PrefBlog

Brompton Group has announced (on December 8):

Dividend Growth Split Corp. (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Thursday, December 9, 2021. The offering is expected to close on or about December 15, 2021 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $6.80 per Class A Share for a distribution rate of 17.6% on the issue price, and the Preferred Shares will be offered at a price of $10.00 per Preferred Share for a yield to maturity of 5.6%. (1) The closing market price on the TSX for each of the Class A Shares and Preferred Shares on December 7, 2021 was $7.00 and $10.11, respectively. The Class A Share and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (“Unit”) (calculated as at December 2, 2021), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering. The offering is being led by RBC Capital Markets.

The Company invests in a portfolio (the “Portfolio”) consisting primarily of equity securities of Canadian dividend growth companies. In addition, the Company may hold up to 20% of the total assets of the Portfolio in global dividend growth companies for diversification and improved return potential, at the discretion of Brompton Funds Limited (the “Manager”). In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing, each dividend growth company included in the Portfolio must have (i) a market capitalization of at least CDN$2.0 billion; and (ii) a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions targeted to be at least $0.10 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.1375 per Preferred Share, and to return the original issue price to holders of Preferred Shares on September 27, 2024.

So the Whole Units were offered for 16.80, while the NAVPU on December 2 was 16.01, a 4.9% premium. I love this business!

Today, Brompton announced:

a successful overnight treasury offering of class A shares and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $76.4 million. The offering is expected to close on or about December 15, 2021 and is subject to certain closing conditions. The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

Thanks to Assiduous Reader JD for ensuring I was aware of this!

DBRS has announced that it:

changed the trends on Canadian Western Bank’s (CWB or the Bank) long-term ratings to Stable from Negative and maintained the trends on all short-term ratings at Stable. DBRS Morningstar also confirmed its ratings on CWB, including the Bank’s Long-Term Issuer Rating at A (low) and Short-Term Issuer Rating at R-1 (low). The Bank’s Intrinsic Assessment of A (low) and Support Assessment of SA3 are unchanged. The SA3 designation, which reflects no expectation of timely external support, results in the final rating being equivalent to the Intrinsic Assessment.

KEY RATING CONSIDERATIONS
The trend changes to Stable from Negative reflect DBRS Morningstar’s view that, despite the potential for some near-term volatility, the economic uncertainties facing the Bank because of the Coronavirus Disease (COVID-19) pandemic have largely abated. Indeed, the Bank has maintained good asset quality metrics. Although impairments initially increased as expected, they reverted to the historical average in F2021, remaining at manageable levels. Additionally, CWB’s earnings have proved resilient and the Bank has continued growing and diversifying its franchise through further expansion into Ontario as well as improving its level of directly sourced deposits.

In confirming the ratings, DBRS Morningstar recognizes CWB’s well-established and growing franchise, operating in the middle-market commercial space across Canada. Furthermore, the Bank has been successful in executing strategically targeted wealth and loan portfolio acquisitions that augment its business while providing some geographic and revenue diversification. The ratings also consider the Bank’s high level of exposure to the real estate sector, specifically to development projects in Western Canada; its modest level of fee-based revenues; and its lower capitalization relative to peers.

RATING DRIVERS
DBRS Morningstar would upgrade its ratings if CWB further diversifies its revenue mix with a material and sustainable increase in the level of noninterest income. Increased diversification of the loan book, including a reduction in the relative exposure to real estate project finance, would also result in a ratings upgrade.

Conversely, a ratings downgrade would occur should there be significant losses in the loan portfolio or a perceived weakness in loan underwriting and/or risk management. Furthermore, operational issues that negatively affect the Bank’s implementation of its various organizational systems and data projects or a reduction in capitalization to levels closer to regulatory minimums would also result in a ratings downgrade.

Affected issues are CWB.PR.B and CWB.PR.D .

Canadian Utilities Limited has announced:

it has closed its previously announced public offering of Cumulative Redeemable Second Preferred Shares Series HH, by a syndicate of underwriters co-led by BMO Capital Markets and RBC Capital Markets, and including TD Securities Inc., Scotia Capital Inc., CIBC World Markets Inc., National Bank Financial Inc., and iA Private Wealth Inc. Canadian Utilities Limited issued 7,000,000 Series HH Preferred Shares for gross proceeds of $175,000,000. The Series HH Preferred Shares will begin trading on the TSX today under the symbol CU.PR.J. The proceeds will be used to increase the Corporation’s cash position to allow for operational flexibility and may be used in the future to repay indebtedness and to bolster liquidity.

Canadian Utilities Limited has granted the Underwriters an option, exercisable, in whole or in part, at any time until and including 30 days following the closing of the Offering, to purchase, at the offering price, an additional 1,050,000 Series HH Preferred Shares, to cover over-allotments, if any. Should the option be fully exercised, the total gross proceeds of the Series HH Preferred Share offering will be $201,250,000.

DBRS rates it Pfd-2(high):

DBRS Limited (DBRS Morningstar) assigned a rating of Pfd-2 (high) with a Stable trend to Canadian Utilities Limited’s CAD 175 million Cumulative Redeemable Second Preferred Shares Series HH.

