BNS.PR.Z, FixedReset 3.70%+134, Listed for Trading

BNS.PR.Z has been listed for trading on Pure and the TMX, although there were no trades today.

This issue was created as part of the Scotia takeover of Dundee Wealth, which has now closed.

Details of the issue are not yet posted on Scotia’s preferred share page, but are available on SEDAR, filled under Bank of Nova Scotia, December 2, 2010, Material Document – English, in Schedule C.

This is kind of interesting, because these preferred shares have a “Regulatory Event” clause, whereby they become redeemable immediately following advice from OSFI that they are no longer Tier 1 Capital. This clause has caused great grief and consternation amongst those who bought Innovative Tier 1 Capital at a fat premium in the past year or two, given the new BIS loss absorbancy rules and the possibility that just such a regulatory event is in the offing. This is a new feature in preferred share land: BMO.PR.L has no such feature and neither does Scotia’s most recent normal FixedReset, BNS.PR.Y.

Another damn thing to worry about! Still, at 3.70%+134, these things are unlikely to trade at much, if any, premium.

There’s a good whack of these things out: 15,946,085 shares, according to

This issue will be tracked by HIMIPref™, but I am delaying incorporation of it into the analytics until there is actually some activity.

Update, 2011-2-8: A better description of the issue, which provides details of dates left undefined in the takeover agreement noted earlier, is the “Security holders documents – English”, dated 2011-2-1. The “Initial Fixed Rate Period” ends 2016-2-1.

3 Responses to “BNS.PR.Z, FixedReset 3.70%+134, Listed for Trading”

  1. Valueye says:

    Even though BNS.PR.Y or other Fixed Resets don’t have the “Regulatory Event” clause in their prospectus, wouldn’t they now be treated the same as if there were such a clause? Now that they are non-qualifying Tier 1 capitals and that they won’t be grandfathered, wouldn’t they be called almost immediately on 1/1/2013 at par since they have such high dividend rates?

  2. jiHymas says:

    That is correct – provided, of course, that the dividend rates are still perceived to be high on the call date.

    A regulatory event clause would merely allow the redemption to take place immediately, although OSFI has indicated that the use of this clause is highly deprecated and most banks have indicated that it will used minimally.

  3. […] been under the impression that BNS.PR.Z has a Regulatory Event clause and made mention of this when the issue was posted for trading. This assertion was based on the December 2 Material […]

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