BNS.PR.C: No Trading On Debut

The extension and new dividend of 3.83% on BNS.PR.R was previously reported on PrefBlog.

On January 16, Scotiabank announced:

announced that 2,623,056 of its 12,000,000 Non-cumulative 5-Year Rate Reset Preferred Shares Series 22 of Scotiabank (the “Preferred Shares Series 22”) have been elected for conversion on January 26, 2014, on a one-for-one basis, into Non-cumulative Floating Rate Preferred Shares Series 23 of Scotiabank (the “Preferred Shares Series 23”). Consequently, on January 26, 2014, Scotiabank will have 9,376,944 Preferred Shares Series 22 and 2,623,056 Preferred Shares Series 23 issued and outstanding. The Preferred Shares Series 22 and Preferred Shares Series 23 will be listed on the Toronto Stock Exchange under the symbols BNS.PR.R and BNS.PR.C, respectively.

It is most interesting that less than a quarter of the FixedResets were converted to FloatingResets; previous conversions have been around the 50% range. I guess T-bill yields aren’t about to skyrocket anymore, or something!

BNS.PR.C will be tracked by HIMIPref™ and assigned to the FloatingResets sub-index. As it is not NVCC-compliant, a ‘Deemed Maturity’ entry, at par on 2022-1-31, has been added to the call schedule.

The issue closed today at 24.96-20, 5×10, on zero volume. Vital statistics are:

Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.96
Bid-YTW : 2.81 %

The pricing of this issue is well-behaved relative to that (and ONLY to that) of its Strong Pair, BNS.PR.R. The break-even three month bill rate to its next Exchange Date is 1.77%, compared to the average of all six FixedReset/FloatingReset pairs now outstanding of 1.79%. This implies a steady rise in three month bill yields (other paths will yield the same average, of course) to about 2.70% over the next five years, which I do not consider unreasonable.

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