PPL.PR.C Weak On Reasonable Volume

Pembina Pipeline Corporation has announced:

that it has closed its previously announced public offering of 6,000,000 cumulative redeemable rate reset class A preferred shares, series 3 (the “Series 3 Preferred Shares”) for aggregate gross proceeds of $150 million (the “Offering”).

The Offering was first announced on September 23, 2013 when Pembina entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and Scotiabank.

Proceeds from the Offering will be used to partially fund capital projects, to reduce short-term indebtedness and for other general corporate purposes of the Company and its affiliates.

The Series 3 Preferred Shares will begin trading on the Toronto Stock Exchange today under the symbol PPL.PR.C.

PPL.PR.C is a FixedReset, 4.70%+260 announced September 23. It will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 232,472 shares today in a range of 24.44-54 before closing at 24.45-50, 16×22. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2043-10-02
Maturity Price : 22.94
Evaluated at bid price : 24.45
Bid-YTW : 4.57 %

3 Responses to “PPL.PR.C Weak On Reasonable Volume”

  1. adrian2 says:

    Am I right in detecting a disconnect between PPL.PR.A and PPL.PR.C?
    Either the former is overvalued, or the latter is undervalued (underwriters dumping, maybe)?

  2. jiHymas says:

    I think there’s a little disconnect, but nothing entirely out of this world. PPL.PR.A (4.25%+247) is bid at 24.05 to yield 4.48% to perpetuity – nine bp less than PPL.PR.C.

  3. adrian2 says:

    My back of the envelope current yield:
    PPL.PR.A pays 4.25% at par, 4.42% @ $24.05
    PPL.PR.C pays 4.7% at par, 4.8% @ $24.45
    Current yield difference 38 bps.
    The former has a reset spread of 247 bps, the latter 260bps.

    Finally, in http://www.prefblog.com/?p=23132, you called PPL.PR.C fairly priced relative to PPL.PR.A, which resets at +247 and trades a little under $24. Fairly priced at par implies a decent discount some 60 cents better in relative price difference, at least for a penny pincher like myself.

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