FFH.PR.D Richly Priced On Debut

There are now about 4.0-million shares of FFH.PR.D outstanding following a 40% conversion from FFH.PR.C.

FFH.PR.D is a FloatingReset, paying the three-month bill rate +315bp, reset quarterly. It is convertible back to FFH.PR.C on 2019-12-31 at the option of the holder.

This issue will be tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

The Toronto Stock Exchange reports 29,200 shares trading on its debut in a very wide range of 22.60-23.99 (!) before closing at 23.87-25.

Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2044-12-31
Maturity Price : 23.40
Evaluated at bid price : 23.87
Bid-YTW : 4.18 %

The Pair Equivalency of FFH.PR.D to its FixedReset sibling FFH.PR.C shows it to be expensive at 23.87, compared to the 22.75 bid on the latter issue. At the bid prices, three-month bills will have to average 2.55% over the next five years to achieve equivalent total returns.

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