PrefBlog

DBRS has announced:

has today placed its ratings of Bell Canada Under Review with Positive Implications and maintained its ratings of BCE Inc. (BCE or the Company) Under Review with Developing Implications. Additionally, DBRS has withdrawn its ratings of BCE Acquisition Inc.
…
DBRS’s review will focus on a re-evaluation of the credit profiles of BCE and Bell Canada. This will include the current business and financial risk profile of Bell Canada and any expected changes to these factors in the near to medium term now that the privatization of its parent, BCE, is not proceeding. This review will include DBRS’s view of the potential for further events over the near term.

In addition to the above, BCE announced that the BCE board will immediately following the termination of its Definitive Agreement address (1) a reinstatement of its common dividend (beginning with declaring its Q4 2008 dividend payable January 15, 2009) and (2) a return of capital to its shareholders through a normal course issuer bid (NCIB). DBRS was largely anticipating the reinstatement of its common dividend, although it is difficult to qualify the magnitude of its NCIB at this stage.

Should there be no significant changes in strategy, business mix or Bell Canada’s capital structure, DBRS believe its ratings could be moved to the A (low) to “A” range given its businesses that generate strong EBITDA margins (at or above 40%) and reasonable leverage with gross debt-to-EBITDA at 2.0 times or below. Concurrently, DBRS plans to remove its recovery ratings on Bell Canada, which will no longer apply. The long-term debt rating of Bell Canada is expected to serve as a reference for BCE’s long-term rating, which could be either one notch lower than Bell Canada’s due to structural subordination or possibly the same.

The NCIB was quantified somewhat in the BCE press release:

BCE will return capital to shareholders in the form of a Normal Course Issuer Bid (NCIB). To that end, BCE will repurchase up to approximately 5% of outstanding common shares, or about 40 million common shares. The NCIB is subject to approval by the Toronto Stock Exchange (TSX) and will be carried out in accordance with the requirements of the TSX and applicable laws.

“A share buyback is the most efficient method of distributing capital to our shareholders, particularly given the current valuation metrics of the Company,” said Siim Vanaselja, Chief Financial Officer of BCE. “The share buyback will be accretive to earnings per share and cash flow. Our improving operational progress provides the Company with confidence in our ability to return value to shareholders now and into the future.”

I noted in the post regarding the death of the deal:

I’m afraid that in the absence of strong, credible statements from BCE regarding their capital structure going forward, BCE prefs remain rather more speculative than I like.

So I share DBRS’ caution! I will say, however, that the absence of dramatic moves by the board to support the stock price – a massive dividend, a massive buy-back – gives comforat and I now consider it more likely than not that BCE will retain its Pfd-2(low) rating.

BCE has the following preferred shares outstanding: BCE.PR.A, BCE.PR.B, BCE.PR.C, BCE.PR.D, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y & BCE.PR.Z

BNS.PR.S is the new issue of BNS Fixed-Resets, 6.25%+384 that Scotia issued to SunLife as partial payment for CI.

Today Scotia had this to say:

Scotiabank (TSX/NYSE: BNS) today announced it has closed the Bank’s 37 per cent strategic investment in CI Financial Income Fund (“CI”; TSX: CIX.UN) and become CI’s largest single shareholder.

Scotiabank bought Sun Life Financial’s (“Sun Life” TSX/NYSE:SLF) stake of 104,609,895 CI trust units for $1.55 billion in cash, $500 million in common shares at $34.60 per share and $250 million in 6.25 per cent five year rate reset preferred shares. Going forward, Sun Life will continue its strong distribution arrangement with CI.

And SunLife chimed in with:

Sun Life Financial Inc. (TSX/NYSE: SLF) today announced that the previously announced sale of its 37% interest in CI Financial Income Fund to Scotiabank has closed. $1.55 billion of the $2.3 billion (Canadian) purchase price was paid in cash. The balance was paid in a combination of common and preferred shares of Scotiabank

Stockwatch advises:

2008-12-10 18:09 ET – Prospectus Approved

TSX bulletin 2008-1429

An application has been granted for the listing of 10 million non-cumulative, five-year rate reset preferred shares, Series 24, of the Bank of Nova Scotia.

The preferred shares, Series 24, are to be distributed at a price of $25 per share pursuant to the terms of a prospectus supplement dated Dec. 9, 2008, to the short form base shelf prospectus dated April 16, 2008, as amended by amendment No. 1 dated Dec. 3, 2008. The closing of the prospectus offering is expected to occur prior to the open on Dec. 12, 2008. In anticipation of such closing, the preferred shares, Series 24, will be listed at 5:01 p.m. on Dec. 11, 2008, and will be posted for trading at the open on Dec. 12, 2008.

