two people familiar with the discussions said.

Finance ministers wrangled over how to close the funding hole in a teleconference last night after seeing estimates that Greece’s debt would fall to 129 percent of gross domestic product in 2020, missing a target of 120 percent, said the people, who declined to be named because the talks are still in progress. Last year, the level was about 160 percent.

It was another down day for the Canadian preferred share market, with PerpetualPremiums off 5bp, and both FixedResets and DeemedRetractibles losing 31bp. PerpetualDiscounts (all four of them) were hammered for 194bp. Lots of volatility, heavily skewed towards losers. Volume was above average.

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 0.00 % 0.00 % 0 0.00 0 -1.4402 % 2,407.7
FixedFloater 4.55 % 3.92 % 38,276 17.46 1 0.0000 % 3,428.9
Floater 2.77 % 3.02 % 61,887 19.65 3 -1.4402 % 2,599.6
OpRet 4.88 % 2.50 % 59,222 1.32 6 0.0511 % 2,503.2
SplitShare 5.29 % -0.76 % 81,635 0.81 4 -0.1495 % 2,645.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0511 % 2,289.0
Perpetual-Premium 5.41 % 4.02 % 116,607 1.58 26 -0.0493 % 2,190.8
Perpetual-Discount 5.20 % 5.20 % 78,648 15.08 4 -1.9413 % 2,376.4
FixedReset 5.07 % 2.92 % 214,787 2.28 65 -0.3066 % 2,373.1
Deemed-Retractible 4.96 % 3.93 % 201,544 3.03 45 -0.3134 % 2,282.6
Performance Highlights
Issue Index Change Notes
BAM.PR.N Perpetual-Discount -3.57 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 22.80
Evaluated at bid price : 23.20
Bid-YTW : 5.17 %
PWF.PR.A Floater -3.38 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 21.49
Evaluated at bid price : 21.75
Bid-YTW : 2.39 %
BAM.PR.M Perpetual-Discount -2.82 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.00
Evaluated at bid price : 23.46
Bid-YTW : 5.11 %
BAM.PR.Z FixedReset -1.91 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.31
Evaluated at bid price : 25.63
Bid-YTW : 4.30 %
W.PR.H Perpetual-Premium -1.53 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 24.79
Evaluated at bid price : 25.11
Bid-YTW : 5.53 %
SLF.PR.G FixedReset -1.40 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.92
Bid-YTW : 4.00 %
SLF.PR.B Deemed-Retractible -1.32 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.16
Bid-YTW : 5.90 %
MFC.PR.C Deemed-Retractible -1.21 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.93
Bid-YTW : 5.73 %
ELF.PR.F Perpetual-Discount -1.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 24.00
Evaluated at bid price : 24.30
Bid-YTW : 5.50 %
CU.PR.C FixedReset -1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.23
Evaluated at bid price : 25.27
Bid-YTW : 3.68 %
IFC.PR.C FixedReset -1.17 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.31
Bid-YTW : 4.05 %
RY.PR.F Deemed-Retractible -1.17 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-05-24
Maturity Price : 25.00
Evaluated at bid price : 25.44
Bid-YTW : 4.00 %
SLF.PR.I FixedReset -1.16 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-12-31
Maturity Price : 25.00
Evaluated at bid price : 24.61
Bid-YTW : 4.54 %
SLF.PR.A Deemed-Retractible -1.15 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.16
Bid-YTW : 5.85 %
SLF.PR.E Deemed-Retractible -1.10 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.40
Bid-YTW : 6.01 %
BNS.PR.M Deemed-Retractible -1.05 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-07-27
Maturity Price : 25.25
Evaluated at bid price : 25.52
Bid-YTW : 4.21 %
IAG.PR.A Deemed-Retractible 1.65 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.99
Bid-YTW : 5.23 %
Volume Highlights
Issue Index Shares
Traded
Notes
ENB.PR.F FixedReset 118,141 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.19
Evaluated at bid price : 25.30
Bid-YTW : 3.79 %
RY.PR.X FixedReset 48,731 Scotia crossed blocks of 16,900 and 25,000 at 27.10.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-08-24
Maturity Price : 25.00
Evaluated at bid price : 27.14
Bid-YTW : 2.69 %
BMO.PR.Q FixedReset 48,482 RBC crossed blocks of 14,500 and 20,000 at 25.80.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 25.75
Bid-YTW : 2.86 %
BNS.PR.Z FixedReset 45,079 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.91
Bid-YTW : 3.24 %
RY.PR.A Deemed-Retractible 42,264 TD crossed 17,900 at 25.60.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-05-24
Maturity Price : 25.00
Evaluated at bid price : 25.54
Bid-YTW : 3.73 %
BNS.PR.N Deemed-Retractible 30,615 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-01-29
Maturity Price : 26.00
Evaluated at bid price : 26.30
Bid-YTW : 4.05 %
There were 41 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
W.PR.H Perpetual-Premium Quote: 25.11 – 25.99
Spot Rate : 0.8800
Average : 0.5394

