PrefBlog

DBRS has announced that it:

has today downgraded the rating of the Class A, Preferred Shares (the Preferred Shares) issued by Big Bank Big Oil Split Corp. (the Company) and removed its Under Review with Negative Implications status. In June 2006, the Company issued 2.72 million Preferred Shares at $10 each and an equal number of Capital Shares (the Capital Shares) at $15 each. The final redemption date for the Preferred Shares is December 30, 2016.

The net proceeds from the offering were used to purchase a portfolio of common shares of the six largest banks and several of the largest oil and gas companies in Canada (collectively, the Portfolio). The Portfolio was initially equally weighted and is rebalanced annually. Dividends received on the Portfolio are used to pay a fixed cumulative quarterly distribution to holders of the Preferred Shares, yielding 5.25% annually on the initial issue price. Holders of the Capital Shares are currently receiving monthly distributions of $0.05 per Capital Share.

On February 6, 2015, due to the drop in downside protection caused by the plunge in oil prices at the end of 2014 and the continued price volatility in early 2015, DBRS placed the rating of the Preferred Shares Under Review with Negative Implications. Downside protection available to holders of the Preferred Shares was 42.1% as of March 30, 2015. As a result of the downside protection remaining below acceptable levels for a prolonged period, the rating of the Preferred Shares have been downgraded to Pfd-3 (high) from Pfd-2 (low), and DBRS removed the Preferred Shares from Under Review with Negative Implications.

The notice of the Review-Negative was previously reported on PrefBlog.

BBO.PR.A is not tracked by HIMIPref™.

This entry was posted on Thursday, April 2nd, 2015 at 9:37 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.