PrefBlog

Nothing happened today.

PerpetualDiscounts now yield 4.94%, equivalent to 6.42% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.16% so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 225bp, a slight increase from the 220bp reported May 15.

A more severe drop for the Canadian preferred share market today, with PerpetualPremiums down 10bp, FixedResets off 6bp and DeemedRetractibles losing 22bp. Volatility was good, skewed to the downside. Volume was very high.

Great news! The Ontario Securities Commission is poised to use its awesome power for some good old-fashioned top-down social engineering:

Ontario is crafting new rules requiring public companies to set targets for the number of women in senior roles, a move with national implications that could reverse Canada’s decline in global standings for gender diversity in the corporate world.

Laurel Broten, Ontario’s minister responsible for women’s issues, revealed in an interview that the provincial government is working with the Ontario Securities Commission on ways to compel companies to set goals for boosting the number of women sitting as corporate directors, as well as in senior management.

It was a distinctly negative day for the Canadian preferred share market, with PerpetualPremiums down 9bp, FixedResets losing 15bp and DeemedRetractibles off 5bp. A distinct tilt in the Performance Highlights table towards losing FixedResets was lead by ENB issues, which are experiencing competitition from an attractive new issue. Volume was high.

Nothing happened today.

It was a directionless day for the Canadian preferred share market, with PerpetualPremiums flat, FixedResets gaining 2bp and DeemedRetractibles up 3bp. Volatility was minimal. Volume was light, with the highlights comprised entirely of FixedResets.

Loblaw’s will get out of the real-estate business:

Loblaw Cos. Ltd. filed a preliminary prospectus Friday for a planned $7-billion real estate investment trust for its sizable land portfolio under the name Choice Properties Real Estate.

The units of the REIT will be priced at $10, comprised of 425 properties and 35.3-million square feet of leasable space. It includes 415 retail properties, an office complex and nine warehouse properties.

The total number of units to be offered was not disclosed. A final prospectus will be released in July.

Loblaw says the value of the initial properties inside the REIT is between $7.25-billion and $7.4-billion and represents about 75% of its owned real estate portfolio.

In the wake of this, DBRS confirmed L.PR.A at Pfd-3:

On closing and going forward, it is expected that Loblaw will hold a significant majority ownership interest in the REIT through ownership of REIT units, as well as all of the Class B limited partnership units of the LP (which are economically equivalent to and exchangeable for units of the REIT). The Company believes that as the REIT’s key tenant, this structure will allow it to retain a high degree of operational flexibility. In addition, Loblaw will hold all of the outstanding Class C limited partnership units of the LP. In conjunction with the offering, George Weston Limited will purchase $200 million of units from the REIT at the IPO price.

Loblaw will also receive notes from the REIT which are senior unsecured debt of the REIT and will rank pari passu with all future senior unsecured indebtedness of the REIT. Concurrent with the IPO, the REIT is expected to offer senior unsecured debentures, the proceeds of which are expected to be used to repay a portion of the indebtedness owing to Loblaw. Loblaw is expected to use such proceeds to repay its own maturing indebtedness.

DBRS believes that this structure effectively maintains Loblaw’s current credit ratings because of the Company’s clear intent to continue to own and control its real estate while using intercompany notes to maintain consolidated leverage levels while effectively transferring an appropriate proportion of financial leverage to the REIT.

George Weston Ltd., proud issuer of WN.PR.A, WN.PR.C, WN.PR.D and WN.PR.E, was also confirmed at Pfd-3:

The GWL confirmation is based on DBRS’s confirmation of Loblaw’s ratings at BBB (see separate press release; Loblaw is 63% owned by GWL), as well as GWL’s relatively stable operating performance and the Company’s significant cash resources. GWL’s ratings reflect its holding in Loblaw and the Company’s strong brands and efficient operations, balanced by a continuing volatile input cost environment and the mature nature of the bakery industry.

DBRS will continue to monitor GWL’s decisions on the deployment of its remaining cash, cash equivalents and short-term investments, and will assess any potential impact on the Company’s credit risk profile at such time.

GWL’s liquidity remains commensurate with the R-2 (high) rating category, reflecting the Company’s high levels of cash on hand and marketable investments, positive free cash flow generating capacity and its manageable debt levels and maturity schedule.

It remains a mystery to me why any business would have on-line banking:

Thieves drained $800,000 from a fuel distribution company in the US state of North Carolina earlier this month – a loss that the company thinks might have something to do with its bank having recently upgraded its security system.
…
David Alexander, J.T. Alexander & Son’s president, told Krebs that the loss was “pretty substantial” and “painful” for the small company, which employs a staff of only 15.

The company typically spends less than $30,000 on its total payroll every two weeks. In five days, the crooks managed to steal more than a year’s worth of salaries.

I finally got caught up on my spam-cleaning for PrefBlog – it got out of control in May. The amount of spam is increasing horrendously: as of today, there are over 48,000 spam comments on file, which have all been received since I cleaned the database in January. What was once a minor daily maintenance ritual is now not so minor!

On the positive side, I did find a comment by a first-time poster, travesty, that got caught up in the net but has now been approved. travesty can now comment and see the comment immediately; it will also be more visible to me, so perhaps his next comment will receive a more timely reply … unless he is so irritated by the delay he doesn’t post any more …

The Canadian preferred share market closed the week on a positive note, with PerpetualPremiums winning 7bp, FixedResets up 5bp and DeemedRetractibles gaining 3bp. Volatility was low. Volume was low … but with good size in some issues!