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 24.79
Evaluated at bid price : 25.11
Bid-YTW : 5.53 %

BAM.PR.R FixedReset Quote: 26.30 – 27.00
Spot Rate : 0.7000
Average : 0.4689

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.58
Evaluated at bid price : 26.30
Bid-YTW : 3.74 %

SLF.PR.G FixedReset Quote: 23.92 – 24.64
Spot Rate : 0.7200
Average : 0.5068

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.92
Bid-YTW : 4.00 %

BAM.PR.N Perpetual-Discount Quote: 23.20 – 23.60
Spot Rate : 0.4000
Average : 0.2783

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 22.80
Evaluated at bid price : 23.20
Bid-YTW : 5.17 %

BNS.PR.K Deemed-Retractible Quote: 25.60 – 25.89
Spot Rate : 0.2900
Average : 0.1875

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-04-28
Maturity Price : 25.50
Evaluated at bid price : 25.60
Bid-YTW : 3.70 %

PWF.PR.P FixedReset Quote: 25.34 – 25.69
Spot Rate : 0.3500
Average : 0.2505

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-16
Maturity Price : 23.36
Evaluated at bid price : 25.34
Bid-YTW : 3.09 %

Issue Comments

RY Under Review for Downgrade by Moody's

Moody’s Investors Service has announced:

a review of 17 banks and securities firms with global capital markets operations. Underpinning this review is Moody’s view that these firms face challenges that are not fully captured in their current ratings. Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions. These difficulties, together with inherent vulnerabilities such as confidence-sensitivity, interconnectedness, and opacity of risk, have diminished the longer term profitability and growth prospects of these firms.

The rationale behind the review is discussed below and in a report titled “Challenges for Firms with Global Capital Markets Operations: Moody’s Rating Reviews and Rationale,” published today. Today’s announcement also follows the publication on 19 January 2012 of a report titled “Why Global Bank Ratings Are Likely to Decline in 2012.”

LONG-TERM RATINGS AND STANDALONE CREDIT ASSESSMENTS– PLACED UNDER REVIEW

Royal Bank of Canada

During its review Moody’s will consider the structural vulnerabilities in the business models of global investment banks, which include the confidence-sensitivity of customers and funding counterparties, risk-management and governance challenges, as well as a high degree of interconnectedness and opacity. In addition, rapidly changing risk positions expose these firms to unexpected losses that can overwhelm the resources of even the largest, most diversified groups. Such challenges caused several issuers to fail, or to avoid failure only upon the receipt of external support, during the 2008 financial crisis.

Additional challenges have now emerged for banks with significant capital markets activities; these include more fragile funding conditions, higher credit spreads, increased regulatory burdens and very challenging macroeconomic and market environments. Some of these risks have been partly mitigated by changes to business models, and higher regulatory capital and liquidity requirements, but they have not been eliminated. Furthermore, these adverse trends have placed acute pressure on these firms’ profitability and increased the scope of restructuring required in their core businesses to generate the level of return on equities expected by shareholders.

The combination of changed operating conditions and increased regulatory requirements and restrictions has diminished these firms’ longer-term profitability and growth prospects. While we had initially expected their standalone credit profiles to recover once the acute phase of the crisis had passed, we now view these challenges as structural features of global investment banks. Our credit analysis is reflecting these challenges through greater emphasis on certain key rating factors in our methodologies, as discussed in more detail in the report “Challenges for Firms with Global Capital Markets Operations: Moody’s Rating Reviews and Rationale,” published today.

RY has a large number of preferred shares outstanding: RY.PR.A, RY.PR.B, RY.PR.C, RY.PR.D, RY.PR.E, RY.PR.F, RY.PR.G & RY.PR.H (DeemedRetractible) and RY.PR.I, RY.PR.L, RY.PR.N, RY.PR.P, RY.PR.R, RY.PR.T, RY.PR.X & RY.PR.Y (FixedReset) and RY.PR.W (PerpetualPremium). All are tracked by HIMIPref™ and assigned to their respective indices.