Symbol: BNS.PR.S

Cusip No.: 064149 13 1

Trading currency: Canadian dollars

I have obtained data from the TSX confirming the symbol and that it is listed for trading today, 2008-12-12. I also have a quote: 25.00 bid, no offer; and volume: 0.

Accordingly, the issue has been added to the HIMIPref™ database and incorporated into the Fixed-Reset sub-index. But I really wish one of the players would announce what happens next … bought deal? exchange offering? distribution to SLF shareholders? Who knows?

High Income Preferred Shares Corporation has announced:

that HI PREFS has commenced a normal course issuer bid to purchase a portion of the outstanding Series 1 Preferred Shares (TSX: HPF.PR.A) and Series 2 Preferred Shares (TSX: HPF.PR.B) on the TSX. Under the normal course issuer bid, HI PREFS intends to purchase up to 37,680 Series 1 Preferred Shares, representing approximately 10% of the public float and up to 65,396 Series 2 Preferred Shares, representing approximately 10% of the public float.

These purchases will be made in accordance with applicable regulations over a maximum period of 12 months commencing on December 16, 2008 and ending on the earlier of December 15, 2009 or on such date as HI PREFS completes its purchase under the normal course issuer bid or on such date as HI PREFS may otherwise determine. Series 1 Preferred Shares and Series 2 Preferred Shares purchased will be cancelled. Within the preceding 12 month period, HI PREFS
purchased 18,500 Series 1 Preferred Shares and 77,100 Series 2 Preferred Shares for cancellation. HI PREFS had 376,806 Series 1 Preferred Shares and 653,962 Series 2 Preferred Shares issued and outstanding as at December 5, 2008. HI PREFS will not purchase in any given 30 day period, in the aggregate more than 7,536 Series 1 Preferred Shares, being 2% of the issued and outstanding Series 1 Preferred Shares as at December 5, 2008 and in the aggregate more than 13,079 Series 2 Preferred Shares, being 2% of the issued and outstanding Series 2 Preferred Shares as at December 5, 2008.

PrefBlog has an informal policy of reporting Normal Course Issuer Bids only if they are highly accretive to NAV (e.g., when a SplitShare trades well below its NAV) or if the previous one has been executed to a meaningful extent.

HPF.PR.A & HPF.PR.B are tracked by HIMIPref™ and are included in the “Scraps” sub-index (rather than SplitShare) due to volume and credit concerns, respectively. HPF.PR.A & HPF.PR.B were mentioned on PrefBlog most recently in connection the DBRS affirmation and downgrade, respectively.

BMO’s new issue of Fixed-Reset 6.50%+383 announced November 25 closed today without incident.

Volume was good at 343,071 shares in a range of 24.86-05. The closing quote was 25.00-01, 44×10.

The issue was relatively small, only $150-million, but there was a greenshoe for $100-million. I am unable to determine whether any of the greenshoe was exercised.

The issue is tracked by HIMIPref™ and has been added to the Fixed-Reset Index.

Update, 2009-6-9: The TSX reports six million shares outstanding; therefore the greenshoe was not exercised.

DBRS has announced that it:

has today downgraded its preferred share ratings of Nortel Network Limited to D from Pfd-5 (low). Nortel Networks Limited is a wholly owned subsidiary of Nortel Networks Corporation (collectively, Nortel or the Company). This rating action follows the Under Review with Negative Implications status, where the ratings were placed November 10, 2008 (see press release dated November 10, 2008). Nortel’s long-term debt remains Under Review with Negative Implications.

This rating action results from Nortel suspending its dividend payments on its preferred shares. This suspension begins with its November 2008 dividends, which will not be paid on December 12, 2008. The last dividend the Company paid was on November 12, 2008, on its Series 5 preferred shares (cumulative) and its Series 7 preferred shares (non-cumulative) as originally declared on July 31, 2008.

DBRS notes that on November 10, 2008 Nortel released its Q3 2008 results, which were below DBRS’s expectations, and lowered its outlook for the year. Additionally, Nortel announced the suspension of its preferred share dividends in an effort to preserve its liquidity. Shortly after this announcement, DBRS placed all of Nortel’s ratings Under Review with Negative Implications.

Notes:
DBRS’s ratings on technology companies are primarily based on factors such as the product suite, the base of customers, the competitive landscape, research and development initiatives, gross operating margins and the financial profile.

These issues were last discussed on PrefBlog when Nortel announced its intention to default.

NTL.PR.F & NTL.PR.G are tracked by HIMIPref™. They would be included in the “Ratchet” index, but have been relegated to “Scraps” on credit concerns.