Against all odds, the new TD issues, announced October 9, managed to make it through its first trading day without embarrassment. From the press release announcing closing, it does not appear that the underwriters’ greenshoe option was exercised.
It closed at 24.60-70, 7×10, on volume of 75,785 shares.
It may be compared with the other two recent new issues:
| Recent New Issues | |||
| Issue | Quote, 11/1 | Pre-Tax bid-YTW |
Fair Value |
| TD.PR.P | 24.60-70 | 5.36% | 23.93 |
| BNS.PR.N | 24.55-57 | 5.39% | 24.01 |
| BMO.PR.K | 24.25-29 | 5.46% | 24.04 |
So I don’t get it. Comparing to the most recent (and much lower coupon) issues for each issuer:
| Penultimate Issues | |||
| Issue | Quote, 11/1 | Pre-Tax bid-YTW |
Fair Value |
| TD.PR.O | 22.30-35 | 5.47% | 22.73 |
| BNS.PR.M | 20.95-18 | 5.41% | 21.42 |
| BMO.PR.J | 20.75-85 | 5.43% | 21.28 |
Yields are basically comparable, although the TD issue looks expensive even on this basis. So:
- If yields go up and prices go down, old & new will return about the same.
- If yields are unchanged, old and new will return about the same.
- If yields go down, the new issues will get called away just as things start to get fun, while the old issues will rack up big gains.
Doesn’t anybody do scenario analysis any more?
The issue has been added to the HIMIPref™ database with the securityCode A49008, replacing the preIssue code of P75006. A reorgDataEntry reflects the change.
[…] I don’t get it. Who, except maybe for those willing to pay up-up-UP for the privilege of buying a big piece, would be willing to buy it at $24.00? Let’s look at a recent comparable – the same comparable I wrote about when I reported on the opening day: TD.PR.O. […]
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