PrefBlog

BAM.PR.S, the new FloatingReset that has come into existence via partial exchange from BAM.PR.R, is now trading.

The 14% conversion rate has been reported previously; Assiduous Readers will remember that I recommended against conversion. BAM.PR.R now pays 3.014% (on par) until 2021-6-30, while BAM.PR.S will pay 3-month bills +230bp, reset quarterly.

BAM.PR.S closed July 4 with a quote of 15.00-50, 1×1.

Vital statistics are:

The $0.39 price difference between the two elements of the Strong Pair implies a break-even three-month bill rate of +0.33% – the highest of the investment-grade Strong Pairs.

Click for Big

Capstone Infrastructure Corporation has announced:

the applicable dividend rates for its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) and Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”) that will take effect on July 31, 2016.

With respect to any Series A shares that remain outstanding after August 2, 2016 (when, subject to the terms of the Corporation’s articles, holders of Series A shares who elect to exchange some or all of their Series A shares for Series B shares will have such shares exchanged) (the “Conversion Date”), holders of Series A shares will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Capstone. The dividend rate for the five-year period from and including July 31, 2016 to but excluding July 31, 2021 will be 3.271% per annum, being equal to the five-year Government of Canada bond yield determined as of today plus 2.71%, in accordance with the terms of the Series A shares.

With respect to any Series B shares that may be issued on the Conversion Date, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Capstone. The dividend rate for the three-month period from and including July 31, 2016 to but excluding October 31, 2016 will be 3.204% per annum, being equal to the three-month Government of Canada Treasury Bill yield per annum determined as of today plus 2.71%, with the amount of any quarterly dividend calculated based on the actual number of days in such quarterly period divided by 365, in accordance with the terms of the Series B shares.

Beneficial owners of Series A shares who wish to exercise their conversion right should communicate with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series A shares can meet the deadline to exercise such conversion right, which is 5:00 p.m. (EST) on July 18, 2016.

I previously reported that this issue will be extended.

CSE.PR.A is a FixedReset, 5.00%+271, that commenced trading 2011-6-30 after being announced 2011-6-13.

The new rate therefore represents a 35% cut in dividends.

As noted, the deadline to notify the company is 5 p.m. (Toronto time) on July 18, 2016.; brokers will have internal deadlines a day or two in advance.

I will post a recommendation regarding whether or not to convert closer to the deadline.

BCE Inc. has issued a Notice to Holders of BCE Inc. Series AI Preferred Shares (BCE.PR.I):

Beginning on June 17, 2016 and ending on July 22, 2016, holders of Series AI Preferred Shares will have the right to choose one of the following options with regards to their shares:
1. To retain any or all of their Series AI Preferred Shares and continue to receive a fixed quarterly dividend; or
2. To convert, on a one-for-one basis, any or all of their Series AI Preferred Shares into BCE Inc. Cumulative Redeemable First Preferred Shares, Series AJ (the “Series AJ Preferred Shares”) and receive a floating monthly dividend.
Effective August 1, 2016, the fixed dividend rate for the Series AI Preferred Shares will be set for a five-year period as explained in more detail in paragraph 5 of the attached Notice of Conversion Privilege.
…
In order to convert your shares, you must exercise your right of conversion during the conversion period, which runs from June 17, 2016 to July 22, 2016, inclusively.

Holders of both the Series AI Preferred Shares and the Series AJ Preferred Shares will have the opportunity to convert their shares again on August 1, 2021, and every five years thereafter as long as the shares remain outstanding.
…
As of August 1, 2016, the Series AI Preferred Shares, should they remain outstanding, will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be determined by BCE Inc. on July 7, 2016 but which shall not be less than 80% of the five-year Government of Canada Yield (as defined in BCE Inc.’s articles) compounded semi-annually and computed on July 7, 2016 by two investment dealers appointed by BCE Inc. The annual dividend rate applicable to the Series AI Preferred Shares will be published on July 11, 2016 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on BCE Inc.’s website at www.bce.ca.

There was a similar Notice to Holders of BCE Inc. Series AJ Preferred Shares (BCE.PR.J).

At the last exchange date, almost 25% of BCE.PR.I Converted to Ratchet Rate.

Assiduous Readers will understand that BCE.PR.I / BCE.PR.J is a Strong Pair; BCE.PR.I being a FixedFloater and BCE.PR.J being a RatchetRate preferred in my terminology.

I will pass on information regarding the reset dividend for BCE.PR.I when that becomes available and make a recommendation regarding which element of the pair is more desirable close to the end of the conversion notice period which, as noted above, runs until July 22.