PrefBlog

Fortis Inc. has announced:

that 2,975,154 of its 10,000,000 issued and outstanding Cumulative Redeemable Five-Year Fixed Rate Reset First Preference Shares, Series H (“Series H Shares”) were tendered for conversion, on a one‑for‑one basis into Cumulative Redeemable Floating Rate First Preference Shares, Series I (“Series I Shares”). As a result of the conversion, Fortis has 7,024,846 Series H Shares and 2,975,154 Series I Shares issued and outstanding. The Series H Shares will continue to be listed on the Toronto Stock Exchange (TSX) under the symbol FTS.PR.H. The Series I Shares will begin trading on the TSX today under the symbol FTS.PR.I.

The Series H Shares will pay on a quarterly basis, for the five-year period beginning on June 1, 2015, as and when declared by the Board of Directors of Fortis, a fixed dividend based on an annual fixed dividend rate of 2.50 per cent.

The Series I Shares will pay a floating quarterly dividend for the five-year period beginning on June 1, 2015, as and when declared by the Board of Directors of Fortis. The floating quarterly dividend rate for the Series I Shares for the first quarterly floating rate period (being the period from June 1, 2015 to but excluding September 1, 2015) is 2.10 per cent and will be reset every quarter based on the applicable 3-month Government of Canada Treasury Bill rate plus 1.45%.

For more information on the terms of, and risks associated with an investment in, the Series H Shares and the Series I Shares, please see the Corporation’s prospectus dated January 18, 2010 which can be found under the Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s website at www.fortisinc.com.

I am very pleased to see this news release, following the earlier policy of minimal communication.

The 30% conversion rate of FixedReset into FloatingReset is lower than it has been for most issues lately; perhaps the persistently poor pricing of FloatingResets is beginning to seep into the market’s consciousness!

Vital statistics for the two elements of the Strong Pair are:

Click for Big

The FTS.PR.H / FTS.PR.I pair is at the high end of break-even T-Bill rates, but not impossibly so at 0.63% compared with an average of 0.49% for all investment-grade pairs. There are three junk pairs implying a negative three-month bill rate over the next five-odd years.

This entry was posted on Tuesday, June 2nd, 2015 at 10:09 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.