Update: RY is irritated:

The announcement — which could result in a downgrade of as much as two notches for the Canadian bank — comes a little over a year after the bank was last cut by Moody’s.

“We are surprised to be included in this review; our inclusion is unwarranted,” RBC said in an emailed statement on Thursday. “This action does nothing to help investors differentiate between strong banks and weak ones. RBC’s credit rating and capital base are among the strongest of all banks globally.”

Issue Comments

S&P Downgrades YLO Preferreds to C

Standard and Poor’s has announced:

  • Standard & Poor’s is concerned about Montreal-based Yellow Media Inc.’s weakening operating performance, as well as various actions the company has taken recently to deal with refinancing risk.
  • As a result, we are lowering our long-term corporate credit rating on Yellow Media by three notches to ‘B-‘ from ‘BB-‘.
  • At the same time, we are lowering our issue-level rating on the company’s senior secured debt to ‘B-‘ from ‘BB-‘ and lowering our rating on the subordinated debt to ‘CCC’ from ‘B’. The recovery ratings on the debt are
    unchanged.

  • We are also lowering our rating on the company’s preferred shares to ‘C’ from ‘P-4 (Low)’ following the company’s decision to suspend dividends on these securities.
  • Finally, we are keeping all the ratings on the company on CreditWatch with negative implications where they were placed Dec. 5, 2011.The CreditWatch listing reflects our concerns about Yellow Media’s deteriorating cash flows and arguably poor access to the capital markets, which we believe limits its available options for refinancing upcoming debt maturities.

….
Separately, we lowered our Canada scale rating on the company’s preferred shares to ‘C’ from ‘P-4 (Low)’ following Yellow Media’s Feb. 9, 2012, announcement to suspend future dividends on all preferred shares outstanding of the company. We expect to lower the ratings on these securities to ‘D’ upon nonpayment of the dividends on their respective payment dates.

“The downgrade follows Yellow Media’s weak operating performance for the three months ended Dec. 31, 2011, which, combined with several corporate actions the company announced on Feb. 9, materially increase refinancing risk, in our opinion,” said Standard & Poor’s credit analyst Madhav Hari.

We also note that Yellow Media’s limited financial flexibility to invest in growth initiatives will affect its ability to increase its online revenue more materially in the near term. While we believe that the company should be able to generate meaningful discretionary cash flow, at least in the next couple of years, we note that internal cash flow might not be sufficient to fully repay the sizable amount of debt maturing in the next couple of years. Given arguably poor access to capital markets (as evidenced by the price of the company’s securities relative to book value), we feel that Yellow Media will be challenged to refinance its debt obligations.

YLO was last mentioned on PrefBlog in the post DBRS Downgrades YLO to Pfd-5(low) Trend Negative.

YLO has four series of public preferred shares outstanding: YLO.PR.A and YLO.PR.B (OperatingRetractible), YLO.PR.C and YLO.PR.D (FixedReset). The company’s operating performance and prospects were reviewed in the February, 2012, edition of PrefLetter.

Market Action

February 15, 2012

A Bloomberg editorial states:

Should European leaders fail in this endeavor, the danger is that they will be blamed if the austerity medicine fails, regardless of whether many of Greece’s troubles are self- inflicted. Already, hyperbolic analogies between Nazi and current Germany are creeping into public discussion. The politics of anger can quickly overtake rational economic debate. How that would unfold is impossible to predict, but it is unwise to assume that Greeks would never decide to roll the dice on a euro exit, putting to the test assurances that contagion won’t follow.

I’m a lot more concerned about analogies between Weimar Germany and current Greece.

One difficulty is that the gun held to Europe’s head might not be loaded:

Greece said that Europe’s wealthier countries are “playing with fire” by toying with the idea of expelling it from the 17-nation euro area as talks over a second aid program ran into new obstacles.

Finance Minister Evangelos Venizelos leveled the accusation after a decision slated for tonight on aid totaling 130 billion euros ($171 billion) was postponed until at least Feb. 20 and possibly until after a full-time Greek government emerges from elections later in the year.

“We are continually faced with new terms,” Venizelos told reporters in Athens today. “In the euro area, there are plenty who don’t want us anymore. There are some playing with fire, domestically and abroad. Some are playing with torches and some are playing with matches. But the risk is equally great.”

