Month: September 2009

PrefLetter

September Edition of PrefLetter Released!

The September, 2009, edition of PrefLetter has been released and is now available for purchase as the “Previous edition”. Those who subscribe for a full year receive the “Previous edition” as a bonus.

The September edition contains an appendix examining the composition of some preferred share indices and passive funds.

As previously announced, PrefLetter is now available to residents of Alberta, British Columbia and Manitoba, as well as Ontario and to entities registered with the Quebec Securities Commission.

Until further notice, the “Previous Edition” will refer to the September, 2009, issue, while the “Next Edition” will be the October, 2009, issue, scheduled to be prepared as of the close October 9 and eMailed to subscribers prior to market-opening on October 13 (the TSX is closed on Monday October 12 for Thanksgiving).

PrefLetter is intended for long term investors seeking issues to buy-and-hold. At least one recommendation from each of the major preferred share sectors is included and discussed.

Note: A recent enhancement to the PrefLetter website is the Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter, being delivered to clients as a large attachment by eMail, sometimes runs afoul of spam filters. If you have not received your copy within fifteen minutes of a release notice such as this one, please double check your (company’s) spam filtering policy and your spam repository. If it’s not there, contact me and I’ll get you your copy … somehow!

Note: There have been scattered complaints regarding inability to open PrefLetter in Acrobat Reader, despite my practice of including myself on the subscription list and immediately checking the copy received. I have had the occasional difficulty reading US Government documents, which I was able to resolve by downloading and installing the latest version of Adobe Reader. Also, note that so far, all complaints have been from users of Yahoo Mail. Try saving it to disk first, before attempting to open it.

Issue Comments

FFN.PR.A Resumes Capital Unit Dividend

Missed this when it came out … on August 19, Financial 15 Split II announced:

its regular monthly distribution of $0.10 for each Class A share ($1.20 annually) and $0.04375 for each Preferred share ($0.525 annually). Distributions are payable September 10, 2009 to shareholders on record as at August 31, 2009.

as opposed to its July announcement:

regular monthly distribution of $0.04375 for each Preferred share ($0.525 annually). Distributions are payable August 10, 2009 to shareholders on record as at July 31, 2009. There will not be a distribution paid to Financial 15 II Class A Shares for July 31, 2009 as per the Prospectus which states no regular monthly dividends or other distributions will be paid on the Class A Shares in any month as long as the net asset value per unit is equal to or less than $15.00. The net asset value as of July 15, 2009 was $14.71.

FFN.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-4(high) by DBRS. In the first half of 2009, its income coverage was 1.0+:1. The Capital Unit divided was suspended in November 2008.

FFN.PR.A is tracked by HIMIPref™, but has been relegated to the “Scraps” index on credit concerns.

PrefLetter

September Edition of PrefLetter Now in Preparation

The markets have closed and the August edition of PrefLetter is now being prepared.

PrefLetter is the monthly newsletter recommending individual issues of preferred shares to subscribers. There is at least one recommendation from every major type of preferred share with investment-grade constituents. The recommendations are taylored for “buy-and-hold” investors.

The September edition will contain an appendix examining the composition of some preferred share indices and passive funds.

Those taking an annual subscription to PrefLetter receive a discount on viewing of my seminars.

PrefLetter is available to residents of Ontario, Alberta, British Columbia and Manitoba as well as Quebec residents registered with their securities commission.

The September issue will be eMailed to clients and available for single-issue purchase with immediate delivery prior to the opening bell on Monday. I will write another post on the weekend advising when the new issue has been uploaded to the server … so watch this space carefully if you intend to order “Next Issue” or “Previous Issue”! Until then, the “Next Issue” is the September issue.

Market Action

September 11, 2009

Esquire has an entertaining and illuminating feature article titled The Deal of the Century, regarding last fall’s Barclays/Lehman deal.

