I have mentioned earlier that I was looking forward to today’s GWO Earnings Release for hints of what they will be doing with preferreds.
No news! And no purchases through the GWO.PR.E / GWO.PR.X Issuer Bid so far this year either. These two issues are currently trading at what I consider to be elevated levels, with pre-tax bid-YTWs in the 3.8% range. This is an interest equivalent (at a factor of 1.4x) of about 5.3%, which in turn is about where Great-West bond paper is trading. Given all the current uncertainty in the credit markets, there is not much incentive for them to purchase on the open market from a strictly financial point of view – there may be regulatory considerations of which I am not aware), so I think we can write off the next few months in terms of hoping for purchases and cancellations of these issues.
As far as CL.PR.B is concerned … who knows? It pays $1.5625, is currently callable at $26.00 and the redemption price declines by $0.25 p.a. every December 1 until 2010-12-31, after which it is callable at $25.00. Thus, net cost to the company of leaving it out is only $1.3125 p.a., which is 5.25% of par, which is probably what it would take to issue a new perpetual in size in this market. I suspect the window of opportunity for redemption of this issue has closed – at least for now.
[…] This one, in the “Volume Leaders”, again? Something’s up. Maybe. Scotia crossed 25,000 at 26.70. Now with a pre-tax bid-YTW of 3.42% based on a bid of 26.65 and a call 2009-10-30 at 26.00 … the after-tax equivalent interest yield is 4.79% … most corporate bonds will get you more than that. […]
[…] This has been rather a boring topic to update this year; in my last update I noted that there had been no purchases, unlike the good old days of substantial purchases. […]