For example, here’s some tough talk:

The chief executive of one of Germany’s most respected manufacturers and an advisor to Chancellor Angela Merkel has called for Greece to be kicked out of the European Union because it is an “unbearable” burden.

“This state with its phantom pensioners and rich people that don’t pay taxes, a state without a functioning administration, has no place in the European Union,” Bosch CEO Franz Fehrenbach told Manager Magazin, according to a transcript of an interview to be published on Friday.

He is the latest in a number of senior German business figures to lash out at Greece over its role in the EU and a second eurozone bailout. A survey of over 300 managers in the magazine shows roughly 57% want Greece to drop out of the euro and reintroduce the drachma.

And things are getting a little testy:

Greek President Karolos Papoulias slammed Germany’s finance minister for recent comments about his country as stalled bailout talks stoked tensions between Greece and the northern European countries funding its rescue.

“I don’t accept insults to my country by Mr. Schaeuble,” Papoulias, who fought in the resistance against the Nazis during World War II, said in a speech today. “I don’t accept it as a Greek. Who is Mr. Schaeuble to ridicule Greece? Who are the Dutch? Who are the Finns? We always had the pride to defend not just our own freedom, not just our own country, but the freedom of all of Europe.”

As far as I can tell, though, he will accept a welfare cheque.

But don’t worry! Europe is saved!

China is ready to be more involved in resolving the crisis through the European Financial Stability Facility and European Stability Mechanism, said People’s Bank of China Governor Zhou Xiaochuan in a speech, echoing comments made yesterday by Premier Wen Jiabao.

Oh, and by the way … that human rights stuff is getting pretty old, you know? And the Dalai Lama should be arrested.

Canada – the land where investors are so smart, they never lose money:

Investors who were caught up in the asset-backed commercial paper freeze in 2007 may be in line for a big cheque, as regulators are hoping to distribute as much as $60-million they collected from banks who sold the money market paper.

The Investment Industry Regulatory Organization of Canada and the Ontario Securities Commission will apply to the judge who oversaw the restructuring of the ABCP for permission to distribute the money, which would go to individual and institutional investors who were affected. An announcement is expected as early as Thursday morning, said two people familiar with the plan.

Whoosh! Another nasty day for the Canadian preferred share market, with PerpetualPremiums down 25bp, FixedResets off 11bp and DeemedRetractibles losing 34bp. Lots of volatility, heavily skewed towards losers. Volume was high.

PerpetualDiscounts now yield 4.98%, equivalent to 6.47% interest at the standard equivalency factor of 1.3x. Long Corporates now yield about 4.5%, so the pre-tax interest-equivalent spread (which in this context is the Seniority Spread) is now about 195bp, a sharp increase from the 165 bp reported February 8.