PerpetualDiscounts underperformed today, losing 22bp against the gain of 7bp by FixedResets. This means that the former class is down 69bp on the month-to-date, while the latter is up 30bp, a reversal of fortunes from recent months! Volume picked up today and is relatively heavy

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices
Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)		 Median
YTW		 Median
Average
Trading
Value		 Median
Mod Dur
(YTW)		 Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 0.9952 % 1,459.3
FixedFloater 5.75 % 4.01 % 57,606 18.58 1 -0.4739 % 2,669.0
Floater 2.51 % 2.10 % 28,681 22.16 4 0.9952 % 1,823.1
OpRet 4.87 % -11.46 % 138,012 0.09 15 0.3278 % 2,284.8
SplitShare 6.48 % 6.79 % 1,036,592 4.05 2 -0.9511 % 2,042.1
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.3278 % 2,089.2
Perpetual-Premium 5.77 % 5.56 % 149,492 2.86 12 -0.0396 % 1,878.4
Perpetual-Discount 5.71 % 5.77 % 199,189 14.23 59 -0.2164 % 1,799.9
FixedReset 5.49 % 3.99 % 469,921 4.14 40 0.0736 % 2,110.4
Performance Highlights
Issue Index Change Notes
RY.PR.W Perpetual-Discount -1.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 22.49
Evaluated at bid price : 22.66
Bid-YTW : 5.45 %
TCA.PR.Y Perpetual-Discount -1.42 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 45.90
Evaluated at bid price : 48.67
Bid-YTW : 5.77 %
BNA.PR.D SplitShare -1.16 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2014-07-09
Maturity Price : 25.00
Evaluated at bid price : 25.55
Bid-YTW : 6.79 %
TD.PR.O Perpetual-Discount -1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 22.23
Evaluated at bid price : 22.37
Bid-YTW : 5.49 %
RY.PR.C Perpetual-Discount -1.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 20.72
Evaluated at bid price : 20.72
Bid-YTW : 5.61 %
TRI.PR.B Floater 1.07 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 18.95
Evaluated at bid price : 18.95
Bid-YTW : 2.09 %
GWO.PR.I Perpetual-Discount 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 19.80
Evaluated at bid price : 19.80
Bid-YTW : 5.70 %
BAM.PR.J OpRet 1.14 % YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2018-03-30
Maturity Price : 25.00
Evaluated at bid price : 25.21
Bid-YTW : 5.27 %
BAM.PR.P FixedReset 1.21 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-30
Maturity Price : 25.00
Evaluated at bid price : 26.59
Bid-YTW : 5.52 %
PWF.PR.A Floater 1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 18.85
Evaluated at bid price : 18.85
Bid-YTW : 2.10 %
BAM.PR.O OpRet 1.36 % YTW SCENARIO
Maturity Type : Option Certainty
Maturity Date : 2013-06-30
Maturity Price : 25.00
Evaluated at bid price : 25.18
Bid-YTW : 4.75 %
Volume Highlights
Issue Index Shares
Traded		 Notes
RY.PR.H Perpetual-Premium 145,530 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-23
Maturity Price : 25.00
Evaluated at bid price : 25.27
Bid-YTW : 5.56 %
RY.PR.R FixedReset 66,060 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.73
Bid-YTW : 3.71 %
TD.PR.O Perpetual-Discount 54,328 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-11
Maturity Price : 22.23
Evaluated at bid price : 22.37
Bid-YTW : 5.49 %
BNS.PR.T FixedReset 53,637 Desjardins bought 10,900 from Nesbitt at 27.95.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.88
Bid-YTW : 3.77 %
CM.PR.L FixedReset 50,986 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-30
Maturity Price : 25.00
Evaluated at bid price : 27.82
Bid-YTW : 4.07 %
RY.PR.P FixedReset 50,465 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.73
Bid-YTW : 3.71 %
There were 49 other index-included issues trading in excess of 10,000 shares.
Seminars

Seminar, October 15: Fixed Income & Preferred Shares

Fixed-Income investing is a widely misunderstood topic and many investors take excessive risks with their fixed income portfolio while blithely assuming that they are taking no risks at all.

In my paper Preferred Shares and GICs I introduced the concept that any fixed-income investment portfolio is a compromise between:

  • Security of Principal, and
  • Security of Income

Many investors emphasize the first attribute while ignoring the second to their ultimate discomfort.

