PrefBlog

DBRS has announced that it:

confirmed the Cumulative Preferred Shares rating of Canaccord Genuity Group Inc.’s (CG or the Company) at Pfd-4 (high) and changed the trend to Stable from Negative. The Company has a Support Assessment of SA3, which implies no expected systemic support.

KEY RATING CONSIDERATIONS
The trend change to Stable reflects DBRS Morningstar’s view that the considerable uncertainties facing financial institutions, particularly those with more limited business models, caused by the Coronavirus Disease (COVID-19) pandemic have begun to abate. CG is a Canadian-based financial institution with $6.1 billion in assets as of Q3 2021, operating in the U.S., the United Kingdom (UK), and Australia, with a focus on capital markets activities and wealth management. The Company reported 9M 2021 revenue of $1.3 billion, up 44% from 9M 2020 earnings of $119 million, double the earnings of the previous year. CG benefited from the businesses it had acquired in 2019, the year prior to the pandemic, namely its U.S. capital markets business as well as its Australian wealth management operations.

In confirming the rating, DBRS Morningstar recognizes CG’s solid niche franchise, with a growing wealth management presence across various geographies, while remaining cognizant of the Company’s increased leverage following its recent wealth management and other acquisitions. The Company has made acquisitions in Canada, the U.S., the UK, and Australia, and although it has now integrated these businesses it will need to continue to leverage the larger platform to further enhance efficiencies. The Company expects the combined businesses’ success and efficiencies should drive profits and enable it to reduce leverage over time. However, DBRS Morningstar remains cognizant that the continued impact of the coronavirus-related downturns could, over the short term, create earnings volatility and impede the Company’s ability to comfortably meet contractual payments.

RATING DRIVERS
Although DBRS Morningstar considers CG as being well placed in its current rating category, over the longer term, further franchise diversification that contributes to sustained and improving earnings across segments while lowering leverage would result in an upgrade. Conversely, weakened credit fundamentals or inconsistent earnings would result in a rating downgrade. Furthermore, given CG’s high reliance on market confidence to support its franchise, any significant operational or reputational issues would likely negatively affect the rating, as would material negative stresses to the Company’s liquidity or funding profiles.

Affected issues are CF.PR.A and CF.PR.C.

The Bank of Nova Scotia has announced:

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 34 (Non-Viability Contingent Capital (NVCC)) (“Series 34 Shares”) of Scotiabank on April 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 February 23, 2021, the Board of Directors of Scotiabank declared quarterly dividends of $0.343750 per Series 34 Share. This will be the final dividend on the Series 34 Shares and will be paid on April 26, 2021, to shareholders of record at the close of business on April 6, 2021, as previously announced. Subsequent to this final dividend payment, the Series 34 Shares will cease to be entitled to dividends.

BNS.PR.E is a FixedReset 5.50%+451, NVCC-compliant issue that commenced trading 2015-12-17 after being announced 2015-12-8.

Thanks to Assiduous Reader CanSiamCyp for ensuring I didn’t miss this.

TC Energy Corporation has announced:

that TransCanada Trust (the Trust), a wholly-owned financing trust subsidiary of TransCanada PipeLines Limited (TCPL), has closed an offering of $500 million of 4.20% subordinated Trust Notes, Series 2021-A due March 4, 2081 (Trust Notes), guaranteed on a subordinated basis by TCPL. The Trust Notes were offered through a syndicate of underwriters, co-led by BMO Capital Markets and Scotiabank, under the Trust’s short form base shelf prospectus dated February 26, 2021, as supplemented by a prospectus supplement dated March 1, 2021.

The Company intends to use the proceeds to redeem its issued and outstanding Cumulative Redeemable Minimum Rate Reset First Preferred Shares, Series 13 (TSX:TRP.PR.J) pursuant to their terms, and pending such redemption, to reduce short-term indebtedness as well as for general corporate purposes.

Well, 60-year subordinated debt at 4.20% interest sure beats the 5.50% dividend minimum payable on TRP.PR.J!

TRP.PR.J is a FixedReset, 5.50%+469M550, that commenced trading 2016-4-20 after being announced 2016-4-13.

Thanks to Assiduous Reader CanSiamCyp for ensuring I didn’t miss this.

TransAlta Corporation has announced:

that it does not intend to exercise its right to redeem all or any portion of the currently outstanding Cumulative Redeemable Rate Reset First Preferred Shares, Series A (“Series A Shares”) (TSX: TA.PR.D) and the Cumulative Redeemable Floating Rate First Preferred Shares, Series B (“Series B Shares”) (TSX: TA.PR.E) on March 31, 2021 (the “Conversion Date”).

As a result, and subject to certain conditions, the holders of the Series A Shares will have the right to elect to: (a) retain any or all of their Series A Shares and continue to receive a fixed rate quarterly dividend; or (b) convert all or any of their Series A Shares into Series B Shares on the basis of one Series B Share for each Series A Share on the Conversion Date and receive a floating rate quarterly dividend.

Comparably, subject to certain conditions, the holders of the Series B Shares will have the right to elect to: (a) retain any or all of their Series B Shares and continue to receive a floating rate quarterly dividend; or (b) convert all or any of their Series B Shares into Series A Shares on the basis of one Series A Share for each Series B Share on the Conversion Date and receive a fixed rate quarterly dividend.

