PrefBlog

DBRS has announced that it:

downgraded the ratings of ECN Capital Corp. (ECN or the Company), including the Company’s Long-Term Issuer Rating to BB (high) and Preferred Shares Rating to Pfd-4 (high). The trend for the ratings is Stable. The rating actions follow the Company’s sale of its Service Finance Company, LLC (Service Finance) business to Truist Bank. The Intrinsic Assessment (IA) for ECN is BB (high) and the Support Assessment is SA3, resulting in the Company’s Long-Term Issuer Rating being equalized with the IA. With these rating actions, ECN’s ratings are removed from Under Review with Negative Implications, where they were placed on August 11, 2021.

KEY RATING CONSIDERATIONS
The ratings downgrade considers the impact of the sale of Service Finance on ECN’s credit fundamentals, including its franchise strength, and earnings generation. With the sale of Service Finance, the Company’s scope of operations and product/services diversity has moderated, increasing ECN’s susceptibility to business and economic downturns. Additionally, the loss of Service Finance’s earning contributions reduces ECN’s earnings capacity, organic capital generation, and to a degree, the Company’s ability to absorb unexpected future losses. The ratings also consider the Company’s ongoing solidly run, asset light businesses, Triad Financial Services, Inc. (Triad) and Kessler Financial Services LLC (Kessler), which are both leaders in their respective niche sectors and contribute to ECN’s satisfactory earnings generation. The Company’s ratings also reflect ECN’s sound credit position, as well as its solid funding and acceptable capital profiles.

The Stable trend, reflects our view that the Company’s credit fundamentals will remain satisfactory, despite the potential for Coronavirus Disease (COVID-19) pandemic related flareups. We expect some moderation in housing demand in 2022, but expect Triad to generate good operating performance as demand for manufactured housing will continue to be supported by affordability issues in the U.S. housing market as well as Triad’s top tier market position. The Stable trend also considers our expectations that Kessler will continue to generate solid results in 2022, especially as marketing services and transaction services benefit from increasing client activity and new partner programs are brought on board, including improving traction with the Company’s Credit Card Investment Management platform.

RATING DRIVERS
A more diverse product mix along with sustained improvements in adjusted profitability and statutory earnings, while maintaining disciplined capital management and risk aversion, would result in an upgrade of the ratings.

Should capital levels not match the Company’s risk position, credit risk on the balance sheet become more pronounced, or if there were partner funding disruptions, the ratings would be downgraded.

RATING RATIONALE
With the sale of Service Finance, ECN’s franchise fundamentals have somewhat weakened, as the transaction reduces the Company’s scope of business, product/services diversity, and to a degree its growth potential. As such, we view ECN as being more prone to negative macroeconomic conditions. Nonetheless, the Company’s ongoing franchise reflects two businesses that are leaders in their respective sectors, including Triad, which provides manufactured home loans and home – land loans, and Kessler, a manager, adviser and structuring partner to credit card issuers, banks, credit unions, and payment networks. The Company’s ratings also consider ECN’s solid management team, which has considerable experience and deep industry knowledge.
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Capital is acceptable for its rating level, and we anticipate that ECN will continue to maintain appropriate capital levels to match its risk position. That said, capital generation has somewhat moderated with the sale of Service Finance. Finally, we note that the gains from the sale of Service Finance will be distributed to common shareholders.

Affected issues are ECN.PR.A and ECN.PR.C. Note that ECN.PR.A has been called for redemption.

The Bank of Nova Scotia has announced:

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 38 (Non-Viability Contingent Capital (NVCC)) (“Series 38 Shares”) of Scotiabank on January 27, 2022 at a price equal to $25.00 per share together with declared and unpaid dividends to the Redemption Date (the “Redemption Price”). Formal notice will be issued to the shareholders in accordance with the share conditions.

The redemption has been approved by the Office of the Superintendent of Financial Institutions and will be financed out of the general funds of Scotiabank. This redemption is part of the Bank’s ongoing management of its Tier 1 capital.

On November 30, 2021, the Board of Directors of Scotiabank declared quarterly dividends of $0.3031250 per Series 38 Share. This will be the final dividend on the Series 38 Shares and will be paid on January 27, 2022, to shareholders of record at the close of business on January 4, 2022, as previously announced. Subsequent to this final dividend payment, the Series 38 Shares will cease to be entitled to dividends.

BNS.PR.H is a FixedReset, 4.85%+419, NVCC, that commenced trading 2016-9-16 after being announced 2016-9-7. It is tracked by HIMIPref™ and has is assigned to the FixedReset-Premium subindex.

Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!

Sun Life Financial Inc. has announced:

its intention to redeem its $300 million principal amount of issued and outstanding Class A Non-Cumulative Rate Reset Preferred Shares Series 12R (the “Series 12R Shares”) on December 31, 2021 (the “Redemption Date”).

The Series 12R Shares will be redeemed at Sun Life Financial Inc.’s option on the Redemption Date at a redemption price of $25.00 per share, together with all declared and unpaid dividends on such share to but excluding the Redemption Date. Notice will be delivered to the holders of the Series 12R Shares in accordance with the terms governing the Series 12R Shares.

Separately from the payment of the redemption price, the final quarterly dividend of $0.237875 per share for the Series 12R Shares will be paid in the usual manner on December 31, 2021, to shareholders of record on November 24, 2021.

SLF.PR.I was issued a FixedReset 4.25%+273, that commenced trading 2011-11-10 after being announced 2011-11-3. Notice of extension was given in 2016 and the issue reset to 3.806%. I recommended against conversion and there was no conversion.

Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!