Other commonly made errors are:

  • Paying too much for liquidity
  • Insufficient diversification
  • Overemphasis on current income
  • Insufficient attention to issuer options
  • Attempting to address all risks with one particular investment
  • Underemphasis on tax effects

In this seminar, I explain that "risk" cannot be thought of as a position on a number line: there are many different kinds of risk and portfolios must be constructed to account for all of them – no single investment can do it. I also explain how preferred shares can fit into a fixed income portfolio, bringing their own strengths to offset the weaknesses of other fixed-income investments.

There is no charge for attendance at this seminar; there will be opportunity after the session to discuss the material informally.

Location: Days Hotel & Conference Center, (at Carlton & College, downtown Toronto) Rosedale Room (see map).

Time: October 15, 2009, 6pm-9pm.

The seminar will be filmed for later distribution.

Advance registration may be performed on-line.

Market Action

September 10, 2009

Volume picked up today, but results were mixed, with PerpetualDiscounts losing 5bp and FixedResets gaining 16bp.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices
Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)		 Median
YTW		 Median
Average
Trading
Value		 Median
Mod Dur
(YTW)		 Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.2877 % 1,445.0
FixedFloater 5.73 % 3.99 % 59,398 18.61 1 0.0000 % 2,681.7
Floater 2.52 % 2.12 % 29,559 22.10 4 -0.2877 % 1,805.2
OpRet 4.87 % -12.15 % 139,737 0.09 15 0.0204 % 2,277.3
SplitShare 6.41 % 6.50 % 1,051,435 4.06 2 0.3774 % 2,061.7
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0204 % 2,082.4
Perpetual-Premium 5.77 % 5.48 % 150,701 2.86 12 0.1618 % 1,879.1
Perpetual-Discount 5.69 % 5.76 % 196,088 14.26 59 -0.0545 % 1,803.8
FixedReset 5.49 % 4.04 % 475,655 4.08 40 0.1560 % 2,108.9
Performance Highlights
Issue Index Change Notes
CIU.PR.A Perpetual-Discount -1.41 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 20.26
Evaluated at bid price : 20.26
Bid-YTW : 5.73 %
PWF.PR.K Perpetual-Discount -1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 21.46
Evaluated at bid price : 21.46
Bid-YTW : 5.85 %
ENB.PR.A Perpetual-Premium -1.13 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2009-10-10
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : -7.26 %
MFC.PR.B Perpetual-Discount -1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 20.32
Evaluated at bid price : 20.32
Bid-YTW : 5.75 %
PWF.PR.A Floater -1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 18.62
Evaluated at bid price : 18.62
Bid-YTW : 2.12 %
ELF.PR.F Perpetual-Discount 1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 21.35
Evaluated at bid price : 21.35
Bid-YTW : 6.32 %
Volume Highlights
Issue Index Shares
Traded		 Notes
SLF.PR.D Perpetual-Discount 168,386 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 19.20
Evaluated at bid price : 19.20
Bid-YTW : 5.81 %
BMO.PR.N FixedReset 75,975 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-27
Maturity Price : 25.00
Evaluated at bid price : 27.85
Bid-YTW : 3.83 %
TD.PR.R Perpetual-Discount 56,585 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 24.78
Evaluated at bid price : 25.01
Bid-YTW : 5.67 %
RY.PR.Y FixedReset 56,250 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-12-24
Maturity Price : 25.00
Evaluated at bid price : 27.50
Bid-YTW : 4.09 %
BNS.PR.M Perpetual-Discount 43,505 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-10
Maturity Price : 20.58
Evaluated at bid price : 20.58
Bid-YTW : 5.55 %
BNS.PR.T FixedReset 37,645 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.86
Bid-YTW : 3.79 %
There were 53 other index-included issues trading in excess of 10,000 shares.
Interesting External Papers

IMF Releases September "Finance & Development"

The International Monetary Fund has released the September 2009 edition of Finance & Development, with articles:

  • Sustaining a Global Recovery
  • What’s In and Out in Global Money
  • Rebuilding the Financial Architecture
  • Looking Ahead
  • Growth after the Crisis
  • The Future of Reserve Currencies
  • Overhauling the System
  • Anticipating the Next Crisis
  • Faces of the Crisis
  • Dial Growth

This is not the most heavyweight or technical of journals, but provides good reviews of the global situation – say, about on the level of the Economist.

