PrefBlog

Northern Securities is under the gun:

Following an expedited hearing held on December 14, 2012, in Toronto, Ontario with notice to Northern Securities Inc. (NSI) and with NSI’s consent, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) imposed the following terms and conditions on NSI’s continued approval and Membership:

1. By no later than the close of business on December 31, 2012, NSI must have a fully executed agreement with one or more Dealer Members to assign its client accounts, by bulk transfer, that would result in the transfer of all of NSI’s client accounts from NSI’s carrying broker, Penson Financial Services Canada (“Penson”) by the close of business on January 15, 2013.

2. If NSI does not have a fully executed agreement within the time prescribed in paragraph 1, NSI agrees to assign all of its client accounts to Penson forthwith.

3. As of the close of business on December 31, 2012, as a condition of its continuing approval and Membership, NSI shall (a) cease any sales and advisory activity for retail or institutional customers; and (b) restrict its activities to mergers and acquisitions, research and corporate finance.

4. Notwithstanding paragraph 3, NSI may seek approval from IIROC for any other registrable activities and must seek approval for any change in business set out in paragraph 3.
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Intact Financial, proud issuer of IFC.PR.A and IFC.PR.C, has been confirmed by DBRS:

DBRS Limited (DBRS) has today confirmed Intact Financial Corporation’s (Intact or the Company) Issuer Rating at A (low), its Senior Unsecured Debt at A (low) and its Non-Cumulative Preferred Shares at Pfd-2 (low). The trends are Stable. The Company’s operating subsidiaries continue to be among the strongest performers in the Canadian property and casualty (P&C) insurance industry in terms of underwriting profit and overall profitability.
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With the acquisition of AXA and Jevco, the Company has increased its financial leverage ratio to 27.8%, which is above the top end of our comfort zone for this particular rating category. (While the Company restricts its leverage target to a debt ratio of 20%, the DBRS methodology uses a total debt ratio that includes both debt and preferred shares with a 15% to 25% range for the “A” category). However, the successful integration of the acquired operations, the full realization of synergies and the Company’s ability to pay down debt according to its longer-term funding plan provides continuing confidence in the Company’s financial management. Fixed charge coverage ratios at just below ten times in the most recent nine month period are well above the threshold for the rating category, reflecting the Company’s strong profitability. The Company has indicated that it will retain more of this internally generated capital and use some of it to pay down some of the acquisition debt to help reduce financial leverage. Should Intact not succeed in reducing its financial leverage over the next few years to levels acceptable for an “A”-rated company in this industry, there would be downward pressure on the Company’s ratings.

FBS.PR.C has been confirmed by DBRS at Pfd-2(low):

DBRS has today confirmed the rating of the Class C Preferred Shares, Series 1 (the Preferred Shares) issued by 5Banc Split Inc. (the Company) at Pfd-2 (low). Approximately 2.58 million Preferred Shares were issued at $10 each on December 15, 2011, following the redemption of the Class B Preferred Shares in accordance with their original terms as part of a share capital reorganization. The final redemption date for the Preferred Shares is December 15, 2016.
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The downside protection available to holders of the Preferred Shares as of December 6, 2012, is 61.5%. The confirmation of the rating of the Preferred Shares is based primarily on the level of downside protection and dividend coverage available, as well as on the high credit quality and consistency of dividend distributions on the underlying names in the Portfolio.

The main constraints to the rating are the following:

(1) The downside protection provided to holders of the Preferred Shares is dependent on the value of the shares in the Portfolio.
(2) Volatility of price and changes in the dividend policies of the Canadian banks may result in significant reductions in downside protection from time to time.
(3) The concentration of the entire Portfolio is in the Canadian financial services industry.

There were uneven gains in the Canadian preferred share market today, with PerpetualPremiums gaining 1bp, FixedResets winning 20bp and DeemedRetractibles up 3bp. Volatility was minimal. Volume was below average.

This entry was posted on Friday, December 14th, 2012 at 9:54 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.