PrefBlog

DBRS has announced (on 2021-7-27):

DBRS Limited (DBRS Morningstar) upgraded the rating on the Preferred Shares issued by Canadian Banc Corp. (the Company) to Pfd-3 (high) from Pfd-3. The Company invests in a portfolio of common shares (the Portfolio) issued by the six largest Canadian banks: Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and The Toronto-Dominion Bank. Each of the six banks generally represents no less than 5% and no more than 20% of the net asset value (NAV) of the Portfolio. In addition, up to 20% of the Portfolio’s NAV may be invested in equity securities of Canadian or foreign financial services corporations other than the banks listed above.

Dividends received from the Portfolio are used to pay to holders of the Preferred Shares floating cumulative monthly dividends at a rate per annum equal to the prevailing prime rate in Canada plus 1.5%, with a minimum annual rate of 5% and a maximum annual rate of 8%. Holders of Class A Shares are entitled to receive monthly cash distributions targeted to be 10% annually based on the volume-weighted average market price of the Class A Shares for the last three trading days of the preceding month.

DBRS Morningstar expects the monthly cash distributions to the holders of the Class A Shares and operating expenses to cause an average grind on the Portfolio’s NAV of approximately 5.6% until the end of the term. An asset coverage test in place mitigates the effects of the grind by not permitting the Company to make monthly distributions to the Class A Shares if the dividends of the Preferred Shares are in arrears or if the NAV of the Portfolio falls below 1.5 times (x) the principal amount of the outstanding Preferred Shares. In addition, no special distributions can be made to the Class A Shares if, after such distributions, the NAV is below $25. This ensures a sufficient level of protection to the holders of the Preferred Shares.

The main form of credit enhancement available to the Preferred Shares is a buffer of downside protection. The amount of downside protection available to the Preferred Shares as of July 15, 2021, was 56.8%. Although the credit quality of the underlying assets of the Portfolio is strong, the Portfolio is concentrated in the financial services industry. The floating nature of dividend distributions to the Preferred Shares and Class A Shares, while mitigated by predetermined ranges of dividend yields, may potentially increase the volatility of the protection available to holders of the Preferred Shares in a high interest rate environment. The Preferred Share dividend coverage ratio was approximately 1.0x.

The maturity date is December 1, 2023. On maturity, the holders of the Preferred Shares will be entitled to the value of the Portfolio, up to the face value of the Preferred Shares, in priority to the holders of the Class A Shares. The Class A Shareholders will receive the remaining value of the Company. The term may be extended beyond the termination date for additional terms of five years each as determined by the Company’s board of directors.

The amount of downside protection, dividend coverage, and time remaining until maturity warranted an upgrade to the rating on the Preferred Shares to Pfd-3 (high) from Pfd-3.

DBRS Morningstar also considered the following constraints to the rating:

(1) The reliance on the Portfolio manager to generate additional income through methods such as option writing.

(2) The monthly cash distributions to holders of the Class A Shares.

(3) The dependence of the downside protection available to holders of the Preferred Shares on the value of the underlying common shares, which are subject to share price volatility.

(4) Market fluctuations resulting from the response to the worldwide spread of the Coronavirus Disease (COVID-19) that could negatively affect the Company’s NAV.

The rating includes additional analysis of the Company’s expected performance as a result of the global efforts to contain the coronavirus. The DBRS Morningstar sovereigns group initially published its outlook on the pandemic’s impact on key economic indicators for the 2020–22 time frame on April 16, 2020. DBRS Morningstar last updated the macroeconomic scenarios on June 18, 2021, in its “Global Macroeconomic Scenarios – June 2021 Update.” For details, see https://www.dbrsmorningstar.com/research/380281.

DBRS has announced (on 2021-7-27):

DBRS Limited (DBRS Morningstar) upgraded the rating on the Preferred Shares issued by Dividend 15 Split Corp. II (the Company) to Pfd-3 (low) from Pfd-4. The Company holds a portfolio of common shares listed on the Toronto Stock Exchange (the Portfolio), which are issued by the following 15 companies: Bank of Montreal, The Bank of Nova Scotia, BCE Inc., CI Financial Corp., Canadian Imperial Bank of Commerce, Enbridge Inc., Manulife Financial Corporation, National Bank of Canada, Royal Bank of Canada, Sun Life Financial Inc., TELUS Corporation, Thomson Reuters Corporation, The Toronto-Dominion Bank, TransAlta Corporation, and TC Energy Corp. Up to 15% of the net asset value (NAV) of the Portfolio may be invested in equity securities of issuers other than the companies listed above. The Portfolio is actively managed by Quadravest Capital Management Inc. The Company has the ability to write covered call options in respect of some or all of the common shares held in the Portfolio to generate additional income and supplement the dividends received on the Portfolio.