Market Action

September 9, 2009

As far as I can make out, the National Association of Insurance Commissioners is reviewing their blind faith in credit ratings while trying to make it look like the agencies’ fault:

State insurance regulators scheduled a hearing to review the role of credit rating firms and whether changes are necessary after the companies gave top ratings to mortgage-linked securities that plunged in value.

Representatives of ratings firms, insurance companies and pension funds will be invited to testify at the Sept. 24 hearing, acting New York Insurance Superintendent James Wrynn said today in an e-mailed statement. Wrynn and Michael McRaith of Illinois lead a group appointed by the National Association of Insurance Commissioners to evaluate watchdogs’ reliance on the firms.
…
“The hearing will examine the role of these credit rating agencies in the insurance regulatory system and what changes may be needed in light of the financial crisis,” Wrynn’s office said in the statement.

NAIC was last mentioned on PrefBlog on June 26 in connection with the hallowed practice of rating-shopping; whereby investors choose the most optimistic agency they can find, so that they can blame them for over-optimism if things don’t work out. To update that story, here’s the NAIC staff report on RealPoint.

A quiet day, price-wise, for the major sub-indices, with PerpetualDiscounts gaining 9bp total return, while FixedResets were down 2bp. This brings the yield on PerpetualDiscounts down to 5.74%, equivalent to 8.04% interest at the standard equivalency factor of 1.4x. Long Corporates yield a smidgen under 6.0%, so the pre-tax interest-equivalent spread is now about 205bp, a slight (and possibly completely technical) narrowing from the 210bp recorded on September 2.

Volume continued to be OK.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices
Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)		 Median
YTW		 Median
Average
Trading
Value		 Median
Mod Dur
(YTW)		 Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 1.1314 % 1,449.1
FixedFloater 5.73 % 3.99 % 59,824 18.60 1 0.7427 % 2,681.7
Floater 2.52 % 2.10 % 30,512 22.13 4 1.1314 % 1,810.4
OpRet 4.87 % -11.94 % 134,320 0.09 15 -0.0485 % 2,276.9
SplitShare 6.44 % 6.65 % 1,067,651 4.06 2 0.0444 % 2,053.9
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0485 % 2,082.0
Perpetual-Premium 5.78 % 5.66 % 151,484 2.86 12 -0.0759 % 1,876.1
Perpetual-Discount 5.69 % 5.74 % 196,737 14.28 59 0.0908 % 1,804.8
FixedReset 5.50 % 4.08 % 465,825 4.10 40 -0.0185 % 2,105.6
Performance Highlights
Issue Index Change Notes
ELF.PR.F Perpetual-Discount -1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 21.11
Evaluated at bid price : 21.11
Bid-YTW : 6.40 %
ELF.PR.G Perpetual-Discount -1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 19.21
Evaluated at bid price : 19.21
Bid-YTW : 6.30 %
BMO.PR.H Perpetual-Discount -1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 22.84
Evaluated at bid price : 23.86
Bid-YTW : 5.55 %
BAM.PR.I OpRet -1.12 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2011-07-30
Maturity Price : 25.25
Evaluated at bid price : 25.71
Bid-YTW : 5.05 %
GWO.PR.I Perpetual-Discount -1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 19.51
Evaluated at bid price : 19.51
Bid-YTW : 5.79 %
MFC.PR.C Perpetual-Discount 1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 19.95
Evaluated at bid price : 19.95
Bid-YTW : 5.67 %
BAM.PR.K Floater 1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 12.45
Evaluated at bid price : 12.45
Bid-YTW : 3.19 %
PWF.PR.K Perpetual-Discount 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 21.45
Evaluated at bid price : 21.75
Bid-YTW : 5.76 %
PWF.PR.A Floater 1.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 18.81
Evaluated at bid price : 18.81
Bid-YTW : 2.10 %
TD.PR.N OpRet 1.14 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2009-10-09
Maturity Price : 26.00
Evaluated at bid price : 26.56
Bid-YTW : -15.07 %
TRI.PR.B Floater 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 18.85
Evaluated at bid price : 18.85
Bid-YTW : 2.10 %
Volume Highlights
Issue Index Shares
Traded		 Notes
BAM.PR.K Floater 242,610 Nesbitt crossed 240,000 at 12.35. Nice ticket!
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-09-09
Maturity Price : 12.45
Evaluated at bid price : 12.45
Bid-YTW : 3.19 %
TD.PR.E FixedReset 225,900 Desjardins crossed 165,000 at 27.80, then another 50,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-30
Maturity Price : 25.00
Evaluated at bid price : 27.81
Bid-YTW : 3.84 %
RY.PR.R FixedReset 78,370 Desjardins bought 67,900 from Commission Direct at 27.70.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.75
Bid-YTW : 3.69 %
CM.PR.L FixedReset 56,370 Nesbitt crossed 25,000 at 27.85, then bought 14,100 from National at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-30
Maturity Price : 25.00
Evaluated at bid price : 27.84
Bid-YTW : 4.05 %
BNS.PR.X FixedReset 43,330 Nesbitt crossed 10,000 at 28.00.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.80
Bid-YTW : 3.86 %
BMO.PR.O FixedReset 37,400 Nesbitt crossed 25,000 at 28.00.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-24
Maturity Price : 25.00
Evaluated at bid price : 28.00
Bid-YTW : 3.86 %
There were 50 other index-included issues trading in excess of 10,000 shares.
Interesting External Papers

