PrefBlog

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell 20 million Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (the “Series 17 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on or about November 23, 2016.

The holders of Series 17 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.2875 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge. The Series 17 Preferred Shares are expected to yield 5.15 per cent per annum for the initial fixed rate period to, but excluding, March 1, 2022. The first quarterly dividend payment date is scheduled for March 1, 2017. The dividend rate will reset on March 1, 2022 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 4.14 per cent, provided that, in any event, such rate shall not be less than 5.15 per cent per annum. The Series 17 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2022 and on March 1 of every fifth year thereafter.

The holders of Series 17 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 18 (the “Series 18 Preferred Shares”) on March 1, 2022 and on March 1 of every fifth year thereafter, subject to certain conditions. The holders of Series 18 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 4.14 per cent.

Enbridge has granted to the underwriters an option to purchase up to an additional two million Series 17 Preferred Shares at a price of $25.00 per share, exercisable at any time up to 48 hours prior to the closing of the offering.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Company dated August 19, 2016. Proceeds are expected to be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Company and its affiliates.

The syndicate of underwriters is led by TD Securities Inc., CIBC Capital Markets, Scotiabank, and RBC Capital Markets.

They later announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (the “Series 17 Preferred Shares”), the size of the offering has been increased to 30 million from 20 million. The aggregate gross proceeds of the offering will be $750 million with closing expected on or about November 23, 2016.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”). Manulife will issue 14 million Series 23 Preferred Shares priced at $25 per share to raise gross proceeds of $350 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. Manulife has also granted the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing, to purchase up to an additional 2 million Series 23 Preferred Shares at the same offering price. The gross proceeds raised under the offering will be $400 million should this option be exercised in full. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.

Holders of the Series 23 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.85 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.83 per cent.

Holders of Series 23 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Floating Rate Class 1 Shares Series 24 (“Series 24 Preferred Shares”), subject to certain conditions, on March 19, 2022 and on March 19 every five years thereafter. Holders of the Series 24 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.83 per cent.

Manulife intends to use the net proceeds from the offering for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”), the size of the offering has been increased to 19 million shares. The gross proceeds of the offering will now be $475 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.

Manulife intends to use the net proceeds from the offering for general corporate purposes.

Implied Volatility analysis suggests that the issue is actually a little rich compared to its peers:

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TransCanada Corporation has announced:

that it will issue 20 million cumulative redeemable minimum rate reset first preferred shares, series 15 (the “Series 15 Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $500 million on a bought deal basis to a syndicate of underwriters in Canada led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

The holders of Series 15 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.2250 per share, payable quarterly on the last business day of February, May, August and November, as and when declared by the board of directors of TransCanada. The Series 15 Preferred Shares will yield 4.90 per cent per annum for the initial fixed rate period ending May 31, 2022 with the first dividend payment date scheduled for February 28, 2017. The dividend rate will reset on May 31, 2022 and on the last business day of May in every fifth year thereafter to a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.85 per cent, provided that, in any event, such rate shall not be less than 4.90 per cent per annum. The Series 15 Preferred Shares are redeemable by TransCanada, at its option, on May 31, 2022 and on the last business day of May in every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 15 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 16 (the “Series 16 Preferred Shares”), subject to certain conditions, on May 31, 2022 and on the last business day of May in every fifth year thereafter. The holders of Series 16 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of TransCanada, at an annualized rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.85 per cent.

TransCanada has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million Series 15 Preferred Shares at a price of $25.00 per share.

The anticipated closing date is November 21, 2016. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

The Series 15 Preferred Shares will be offered to the public in Canada pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under TransCanada’s short form base shelf prospectus dated December 23, 2015. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable minimum rate reset first preferred shares, series 15 (the “Series 15 Preferred Shares”), the size of the offering has been increased to 40 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds of the offering will now be $1.0 billion. The syndicate of underwriters is led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

The anticipated closing date is November 21, 2016. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

Surprisingly, this issue looks a shade expensive when the TRP series is subjected to Implied Volatility analysis:

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However, there will be those who say that the presence of the minimum reset guarantee more than offsets the $0.25 richness of the issue price.