Dividends received from the Portfolio’s underlying common shares are used to pay fixed cumulative monthly cash distributions of $0.04792 per Preferred Share, yielding 5.75% annually on the original issue price of $10.00. Holders of the Class A Shares receive regular monthly cash dividends targeted at $0.10 per Class A Share, yielding 8% per annum on the original issue price of $15.00. No monthly distributions to the Class A Shares are made if the dividends of the Preferred Shares are in arrears, or if the Company’s NAV falls below 1.5 times (x) the principal amount of the outstanding Preferred Shares. Furthermore, no special distributions are made if the Company’s NAV is below $25.00. No distributions are currently made to holders of the Class A Shares.

The termination date is December 1, 2024. At maturity, the holders of the Preferred Shares will be entitled to the value of the Company up to the face amount of the Preferred Shares in priority to the holders of the Class A Shares. Holders of the Class A Shares will receive the remaining value of the Company.

As at June 30, 2021, the downside protection available to the Preferred Shares was 35.0%, and the dividend coverage ratio was approximately 0.7x. The rating upgrade on the Preferred Shares to Pfd-3 (low) from Pfd-4 is based on the current downside protection level and the minimum downside protection provided by an asset coverage test, which does not permit any distribution to the holders of Class A Shares if the Company’s NAV falls below $15.00.

The main constraints on the rating are:

(1) The Company’s dependence on the value and dividend policies of the securities in the Portfolio.

(2) The reliance on the Portfolio manager to generate additional income through methods such as option writing.

(3) Market fluctuations resulting from the response to the worldwide spread of the Coronavirus Disease (COVID-19) that could negatively affect the Company’s NAV.

The rating includes additional analysis of the Company’s expected performance as a result of the global efforts to contain the coronavirus. The DBRS Morningstar sovereigns group initially published its outlook on the pandemic’s impact on key economic indicators for the 2020–22 time frame on April 16, 2020. DBRS Morningstar last updated the macroeconomic scenarios on June 18, 2021, in its “Global Macroeconomic Scenarios – June 2021 Update.” For details, see https://www.dbrsmorningstar.com/research/380281.

DBRS has announced (on 2021-6-8):

DBRS Limited (DBRS Morningstar) upgraded its rating on the Preferred Shares issued by Brompton Lifeco Split Corp. (the Company) to Pfd-3 (low) from Pfd-4 (low).

The Company holds a portfolio (the Portfolio) consisting of common shares of the four largest publicly traded Canadian life insurance companies: Great-West Lifeco Inc., Sun Life Financial, Inc, Manulife Financial Corporation, and Industrial Alliance Insurance and Financial Services Inc. The Portfolio is approximately equally weighted and is rebalanced at least annually. The maturity date is April 29, 2024. On maturity, the holders of the Preferred Shares are entitled to receive the value of the Company up to the face value of the Preferred Shares. Holders of the Class A Shares will receive the remaining value of the Company. The term of the Company may be extended further beyond the new maturity date for additional terms of five years each, as determined by the Company’s board of directors.

The Preferred Shares are entitled to receive fixed cumulative, quarterly distributions in the amount of $0.15625 per preferred share, yielding 6.25% annually on the issue price of $10.00 per share. Holders of the Class A Shares receive regular monthly cash distributions targeted at $0.075 per share. No monthly distributions on the Class A Shares will be made if the Preferred Share distributions are in arrears or if the net asset value (NAV) of the Company falls below 1.5 times (x) the principal amount of the outstanding Preferred Shares. Furthermore, no special distributions in excess of $0.075 per month will be made if the NAV of the Company is below $25.00. The Company has the ability to write covered-call options or cash-covered put options with respect to all or part of the common shares of the Portfolio and may also engage in securities lending to generate additional income to supplement the dividends received on the Portfolio.