The rating assigned to this newly issued preferred shares instrument is based on the rating of an already-outstanding preferred shares series of the above-mentioned instrument.

CU.PR.J is a Straight Perpetual, 4.75%, announced 2021-11-23.

The issue traded 383,500 shares today in a range of 24.70-00 before closing at 24.80-97. Vital statistics are:

The issue will be tracked by HIMIPref™ and has been assigned to the PerpetualDiscount subindex.

DBRS has announced that it:

downgraded the ratings of ECN Capital Corp. (ECN or the Company), including the Company’s Long-Term Issuer Rating to BB (high) and Preferred Shares Rating to Pfd-4 (high). The trend for the ratings is Stable. The rating actions follow the Company’s sale of its Service Finance Company, LLC (Service Finance) business to Truist Bank. The Intrinsic Assessment (IA) for ECN is BB (high) and the Support Assessment is SA3, resulting in the Company’s Long-Term Issuer Rating being equalized with the IA. With these rating actions, ECN’s ratings are removed from Under Review with Negative Implications, where they were placed on August 11, 2021.

KEY RATING CONSIDERATIONS
The ratings downgrade considers the impact of the sale of Service Finance on ECN’s credit fundamentals, including its franchise strength, and earnings generation. With the sale of Service Finance, the Company’s scope of operations and product/services diversity has moderated, increasing ECN’s susceptibility to business and economic downturns. Additionally, the loss of Service Finance’s earning contributions reduces ECN’s earnings capacity, organic capital generation, and to a degree, the Company’s ability to absorb unexpected future losses. The ratings also consider the Company’s ongoing solidly run, asset light businesses, Triad Financial Services, Inc. (Triad) and Kessler Financial Services LLC (Kessler), which are both leaders in their respective niche sectors and contribute to ECN’s satisfactory earnings generation. The Company’s ratings also reflect ECN’s sound credit position, as well as its solid funding and acceptable capital profiles.

The Stable trend, reflects our view that the Company’s credit fundamentals will remain satisfactory, despite the potential for Coronavirus Disease (COVID-19) pandemic related flareups. We expect some moderation in housing demand in 2022, but expect Triad to generate good operating performance as demand for manufactured housing will continue to be supported by affordability issues in the U.S. housing market as well as Triad’s top tier market position. The Stable trend also considers our expectations that Kessler will continue to generate solid results in 2022, especially as marketing services and transaction services benefit from increasing client activity and new partner programs are brought on board, including improving traction with the Company’s Credit Card Investment Management platform.

RATING DRIVERS
A more diverse product mix along with sustained improvements in adjusted profitability and statutory earnings, while maintaining disciplined capital management and risk aversion, would result in an upgrade of the ratings.

Should capital levels not match the Company’s risk position, credit risk on the balance sheet become more pronounced, or if there were partner funding disruptions, the ratings would be downgraded.

RATING RATIONALE
With the sale of Service Finance, ECN’s franchise fundamentals have somewhat weakened, as the transaction reduces the Company’s scope of business, product/services diversity, and to a degree its growth potential. As such, we view ECN as being more prone to negative macroeconomic conditions. Nonetheless, the Company’s ongoing franchise reflects two businesses that are leaders in their respective sectors, including Triad, which provides manufactured home loans and home – land loans, and Kessler, a manager, adviser and structuring partner to credit card issuers, banks, credit unions, and payment networks. The Company’s ratings also consider ECN’s solid management team, which has considerable experience and deep industry knowledge.
…
Capital is acceptable for its rating level, and we anticipate that ECN will continue to maintain appropriate capital levels to match its risk position. That said, capital generation has somewhat moderated with the sale of Service Finance. Finally, we note that the gains from the sale of Service Finance will be distributed to common shareholders.

Affected issues are ECN.PR.A and ECN.PR.C. Note that ECN.PR.A has been called for redemption.

The Bank of Nova Scotia has announced:

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 38 (Non-Viability Contingent Capital (NVCC)) (“Series 38 Shares”) of Scotiabank on January 27, 2022 at a price equal to $25.00 per share together with declared and unpaid dividends to the Redemption Date (the “Redemption Price”). Formal notice will be issued to the shareholders in accordance with the share conditions.

The redemption has been approved by the Office of the Superintendent of Financial Institutions and will be financed out of the general funds of Scotiabank. This redemption is part of the Bank’s ongoing management of its Tier 1 capital.

On November 30, 2021, the Board of Directors of Scotiabank declared quarterly dividends of $0.3031250 per Series 38 Share. This will be the final dividend on the Series 38 Shares and will be paid on January 27, 2022, to shareholders of record at the close of business on January 4, 2022, as previously announced. Subsequent to this final dividend payment, the Series 38 Shares will cease to be entitled to dividends.

BNS.PR.H is a FixedReset, 4.85%+419, NVCC, that commenced trading 2016-9-16 after being announced 2016-9-7. It is tracked by HIMIPref™ and has is assigned to the FixedReset-Premium subindex.

Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!