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 0.00 % 0.00 % 0 0.00 0 -0.4663 % 2,442.8
FixedFloater 4.55 % 3.92 % 38,089 17.47 1 0.3362 % 3,428.9
Floater 2.73 % 3.00 % 62,070 19.70 3 -0.4663 % 2,637.6
OpRet 4.88 % 2.44 % 59,269 1.32 6 -0.3563 % 2,502.0
SplitShare 5.28 % -0.99 % 82,214 0.82 4 -0.2534 % 2,649.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.3563 % 2,287.8
Perpetual-Premium 5.41 % 3.81 % 117,119 0.89 26 -0.2518 % 2,191.9
Perpetual-Discount 5.10 % 4.98 % 201,534 15.44 4 -0.6120 % 2,423.4
FixedReset 5.05 % 2.79 % 212,274 2.30 65 -0.1079 % 2,380.4
Deemed-Retractible 4.95 % 3.83 % 202,012 2.83 45 -0.3428 % 2,289.7
Performance Highlights
Issue Index Change Notes
POW.PR.D Perpetual-Premium -2.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 23.75
Evaluated at bid price : 24.25
Bid-YTW : 5.19 %
FTS.PR.C OpRet -2.02 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-03-16
Maturity Price : 25.50
Evaluated at bid price : 25.66
Bid-YTW : -4.89 %
BAM.PR.M Perpetual-Discount -1.67 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 23.85
Evaluated at bid price : 24.14
Bid-YTW : 4.97 %
SLF.PR.C Deemed-Retractible -1.58 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.44
Bid-YTW : 5.93 %
BAM.PR.N Perpetual-Discount -1.51 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 23.58
Evaluated at bid price : 24.06
Bid-YTW : 4.98 %
IAG.PR.F Deemed-Retractible -1.50 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 26.20
Bid-YTW : 5.41 %
GWO.PR.I Deemed-Retractible -1.26 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.55
Bid-YTW : 5.36 %
POW.PR.B Perpetual-Premium -1.16 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 24.47
Evaluated at bid price : 24.71
Bid-YTW : 5.47 %
TD.PR.R Deemed-Retractible -1.13 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-04-30
Maturity Price : 26.00
Evaluated at bid price : 27.02
Bid-YTW : 2.25 %
FTS.PR.G FixedReset -1.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 23.89
Evaluated at bid price : 25.50
Bid-YTW : 3.48 %
MFC.PR.E FixedReset 1.27 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-09-19
Maturity Price : 25.00
Evaluated at bid price : 26.24
Bid-YTW : 3.96 %
Volume Highlights
Issue Index Shares
Traded
Notes
FTS.PR.F Perpetual-Premium 111,000 Desjardins crossed 100,000 at 25.05.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 24.54
Evaluated at bid price : 25.03
Bid-YTW : 4.88 %
PWF.PR.I Perpetual-Premium 104,920 Nesbitt crossed 93,700 at 25.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-04-30
Maturity Price : 25.00
Evaluated at bid price : 25.43
Bid-YTW : -1.23 %
BNS.PR.Z FixedReset 86,630 Desjardins bought blocks of 16,900 and 40,000 from anonymous, both at 25.10.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 25.07
Bid-YTW : 3.16 %
TD.PR.G FixedReset 85,045 TD crossed 49,600 at 27.05; Scotia crossed 25,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-30
Maturity Price : 25.00
Evaluated at bid price : 27.06
Bid-YTW : 2.51 %
TD.PR.K FixedReset 76,406 National bought 13,300 from TD at 27.31; RBC crossed 50,000 at 27.25.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-31
Maturity Price : 25.00
Evaluated at bid price : 27.26
Bid-YTW : 2.56 %
ENB.PR.D FixedReset 66,675 Nesbitt crossed 55,000 at 25.34.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 23.19
Evaluated at bid price : 25.26
Bid-YTW : 3.67 %
There were 42 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
PWF.PR.A Floater Quote: 22.51 – 24.70
Spot Rate : 2.1900
Average : 1.7609

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 22.24
Evaluated at bid price : 22.51
Bid-YTW : 2.30 %

FTS.PR.C OpRet Quote: 25.66 – 26.20
Spot Rate : 0.5400
Average : 0.3080

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-03-16
Maturity Price : 25.50
Evaluated at bid price : 25.66
Bid-YTW : -4.89 %

IAG.PR.F Deemed-Retractible Quote: 26.20 – 26.62
Spot Rate : 0.4200
Average : 0.2846

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 26.20
Bid-YTW : 5.41 %

SLF.PR.G FixedReset Quote: 24.26 – 24.65
Spot Rate : 0.3900
Average : 0.2731

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.26
Bid-YTW : 3.82 %

POW.PR.B Perpetual-Premium Quote: 24.71 – 25.01
Spot Rate : 0.3000
Average : 0.1899

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-02-15
Maturity Price : 24.47
Evaluated at bid price : 24.71
Bid-YTW : 5.47 %

RY.PR.G Deemed-Retractible Quote: 25.66 – 25.90
Spot Rate : 0.2400
Average : 0.1523

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-05-24
Maturity Price : 25.25
Evaluated at bid price : 25.66
Bid-YTW : 3.91 %

New Issues

New Issue: POW 5.60% Straight

And thick and fast they came at last, and more and more and more!

Power Corporation has announced:

that it has agreed to issue 6,000,000 Non-Cumulative First Preferred Shares, Series G (the “Series G Shares”) on a bought deal basis, for gross proceeds of $150 million. The Series G Shares will be priced at $25.00 per share and will carry an annual dividend yield of 5.60%. Closing is expected on or about February 28, 2012. The issue will be underwritten by a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

Power Corporation of Canada has also granted the underwriters an option to purchase an additional 2,000,000 Series G Shares at the same offering price. Should the underwriters’ option be exercised fully, the total gross proceeds of the Series G Share offering will be $200 million.

Proceeds from the issue will be used to supplement the Corporation’s financial resources and for general corporate purposes.