The main form of credit enhancement available to the Preferred Shares is a buffer of downside protection. Downside protection corresponds to the percentage decline in market value of the Portfolio that must be experienced before the Preferred Shares would be in a loss position. As at May 31, 2021, the amount of downside protection available to the Preferred Shares was 39.0%. The dividend coverage ratio was 0.7x.

In its analysis, DBRS Morningstar has considered the current level and trend of downside protection of the Company. After experiencing a sharp decline in March 2020, the downside protection has fully recovered the losses within a year. Some other important rating considerations were the credit quality and diversification of the Portfolio as well as changes in dividend policies of the underlying companies in the Portfolio. Based on these considerations and performance metrics, DBRS Morningstar upgraded the rating of the Preferred Shares issued by the Company to Pfd-3 (low) from Pfd-4 (low).

The main constraints to the rating are as follows:

(1) The Company’s dependence on the value and dividend policies of the securities in the Portfolio.
(2) The reliance on the manager to generate a high yield on the Portfolio to meet distributions and other trust expenses without having to liquidate portfolio securities.
(3) Market fluctuations resulting from the response to the worldwide spread of the Coronavirus Disease (COVID-19) that could negatively affect the Company’s NAV.

The rating includes additional analysis of the expected performance as a result of the global efforts to contain the coronavirus. The DBRS Morningstar sovereigns group initially published its outlook on the coronavirus’ impact on key economic indicators for the 2020–22 time frame on April 16, 2020. DBRS Morningstar last updated the macroeconomic scenarios on March 17, 2021, in its “Global Macroeconomic Scenarios: March 2021 Update” at https://www.dbrsmorningstar.com/research/375376.

DBRS has announced (on 2021-3-29):

DBRS Limited (DBRS Morningstar) downgraded Brookfield Property Partners L.P.’s (BPP) Issuer Rating and Senior Unsecured Debt rating to BBB (low) from BBB. DBRS Morningstar also downgraded its ratings on Brookfield Property Finance ULC’s Senior Unsecured Notes and Brookfield Office Properties Inc.’s Senior Unsecured Notes to BBB (low) from BBB and Brookfield Office Properties Inc.’s Cumulative Redeemable Preferred Shares, Class AAA to Pfd-3 (low) from Pfd-3. All trends have been changed to Stable from Negative. DBRS Morningstar notes that the ratings are based on the credit risk profile of the consolidated entity, including BPP and its subsidiaries (collectively, BPY or the Partnership).

The rating downgrades principally reflect BPY’s weaker-than-expected key financial risk metrics, particularly total debt-to-EBITDA (18.7 times (x) on a last-12-months (LTM) basis at December 31, 2020), as a result of the significant impact the ongoing Coronavirus Disease (COVID-19) pandemic and consequent economic slowdown has had on BPY’s operations and tenants. Negative impacts include rent deferrals and abatements, increased bad debt reserves, lower short-term revenues (parking, temporary tenants, etc.), increasing vacancy because of tenant bankruptcies (concentrated in BPY’s Core Retail segment), and the impact of drastically lower travel demand on BPY’s hotel portfolio (concentrated in BPY’s LP Investments segment).

DBRS Morningstar has also modestly revised downward its overall business risk assessment of BPY because of a lower assessment of BPY’s asset quality, partially offset by improvement in market position. DBRS Morningstar is of the view that, while still of high overall quality, demand for BPY’s enclosed shopping centre assets in the U.S. will take time to recover, as evidenced by cash flow volatility through the pandemic, the discretionary nature of its tenants with elevated counterparty risk, and tempered transaction activity resulting in a lower asset quality assessment. On the other hand, DBRS Morningstar has revised upward its assessment of BPY’s market position as a top player in the global real estate industry across real estate categories, as proven by BPY’s continued ability to transact through the pandemic in multiple respects, such as leasing, capital recycling, and financing initiatives. The net impact of the revisions to asset quality and market position result in a modest deterioration in BPY’s stand-alone credit assessment.

