BMO.PR.W Firm On Excellent Volume

Bank of Montreal has announced:

it has closed its domestic public offering of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 31 (the “Preferred Shares Series 31”). The offering was underwritten on a bought deal basis by a syndicate of underwriters led by BMO Capital Markets. Bank of Montreal issued 12 million Preferred Shares Series 31 at a price of $25 per share to raise gross proceeds of $300 million.

The Preferred Shares Series 31 were issued under a prospectus supplement dated July 23, 2014, to the Bank’s short form base shelf prospectus dated March 13, 2014. Such shares will commence trading on the Toronto Stock Exchange today under the ticker symbol BMO.PR.W.

BMO.PR.W is a FixedReset, 3.80%+222, announced July 22. It will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

The issue traded 1,727,555 shares today (consolidated exchanges) in a range of 24.89-99 before closing at 24.96-98, 30×131. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2044-07-30
Maturity Price : 23.13
Evaluated at bid price : 24.96
Bid-YTW : 3.61 %

The Implied Volatility chart is:

Click for Big

So, overall, it would appear that Implied Volatility continues to be 40%+ (which I interpret as being due to a high level of expected directionality in prices, i.e., towards $25) and the NVCC-compliant issues continue to trade in line with the non-compliant issues. Regrettably, there isn’t much of a range in the Issue Reset Spreads of the compliant issues.

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