BNS.PR.Y / BNS.PR.D: Results of Conversion = 42%

The Bank of Nova Scotia has announced:

that 4,457,262 of its 10,600,000 Non-cumulative 5-Year Rate Reset Preferred Shares Series 30 of Scotiabank (the “Preferred Shares Series 30”) have been elected for conversion on April 27, 2015, on a one-for-one basis, into Non-cumulative Floating Rate Preferred Shares Series 31 of Scotiabank (the “Preferred Shares Series 31”). Consequently, on April 27, 2015, Scotiabank will have 6,142,738 Preferred Shares Series 30 and 4,457,262 Preferred Shares Series 31 issued and outstanding. The Preferred Shares Series 30 and Preferred Shares Series 31 will be listed on the Toronto Stock Exchange under the symbols BNS.PR.Y and BNS.PR.D, respectively.

This is a conversion rate of 42%, comparable to the recent AIM.PR.A / AIM.PR.B rate of 43%, and a little higher than the FFH.PR.E / FFH.PR.F rate of 31%.

Readers will remember that I recommended holders of BNS.PR.Y retain their shares and the reasoning behind this conclusion remains valid, according to the latest analysis of FixedReset / FloatingReset Strong Pairs outstanding:

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Investment-Grade pairs outstanding currently require break-even three-month bill rates of 0.28%. If the new BNS.PR.Y / BNS.PR.D pair trades at this implied rate then, given today’s closing bid of 21.52 for BNS.PR.Y, the bid for BNS.PR.D will be 20.91, about 2.8% lower.

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