The Stable trends consider DBRS Morningstar’s expectation for significant improvement in BPY’s total debt-to-EBITDA to below 16.0x by YE2022, with continued improvement thereafter. This expectation is supported by DBRS Morningstar’s view that the worst of the economic fallout from the pandemic has already occurred and that BPY should see a recovery in EBITDA as the economy gradually normalizes, resulting in improved cash rent collections, fewer bad debt expenses, improving occupancy driven by fewer bankruptcies and re-leasing to well-positioned tenants, increasing short-term revenue streams, and improving travel demand for its hotel accommodations, as well as stabilization of its office development projects (e.g., One Manhattan West and 100 Bishopsgate). DBRS Morningstar anticipates that the aforementioned growth drivers will be partially offset by accelerating capital recycling activity as BPY disposes of noncore assets and/or partial interests in core assets and uses the proceeds to pay down debt and fund capital expenditures. As a result of all the above, DBRS Morningstar expects BPY’s EBITDA to increase to approximately $3.1 billion and total debt to decrease to approximately $48.0 billion by YE2022 (from $2.8 billion and $52.2 billion in 2020, respectively).

The ratings continue to be supported by (1) the Partnership’s robust access to liquidity of $5.5 billion, consisting of $1.7 billion in cash and cash equivalents and $3.8 billion available on credit facilities at December 31, 2020; (2) financial flexibility afforded by nonrecourse mortgage debt and no unsecured maturities until October 2021, when the $314 million Series 2 Senior Unsecured Notes come due; (3) DBRS Morningstar’s view of implicit support from Brookfield Asset Management Inc. (BAM; rated A (low) with a Stable trend by DBRS Morningstar); (4) BPY’s market position as a pre-eminent global real estate company; and (5) high-quality assets, particularly its Core Office segment, with long-term leases in place and large, recognizable investment-grade-rated tenants. The ratings continue to be constrained by BPY’s weak financial risk assessment as reflected by both its highly leveraged balance sheet and low EBITDA interest coverage (1.25x LTM); a riskier retail leasing profile in terms of lease maturities and counterparty risk relative to BPY’s Core Office segment; a higher-risk opportunistic LP Investments segment composed primarily of hotel, office, retail, and alternative assets; and DBRS Morningstar’s assessment of the unmitigated structural subordination of the Senior Unsecured Debt at the BPP level relative to a material amount of debt at its operating subsidiaries.

With these rating downgrades, BPY continues to have little in the way of financial flexibility for the ratings. Indeed, DBRS Morningstar would consider a further negative rating action should BPY’s operating environment fail to improve as expected such that total debt-to-EBITDA remains above 16.0x on a sustained basis, all else equal, or if DBRS Morningstar changes its views on the level and strength of implicit support provided by BAM. DBRS Morningstar does not anticipate a positive rating action for the foreseeable future given the constraints noted above.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Affected issues are: BPO.PR.A, BPO.PR.C, BPO.PR.E, BPO.PR.G, BPO.PR.I, BPO.PR.N, BPO.PR.P, BPO.PR.S, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y.

Sun Life Financial Inc. has announced (on 2021-8-4):

On September 29, 2021, we intend to redeem all of the $400 million Class A Non-Cumulative Preferred Shares Series 1 and all of the $325 million Class A Non-Cumulative Preferred Shares Series 2. The redemptions are subject to regulatory approval and will be funded from existing cash and other liquid assets in SLF Inc. The redemptions will result in a reduction in SLF Inc.’s LICAT ratio and financial leverage ratio of approximately three and two percentage points, respectively. Sun Life Assurance’s LICAT ratio will not be impacted.

This follows an earlier announcement (on 2021-6-23):

that it intends to issue in Canada $1 billion principal amount of 3.60% Limited Recourse Capital Notes Series 2021-1 (Subordinated Indebtedness) (the “Notes”). The offering is expected to close on June 30, 2021. The net proceeds will be used for general corporate purposes of the Company, which may include investments in subsidiaries, repayment of indebtedness and other strategic investments.

The Notes will bear interest at a fixed rate of 3.60% annually, payable semi-annually, for the initial period ending on, but excluding, 2026. Thereafter, the interest rate on the Notes will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 2.604%. The Notes mature on June 30, 2081.

In connection with the issuance of the Notes, the Company will issue 1 million Class A Non-Cumulative Rate Reset Preferred Shares Series 14 (the “Series 14 Shares”) to be held by Computershare Trust Company of Canada as trustee of a newly formed trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the Notes when due, the recourse of each noteholder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Series 14 Shares except in limited circumstances.