Boston Fed Publishes 1H09 Research Review

The Boston Fed has published its Research Review, Jan. ’09 – Jun ’09 with abstracts, summaries and a few charts from their recent publications.

Article titles are:

  • Making Sense of the Subprime Crisis
  • Reducing Foreclosures
  • Reviving Mortgage Securitization: Lessons from the Brady Plan
  • Why Are (Some) Consumers (Finally) Writing Fewer Checks?
  • Another Hidden Cost of Incentives: The Detrimental Effect on Norm Enforcement
  • Has Overweight Become the New Normal? Evidence of a Generational Shift in Body Weight Norms
  • Empirical Estimates of Changing Inflation Dynamics
  • Geographic Variations in a Model of Physician Treatment Choice with Social Interactions
  • The Optimal Level of Deposit Insurance Coverage

Three of these papers were discussed on PrefBlog following their release; links are provided to the PrefBlog post.

Regulatory Capital

TD Issues IT1C: CaTS 6.631% 99-Year Notes with Reset

TD has announced:

an issue of $750,000,000 TD Capital Trust IV Notes – Series 3 due June 30, 2108 (“TD CaTS IV – Series 3 Notes”). The TD CaTS IV – Series 3 Notes are subordinated, unsecured debt obligations of the Trust and are expected to qualify as Tier 1 Capital of TDBFG. Any Tier 1 Capital raised by TDBFG over the 15% regulatory limit will temporarily be counted as Tier 2B Capital. The expected closing date is September 15, 2009.

From the date of issue to, but excluding, June 30, 2021, interest on the TD CaTS IV – Series 3 Notes is payable semi-annually at a rate of 6.631% per year. Starting on June 30, 2021, and on every fifth anniversary thereafter until June 30, 2106, the interest rate on the TD CaTS IV – Series 3 Notes will reset as described in the prospectus.

On or after December 31, 2014, the Trust may, at its option and subject to certain conditions, redeem the TD CaTS IV – Series 3 Notes, in whole or in part.

In certain circumstances, the TD CaTS IV – Series 3 Notes and interest thereon may be automatically exchanged for, or paid by the issuance of, non-cumulative Class A first preferred shares of TDBFG.

The TD CaTS IV – Series 3 Notes will not be listed on any stock exchange.

The Trust and TDBFG intend to file a prospectus supplement with the securities regulators in each of the provinces and territories of Canada with respect to the offering of the TD CaTS IV – Series 3 Notes.

The prospectus supplement is not yet available. It is of interest that the 6.631% coupon is equivalent to 4.74% dividend, which may – possibly – be a clue as to the level of possible high quality FixedReset preferreds. Note that the initial 6.631% rate on the CaTS IV is set for 12 years, although there is a five-year call.