GWO.PR.M Drops on Light First-Day Trading; Still Expensive

Great-West Lifeco has announced:

the closing of its previously announced offering of 6,000,000 Non-Cumulative First Preferred Shares, Series M through a syndicate of underwriters co-led by BMO Capital Markets, RBC Capital Markets and Scotia Capital to raise gross proceeds of $150 million. The shares will be posted for trading on the Toronto Stock Exchange under the symbol “GWO.PR.M”.

The Series M Shares were priced at $25.00 per share and carry a 5.80% annual dividend. The net proceeds will be used by the Company to fund the redemption of the Non-Cumulative First Preferred Shares, Series D on March 31, 2010.

The issue traded 160,180 shares in a range of 24.50-70 before closing at 24.62-65, 50×11. It is 5.80% Straight announced February 23.

Vital statistics are:

GWO.PR.M Perpetual-Discount YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-03-04
Maturity Price : 24.41
Evaluated at bid price : 24.62
Bid-YTW : 5.92 %

Comparables are:

GWO PerpetualDiscount Comparables
Ticker Dividend Quote Bid YTW
GWO.PR.I 1.125 18.76-83 6.01%
GWO.PR.H 1.2125 20.26-44 6.00%
GWO.PR.G 1.30 21.40-45 6.09%
GWO.PR.L 1.4125 23.55-68 6.00%
GWO.PR.M 1.45 24.62-65 5.92%
GWO.PR.F 1.475 24.64-80 5.98%

Lynx-eyed Assiduous Readers will note that prices of comparators has dropped since the announcement, but yields have barely changed. These issues all went ex-Dividend on March 1; the Power Group likes to announce new straight issues shortly prior to the ex-Date so that comparators will be full of dividend and hence have a lower Current Yield.

It is worth noting that not only is GWO.PR.M still expensive when priced as a perpetual annuity, but also that there is basically no allowance for Implied Volatility in the group prices – which makes it more expensive still.

2 Responses to “GWO.PR.M Drops on Light First-Day Trading; Still Expensive”

  1. […] Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-08 Maturity Price : 24.30 Evaluated at bid price : 24.50 Bid-YTW : 5.96 % […]

  2. […] has been almost two years since the last Straight offering, which was GWO.PR.M, listed on 2010-3-4. Mind you, the market doesn’t seem too thrilled – comparable issues have dropped […]

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