Subject to prior regulatory approval, the Company may redeem the Notes, in whole or in part on not less than 15 nor more than 60 days’ prior notice by the Company, on June 30, 2026 and every five years thereafter during the period from May 31 to and including June 30, commencing in 2031, at a redemption price equal to par, together with accrued and unpaid interest up to, but excluding, the date of redemption.

Additional details of the offering will be set out in a prospectus supplement that the Company intends to issue pursuant to its short form base shelf prospectus dated March 19, 2021, both of which are or will be available on the SEDAR website for Sun Life Financial Inc. at www.sedar.com. The Notes will be sold on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, BMO Capital Markets and TD Securities. The proceeds from this offering are expected to qualify for Tier 1 capital.

SLF.PR.A and SLF.PR.B were both PerpetualDiscounts, paying 4.75% and 4.80% respectively, that were issued in 2005.

Update, 2021-8-13: DBRS has finalized the LRCN rating:

DBRS Limited (DBRS Morningstar) finalized its provisional rating of A (low) with a Stable trend on Great-West Lifeco Inc.’s (Great-West or the Company) Limited Recourse Capital Notes Series 1 (Subordinated Indebtedness). DBRS Morningstar assigned the rating equal to the Company’s Issuer Rating of A (high) less two rating notches, which is consistent with DBRS Morningstar’s notching approach for debt instruments issued by insurance holding companies. This is two notches below the rating of Great-West’s Debentures.

Great-West expects to issue $1.5 billion of the Limited Recourse Capital Notes on August 16, 2021, with a maturity date of December 31, 2081. The Limited Recourse Capital Notes will have an initial five-year fixed rate of 3.60%.

RATING DRIVERS
An upgrade is unlikely in the intermediate term given the increase in financial leverage and integration risk following two large acquisitions. However, over the long term, a material improvement in financial leverage together with the successful integration of recent acquisitions, while maintaining strong earnings and regulatory capital levels, would result in an upgrade.

Conversely, the ratings would be downgraded if the Company experiences further sustained deterioration of its financial leverage, combined with weaker profitability and coverage ratios. Moreover, an adverse event causing regulatory capital to decline substantially or significant operational missteps with recent acquisitions, would result in a downgrade.

Bank of Montreal has announced (on 2021-7-16):

its intention to redeem all of its 9,425,607 outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 25 (“Preferred Shares Series 25”) for an aggregate total of approximately $236 million and all of its 2,174,393 outstanding Non-Cumulative Floating Rate Class B Preferred Shares, Series 26 (“Preferred Shares Series 26”) for an aggregate total of approximately $54 million on August 25, 2021. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

The Preferred Shares Series 25 and the Preferred Shares Series 26 are redeemable at the Bank’s option on August 25, 2021, at a redemption price of $25.00 per share. Payment of the redemption price will be made by the Bank on August 25, 2021.

Separately from the payment of the redemption price, the final quarterly dividend of $0.112813 per share for the Preferred Shares Series 25 and $0.078704 per share for the Preferred Shares Series 26 announced by the Bank on May 26, 2021 will be paid in the usual manner on August 25, 2021, to shareholders of record on August 3, 2021.

Notice will be delivered to holders of the Preferred Shares Series 25 and the Preferred Shares Series 26 in accordance with the terms outlined in the Preferred Shares Series 25 and Preferred Shares Series 26 prospectus supplement.

BMO.PR.Q was issued as a FixedReset, 3.90%+115, which commenced trading 2011-3-11 after being announced 2011-3-2. Notice of extension was provided and the issue reset to 1.805% in 2016. There was a 19% conversion to the FloatingReset, BMO.PR.A.

BMO.PR.A arose through a partial conversion from the FixedReset, BMO.PR.Q, in 2016.

Canadian Western Bank has announced (on 2021-6-1):

that it will redeem all of its outstanding 5,600,000 Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 7 (Non-Viability Contingent Capital (NVCC)) (the “Series 7 Preferred Shares”) for cash on July 31, 2021. The Series 7 Preferred Shares (TSX: CWB.PR.C) are redeemable at CWB’s option on July 31, 2021 at a redemption price per Series 7 Preferred Share equal to $25.00 for an aggregate total of $140 million. Formal notice will be delivered to holders of Series 7 Preferred Shares in accordance with the terms outlined in the share provisions for the Series 7 Preferred Shares.

