The Toronto-Dominion Bank has announced:
a domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”).
TD has entered into an agreement with a group of underwriters led by TD Securities Inc. to issue, on a bought deal basis, 12 million Series 3 Shares at a price of $25.00 per share to raise gross proceeds of $300 million. TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 3 Shares. This option is exercisable in whole or in part by the underwriters at any time up to two business days prior to closing.
The Series 3 Shares will yield 3.80% annually, payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending July 31, 2019. Thereafter, the dividend rate will reset every five years at a level of 2.27% over the then five-year Government of Canada bond yield.
Subject to regulatory approval, on July 31, 2019 and on July 31 every 5 years thereafter, TD may redeem the Series 3 Shares, in whole or in part, at $25.00 per share. Subject to TD’s right of redemption, holders of the Series 3 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”), subject to certain conditions, on July 31, 2019, and on July 31 every five years thereafter. Holders of the Series 4 Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of TD, equal to the three-month Government of Canada Treasury bill yield plus 2.27%.
The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.
Later, they added:
that as a result of strong investor demand for its previously announced domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”), the size of the offering has been increased to 20 million Series 3 Shares. The gross proceeds of the offering will now be $500 million. The offering will be underwritten by a group of underwriters led by TD Securities Inc.
The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.
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It is difficult to come to any conclusions regarding the Implied Volatility. The two issues with the highest Issue Reset Spreads, TD.PR.I and TD.PR.K, have been called for redemption and otherwise the issues available for calculation are not well distributed – the low-spread issues are not NVCC-compliant, while the higher-spread issues are.