PrefBlog

RY.PR.X, the FixedReset issue announced last week had a very solid opening day, trading 725,748 shares in a range of 24.91-09 before closing at 25.02-05, 27×46.

Its vital statistics are:

This is an issue sure to be at the centre of many trade errors over the course of its existence. A few years back, Royal Bank started a new numbering system for its preferreds, presumably in cooperation with the TSX: Series ‘AA’ has ticker RY.PR.A, Series ‘AB’ has ticker RY.PR.B and so on. It was great, and a lot better than giving Series N the symbol RY.PR.K, for instance.

But now we have Series AV having ticker RY.PR.X. I suspect that the TSX reserves the “V” suffix for USD issues, or perhaps they consider it too soon after the redemption of the old RY.PR.V (USD 250-million, Series K, redeemed in 2003) to recycle the ticker.

One way or another, it would appear a little more communication is in order.

S&P has announced:

it lowered its issue ratings on the hybrid capital securities of over 60 European financial institutions.

The rating actions followed our review of ratings on the hybrid instruments of financial institutions in Europe. The downgrades reflect our assessment of the deteriorating financial prospects for the European banking industry in the worsening economic environment and our view that European governments and the European Commission (EC) over the medium term may be more willing than previously to encourage or force banks to suspend payments on hybrid securities to preserve cash and build capital. We did not change any of the issuer credit ratings (ICRs) on the banking groups that issue these hybrid securities.

Hybrids for HSBC Bank PLC has been downgraded from A+ to A; HSBC Holdings PLC has been downgraded from A to A-.

The rating of HSBC Bank Canada preferreds, have been reduced from A+ to A, which equates to a change from P-1 to P-1(low) on the national scale.

This has had repercussions for the new issue announced last week, which had been assigned the TSX ticker symbol HSB.PR.E.

The underwriting agreement dated March 24 (available on SEDAR) states:

The Bank shall cause to be delivered to the Underwriters’ Representative on behalf of all Underwriters at the Closing Time, and the Underwriters’ obligations pursuant to this Agreement will be conditional upon:
…
(j) receipt by the Underwriters of a confirmation in a form reasonably acceptable to them that the Offered Securities have received a final rating from DBRS of Pfd-1 with a negative trend and from S&P of P-1 and A+, using S&P’s Canadian scale for preferred shares and S&P’s global scale for preferred shares, respectively;

It is my understanding that a new term sheet has been issued, but I haven’t seen it.

There is no press release and HSBC has not responded to my inquiry. You can’t expect important people like bankers and underwriters to demean themselves by communicating with investor scum.

This could be fun! Get your popcorn!