Separately from the redemption price, the final quarterly dividend of $0.390625 per Series 7 Preferred Share will be paid in the usual manner on July 31, 2021 to shareholders of record on July 23, 2021. After the Series 7 Preferred Shares are redeemed, holders of Series 7 Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price.

CWB.PR.C was a FixedReset, 6.25%+547, NVCC, that commenced trading 2016-3-31 after being announced 2016-3-10. It was tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Capstone Infrastructure Corporation has announced (on 2021-7-5):

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, 2021.

With respect to any Series A shares that remain outstanding after August 3, 2021 (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, 2021 to but excluding July 31, 2026 will be 3.702% 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, 2021 to but excluding October 31, 2021 will be 2.852% 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 19, 2021.

This followed notice of conversion rights (on 2021-6-10):

it does not intend to exercise its right under the terms of its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) to redeem all or part of the currently outstanding 3,000,000 Series A shares on July 31, 2021. As a result, subject to certain conditions, the holders of the Series A shares have the right to convert all or part of their Series A shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”) on August 3, 2021 (the “Conversion Date”) in accordance with the terms of the Series A shares.

Holders of Series A shares who do not exercise their right to convert their Series A shares into Series B shares on the Conversion Date will retain their Series A shares, subject to the conditions set out below.

The dividend rate applicable to the Series A shares for the five-year period from July 31, 2021 to but excluding July 31, 2026, and the dividend rate applicable to the Series B shares for the three-month period from July 31, 2021 to October 31, 2021, will be determined and announced by way of a news release on July 5, 2021.

Beneficial owners of Series A shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 5, 2021 until July 19, 2021 at 5:00 p.m. (EST).

The foregoing conversion rights are subject to the conditions, as set out in the terms of the Series A shares, that: (i) if Capstone determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series B shares, after having taken into account all Series A shares tendered for conversion into Series B shares, then holders of Series A shares will not be entitled to convert their shares into Series B shares and all holders will continue to hold Series A shares, and (ii) alternatively, if Capstone determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series A shares, after having taken into account all Series A shares tendered for conversion into Series B shares, then all remaining Series A shares will automatically be converted into Series B shares on a one-for-one basis on the Conversion Date and all holders will hold Series B shares. In either case, Capstone will give written notice to that effect to the registered holder of Series A shares no later than July 27, 2021.

They then announced (on 2021-7-20):

that none of its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) will be converted into Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”).

On June 10, 2021, Capstone notified holders of Series A shares that they could elect to convert their Series A shares into Series B shares, subject to the terms and conditions of those shares. One such condition is that, following conversion, there be at least 1,000,000 Series B shares outstanding or else no Series A shares will be converted.

As of 5:00 p.m. (EST) on July 19, 2021, the end of the period during which holders of Series A shares could elect to convert their Series A shares into Series B shares, elections for conversion into Series B shares were received in respect of only 57,250 of the 3,000,000 outstanding Series A shares. As a result, the above condition is not satisfied and no Series A shares will be converted into Series B shares. All holders of Series A shares will continue to hold Series A shares.

As previously announced, for the five-year period from and including July 31, 2021 to but excluding July 31, 2026, the fixed annual dividend rate for the Series A shares has been set at 3.702% per share, payable in equal quarterly amounts on the last day of each of the months of January, April, July and October if, as and when dividends are declared by the Board of Directors of the Corporation.

CSE.PR.A was issued as a FixedReset, 5.00%+271, that commenced trading 2011-6-30 after being announced 2011-6-13. Notice of extension was provided and it reset to 3.271% in 2016. I recommended against conversion and there was no conversion to FloatingReset. The issue is now unrated.

The Bank of Nova Scotia has announced (on 2021-6-17):

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 36 (Non-Viability Contingent Capital (NVCC)) (“Series 36 Shares”) of Scotiabank on July 26, 2021 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 June 1, 2021, the Board of Directors of Scotiabank declared quarterly dividends of $0.343750 per Series 36 Share. This will be the final dividend on the Series 36 Shares and will be paid on July 26, 2021, to shareholders of record at the close of business on July 6, 2021, as previously announced. Subsequent to this final dividend payment, the Series 36 Shares will cease to be entitled to dividends.

BNS.PR.G was a FixedReset, 5.50%+472, that commenced trading 2016-3-14 after being announced 2016-3-3. It was tracked by HIMIPref™ and is assigned to the FixedReset-Premium subindex.