DBRS Upgrades Four SplitShare Preferreds

DBRS has announced that it has:

upgraded the ratings of preferred shares issued by four split share companies and trusts (the Issuers): Energy Split Corporation, Energy Split Corp. II, SNP Split Corp. and Utility Split Trust.

Each of the Issuers has invested in a portfolio of securities (the Portfolio) funded by issuing two classes of shares – dividend-yielding preferred shares or securities (the Preferred Shares) and capital shares or units (the Capital Shares). The main form of credit enhancement available to these 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. The amount of downside protection available to Preferred Shares will fluctuate over time based on changes in the market value of the Portfolio.

Today’s rating actions reflect upward trends in the net asset value (NAV) of the respective Portfolios over the past eight months. In its surveillance of split share funds, DBRS reviews the historical trends in downside protection and assigns greater weighting to more recent Issuer NAVs.

DBRS will continue to closely monitor changes in the credit quality of these Preferred Shares. The timing of rating actions will generally follow the surveillance guidelines listed in DBRS’s split share methodology, “Rating Canadian Split Share Companies and Trusts.”

DBRS Review Announced 2010-5-3
Ticker Old
UST.PR.A Pfd-3(high) 2.1+:1
Downgraded None Pfd-2(low)
ES.PR.B Pfd-4(high) 1.5+:1
Upgraded None Pfd-3(low)
EN.PR.A Pfd-3(high) 2.2+:1
Upgraded Scraps Pfd-2(low)
SNP.PR.V Pfd-3 1.7-:1
Upgraded None Pfd-3(high)

I am sorely tempted to add UST.PR.A to the HIMIPref™ database, but it is scheduled to wind-up 2011-12-31. Maybe if they extend term …

2 Responses to “DBRS Upgrades Four SplitShare Preferreds”

  1. […] was last mentioned on PrefBlog when it was upgraded to Pfd-3(high) by DBRS. SNP.PR.V is not tracked by […]

  2. […] Split Corporation is ES.PR.B, last mentioned on PrefBlog when it was upgraded to Pfd-3(low) by DBRS. ES.PR.B is not tracked by HIMIPref™, but it will be considered for inclusion in the database […]

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