Royal Bank of Canada has announced:
a domestic public offering of Non-Cumulative, Preferred Shares Series BH.
Royal Bank of Canada will issue 6 million Preferred Shares Series BH priced at $25 per share to raise gross proceeds of $150 million.
The Preferred Shares Series BH will yield 4.90 per cent annually, payable quarterly, as and when declared by the Board of Directors of Royal Bank of Canada.
Subject to regulatory approval, on or after November 24, 2020, the bank may redeem the Preferred Shares Series BH in whole or in part at a declining premium.
The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is June 5, 2015.
We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes.
Well! It’s been a long time since we last saw a Straight Perpetual being issued … not since GWO.PR.S, paying 5.25%, announced 2014-5-13 and listed 2014-5-22.
I’m not sure what we can make of this … does this mean that RY’s treasury department thinks FixedResets are cheap? Their recently issued RY.PR.M, FixedReset, 3.60%+262, was hammered on the opening and they might be unwilling to risk a reprise. Or they may simply want to test the waters of the Straight Perpetual market with a small new issue. Or they might feel that they’ve got quite enough capital tied to five-year Canadas, thank you very much, and be willing to pay up a little for diversification of funding.
One way or another, it’s good to see. I’ve been saying for the past six years that I think Straights will always be the ‘little black dress’ of the preferred share market and it’s nice to see a bit of support for that idea.
Update, 2015-5-29: It’s also noteworthy that this issue has a great big fat first dividend, payable in November, that will go ex in late October. There might be some opportunities for dividend capture come October!