As provided in the share terms, the foregoing conversion right is subject to the conditions that: (i) if TransAlta determines that there would remain outstanding immediately following the conversion, less than 1,000,000 Series A Shares, holders of Series B Shares shall not be entitled to convert their shares into Series A Shares, and the remaining Series A Shares will automatically convert to Series B Shares, on the Conversion Date; or (ii) if TransAlta determines that there would remain outstanding immediately after the conversion, less than 1,000,000 Series B Shares, holders of Series A Shares shall not be entitled to convert their shares into Series B Shares, and the remaining Series B Shares will automatically convert to Series A Shares, on the Conversion Date. There are currently 10,175,380 Series A Shares outstanding and 1,824,620 Series B Shares.

Should a holder of Series A Shares choose to retain their shares, such shareholders will receive quarterly fixed dividend rate applicable to Series A Shares of 0.71925% (2.87700% on an annualized basis) for the five-year period from and including March 31, 2021 to but excluding March 31, 2026. Should a holder of Series A Shares choose to convert their shares to Series B Shares, the Series B Shares that may be issued on the Conversion Date will receive the floating quarterly dividend rate applicable to the Series B Shares of 0.52431% (2.10300% on an annualized basis) for the three-month period from and including March 31, 2021 to but excluding June 30, 2021. The floating dividend rate will be reset every quarter.

Should a holder of Series B Shares choose to retain their shares, such shareholders will receive the floating quarterly dividend rate applicable to Series B Shares of 0.52431% (2.10300% on an annualized basis) for the three-month period from and including March 31, 2021 to but excluding June 30, 2021. The floating dividend rate will be reset every quarter. Should a holder of Series B Shares choose to convert their shares to Series A Shares, holders of Series A Shares will receive the new fixed quarterly dividend rate applicable to the Series A Shares of 0.71925% (2.87700% on an annualized basis) for the five-year period from and including March 31, 2021 to but excluding March 31, 2026.

The Series A Shares and Series B Shares are issued in “book entry only” form and must be purchased or transferred through a participant in the CDS depository service (“CDS Participant”). All rights of holders of Series A Shares and Series B Shares must be exercised through CDS or the CDS Participant through which the shares are held. The deadline for the registered shareholder to provide notice of exercise of the right to convert Series A Shares into Series B Shares, or Series B Shares into Series A Shares, as applicable, is 3:00 p.m. (MST) / 5:00 p.m. (EST) on March 16, 2021. Any notices received after this deadline will not be valid. As such, holders of Series A Shares or Series B Shares who wish to exercise their right to convert their shares should contact their broker or other intermediary for more information and it is recommended that this be done as soon as possible and well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.

If TransAlta does not receive an election notice from a holder of Series A Shares or Series B Shares during the time fixed therefor, then such shares shall be deemed not to have been converted (except in the case of an automatic conversion described above). Holders of the Series A Shares and the Series B Shares will have the opportunity to convert their shares again on March 31, 2026, and every five years thereafter as long as the shares remain outstanding. For more information on the terms of the Series A Shares and the Series B Shares, please see TransAlta’s articles of amalgamation, including the share terms and shares in series schedule attached thereto as Schedule “A”, which are available on the Company’s website under Governance.

TA.PR.D was issued as a FixedReset, 4.60%+203, that commenced trading 2010-12-10 after being announced 2010-12-2. In 2016, it reset to 2.709%. I recommended against conversion, but there was a 15% conversion to the FloatingReset, TA.PR.E, anyway.

TA.PR.E is a FloatingReset, Bills+203, that arose via a partial conversion from the FixedReset, TA.PR.D.

First National Financial Corporation has announced:

the applicable dividend rates for its cumulative 5-year rate reset Class A Preference Shares, Series 1 (“Series 1 Preference Shares”) and cumulative floating rate Class A Preference Shares, Series 2 (“Series 2 Preference Shares”).

With respect to any Series 1 Preference Shares that remain outstanding on March 31, 2021, commencing as of such date, holders thereof will be entitled to receive cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of First National. The annual dividend rate for the five-year period commencing on April 1, 2021, and ending on March 31, 2026 will be 2.895%, being equal to the 5-Year Government of Canada bond yield determined as at 10 am (Toronto time) March 2, 2021 plus 2.07%, as determined in accordance with the terms of the Series 1 Preference Shares.

With respect to any Series 2 Preference Shares that remain outstanding on March 31, 2021, holders thereof will be entitled to receive floating rate cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of First National, based on a dividend rate equal to the 90-day Canadian Treasury Bill plus 2.07% on an actual/365 day count basis, subject to certain adjustments in accordance with the terms of the Series 2 Preference Shares. The dividend rate for the period commencing on April 1, 2021 and ending on June 30, 2021 will be equal to 2.192%, as determined in accordance with the terms of the Series 2 Preference Shares.

Beneficial owners of Series 1 Preference Shares or Series 2 Preference Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to ensure that they meet the deadline to exercise such right, which is 5:00 p.m. (Toronto time) on March 16, 2021.

FN.PR.A is a FixedReset, 4.65%+207, that commenced trading 2011-1-25 after being announced 2011-1-17. Notice of extension was given in February, 2016 and the issue reset to 2.79%. I recommended against conversion, but there was 28% conversion to the FloatingReset, FN.PR.B. Notice of the second extension was given in February, 2021.

FN.PR.B is a FloatingReset, Bills+207, that arose via a partial conversion from the FixedReset, FN.PR.A, in 2016.