New Issue : BMO 5.25% Perpetual

Hot on the heels of the BNS 5.25% Perp New Issue comes a very similar offering from BMO!

Bank of Montreal (TSX, NYSE: BMO) today announced a domestic public offering of $250 million of Non-Cumulative Perpetual Class B Preferred Shares Series 14 (the “Preferred Shares”).

With an anticipated closing date of October 9, this too will get the Tier 1 Capital onto BMO’s balance sheet prior to their year-end.

Size: 10-million shares = $250-million. Greenshoe option for 2-million shares = $50-million.

Dividends: 5.25% of par = $1.3125 p.a. Fat first dividend of $0.49983 payable February 25, 2008 based on October 9 closing.

Redemption: Redeemable at $26 commencing November 25, 2012; redemption price declines by $0.25 annually until November 25, 2016; redeemable at $25.00 thereafter.

Priority: Parri Passu with all other preferred shares; Senior to common; Junior to everything else.

Ratings: S&P: P-1(low); DBRS Pfd-1; Moody’s: Aa3 (I can’t remember seeing a Moody’s rating for a Canadian Pref before … is BMO doing a little ratings-shopping after their downgrade by S&P?)

HIMIPref™ Valuation: The issue has been added to the HIMIPref™ database with a preIssue securityCode of P25008. Estimated fair price with some comparables is:

Issue Fair Value
by HIMIPref™
Quote 9/26
BMO.PR.H 25.35 25.60-66
BMO.PR.J 22.90 22.72-75
BMO.PR.? 25.32 Not Yet Trading
BNS.PR.? 25.33 Not Yet Trading

3 Responses to “New Issue : BMO 5.25% Perpetual”

  1. […] Readers will remember that when the recent new issues were announced, I liked both of them: the BNS 5.25% was worth $25.93 according to the prior day’s closing prices, although by the time the BMO 5.25% was announced both issues were worth more like $25.33. […]

  2. […] Well, TD responded to my plea for TD Perps, but I suppose I should have specified that I want a decent coupon! Come on, guys! 5.25% was a great coupon, back in the old days of late September when comparables were trading to yield 5%, but it doesn’t cut the mustard today. This issue, which joins the 5.25% BNS Perps and the 5.25% BMO Perps is expensive compared to comparables and cannot be recommended at the issue price, given the recent increase in market yields. […]

  3. […] This new issue, announced on September 27 initially looked pretty good … but market yields kept increasing and it looked less and less like a good thing as time went on. […]

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