Yellow Pages Income Fund (the “Fund”) (TSX:YLO.UN) announced today that its subsidiary, YPG Holdings Inc. (the “Issuer”), will be issuing 12,000,000 cumulative redeemable preferred shares, series 1 (the “Series 1 Shares”) for aggregate gross proceeds of $300 million on a bought deal basis to a syndicate of underwriters led by Scotia Capital Inc., CIBC World Markets Inc., RBC Capital Markets and BMO Capital Markets, acting as joint book-runners.
The issue price is $25.00 and the dividend is 4.25% p.a., payable quarterly. Issue size is 12-million shares ($300-million) and the underwriters have the option until March 31 to purchase an additionaly 1.8-million shares ($45-million).
The initial dividend will be $0.32894, payable June 27 based on a closing date of March 6, 2007.
There are call privileges on the issue, which are exercisable only in circumstances in which the Series 1 shares are entitled to vote separately as a class or series by law. This “special call privilege” has the following schedule:
| Special Call, if redeemed during the 12 months |
| Commencing March 31, |
Redemption Price |
| 2007 |
$26.25 |
| 2008 |
26.00 |
| 2009 |
25.75 |
| 2010 |
25.50 |
| 2011 |
25.25 |
There is a normal call, exercisable on and after March 31, 2012 at the corporation’s whim, to call at $25.00 cash.
The corporation can force conversion in to Trust Units of Yellow Pages Income Fund at the greater of (i) $2, or (ii) 95% of the Trust Units’ trading price at any time at which it could redeem the shares (including the special call).
The shares are retractible to cash on and after Dec 31, 2012 at $25.00.
This issue has ratings (provisional, presumably) of :
More later.
Update & Bump: The issue has been entered into the HIMIPref™ database on a preIssue basis, with the securityCode P50011.
There aren’t too many comparables for this issue, but I’ll do what I can!
| Curve Price & Comparables for YPG.PR.? |
| Item |
YPG.PR.? |
BNA.PR.C |
BAM.PR.J |
CFS.PR.A |
| Price due to base-rate |
24.15 |
24.00 |
26.57 |
9.89 |
| Price due to short-term |
-0.51 |
-0.61 |
-0.65 |
-0.19 |
| Price due to long-term |
1.40 |
1.67 |
1.78 |
0.52 |
| Price to to Cumulative Dividends |
0.00 |
0.00 |
0.00 |
0.00 |
| Price due to SplitShareCorp |
0.00 |
-1.19 |
0.00 |
-0.22 |
| Price due to Retractibility |
0.84 |
1.52 |
1.52 |
0.29 |
| Price due to Liquidity |
0.46 |
0.85 |
-0.09 |
0.16 |
| Price due to Credit Spread (2) |
0.00 |
-0.39 |
-0.39 |
0.00 |
| Price due to Credit Spread (3) |
-0.60 |
0.00 |
0.00 |
0.00 |
| Price due to Credit Spread (High) |
0.00 |
0.00 |
0.00 |
0.00 |
| Price due to Credit Spread (Low) |
0.00 |
0.00 |
-0.29 |
0.00 |
| Price due to error |
0.02 |
0.09 |
0.05 |
0.01 |
| Curve Price (Taxable Curve) |
$25.76 |
$25.94 |
$28.50 |
$10.46 |
| DBRS Credit Rating |
Pfd-3(high) |
Pfd-2 |
Pfd-2(low) |
Pfd-1 |
| Quote, 2/19 |
$25.00 (Issue Price) |
24.91-95 |
27.86-97 |
$10.20-23 |
| YTW (After Tax) |
3.36% |
3.54% |
3.32% |
3.07% |
| Modified Duration (YTW – after tax) |
5.27 |
9.61 |
6.16 |
5.40 |
| Pseudo-Convexity (YTW – after tax) |
0.38 |
0.42 |
-12.44 |
0.47 |
| YTW (Pre-tax) |
4.24% |
4.46% |
4.17% |
3.86% |
Update 2007-02-20 : I note that the YPG bonds, 5.25% of Feb. 2016 are indicated at Canada 4.5/15 + 143bp, call it 5.51% at last night’s close. So, at a pre-tax YTW of 4.24%, interest equivalent (for rich Ontario residents) to 5.94%, the new prefs are trading at a reasonable spread to bonds.
Mind you, these are only Pfd-3(high). As credit quality decreases, so does the quality of HIMIPref™’s yield curve analysis. I do not recommend that these prefs be considered for more than 5% of a diversified preferred share portfolio.
ENB.PR.D Redemption Completed
Thursday, February 15th, 2007ENB.PR.D, an interest bearing preferred security, was redeemed today as previously noted. They had, presumably, no difficulty in finding the money for the redemption, what with their recent equity issue and my January gas bill.
This leaves the interestBearing index bereft of all operating companies; it is now populated solely by split-share corporations.
It now remains to be seen whether they will also redeem ENB.PR.A, a perpetual that is currently part of the PerpetualPremium index. This issue has been mentioned as occasionally drifting into negative YTW territory; it’s currently redeemable at $25.25, but will be redeemable at par in December.
Oops! There is actually one remaining operating company issue left in the interestBearing index … BAM.PR.T. However, it is virtually certain that BAM.PR.T will be redeemed in June, so I was only off by five months!
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