Royal Bank of Canada has announced:
it has closed its domestic public offering of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series AZ. Royal Bank of Canada issued 20 million Preferred Shares Series AZ at a price of $25 per share to raise gross proceeds of $500 million.
The offering was underwritten by a syndicate led by RBC Capital Markets. The Preferred Shares Series AZ will commence trading on the Toronto Stock Exchange today under the ticker symbol RY.PR.Z.
The Preferred Shares Series AZ were issued under a prospectus supplement dated January 23, 2014 to the bank’s short form base shelf prospectus dated
December 20, 2013.
RY.PR.Z is a NVCC-compliant FixedReset, 4.00%+221, announced January 21. This issue will be tracked by HIMIPref™ and is assigned to the FixedReset subindex.
The issue traded 1,429,936 shares today in a range of 24.75-97 before closing at 24.95-96, 26×77. Vital statistics are:
| RY.PR.Z | FixedReset | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-01-30 Maturity Price : 23.13 Evaluated at bid price : 24.95 Bid-YTW : 3.76 % |
Any plans for a NVCC-compliant FixedReset index? The floodgates are now open.
Yeah, there certainly should be a distinction between extant Fixed Resets and the newer NVCC-compliant varieties. You would assume the newer variety offers a small risk reward.
It would be interesting to see two indexes to keep track of the size of that reward.
ltr
I’ll think about it. There are currently 13 bank-issued FixedResets with Issue Reset Spreads of 267bp or less. Next Exchange Dates are:
2014 (1) : CM.PR.K
2015 (2) : BNS.PR.Y, BMO.PR.P
2016 (2) : BMO.PR.Q, BNS.PR.Z
2017 (0)
2018 (5) : TD.PR.S, BMO.PR.M, TD.PR.Y, BNS.PR.Q, BNS.PR.P
2019 (3) : BNS.PR.R, RY.PR.I, RY.PR.L
In addition, there is one insurance issue, GWO.PR.N, which might be included.
The 267bp low-Reset cut-off was chosen because this is the IRS of RY.PR.L, which was extended to the surprise of the market. And I’m looking at the low-reset ones because the high-reset non-NVCC issues should trade as if a call is likely anyway.
Thirteen isn’t a lot, especially since there will not be any more of them (possibly some insurers might be added) but it’s enough to influence the index if they start behaving differently from NVCC issues.
As far as new subindices go, I’ll be more likely to split the DeemedRetractible index into two, retroactively to February 2011 (yes, we’ve been living with this shit for three years now. Thank you OSFI!). It has certainly been shown that insurance DeemedRetractibles behave qualitatively differently from bank DeemedRetractibles.