SLF.PR.G / SLF.PR.J: 50% Conversion to FloatingResets

Sun Life Financial Inc. has announced:

that 6,007,314 of its 11,200,000 Class A Non-cumulative Rate Reset Preferred Shares Series 8R (the “Series 8R Shares”) have been elected for conversion on June 30, 2015, on a one-for-one basis, into Class A Non-cumulative Floating Rate Preferred Shares Series 9QR (the “Series 9QR Shares”). Consequently, on June 30, 2015, Sun Life Financial will have 5,192,686 Series 8R Shares and 6,007,314 Series 9QR Shares issued and outstanding. The Series 8R Shares and Series 9QR Shares will be listed on the Toronto Stock Exchange under the symbols SLF.PR.G and SLF.PR.J, respectively.

Subject to regulatory approval, Sun Life Financial may redeem the Series 8R Shares and the Series 9QR Shares in whole or in part on June 30, 2020 and on the 30th of June every five years thereafter.

The conversion rate is much higher than the most recent conversion, FTS.PR.H / FTS.PR.I, in which a 30% conversion was seen.

And the conversion rate flies in the face of my recommendation to hold SLF.PR.G, the FixedReset. Oh well, we’ll see how it turns out.

This entry was posted on Friday, June 19th, 2015 at 8:33 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.

2 Responses to “SLF.PR.G / SLF.PR.J: 50% Conversion to FloatingResets”

  1. fed says:
    August 10, 2015 at 1:20 pm

    Thanks again for your blog.

    I have been looking at floating preferred shares recently. It looks like the current yields are in the 3-5% range, since the price of these shares are quite low. They are generally pfd 2low – 3low. It seems to me that you can get a good deal here. For example, TRP.PR.F is Pfd-2 (low) Stable Trend, yields GCAN5YR +192, and is trading at $16.40.

    The way I see it, 1.92%*25 = $0.48, and $0.48/$16.4=2.9%. So, any investment put into this stock will get 2.9% plus whatever you get from the GCAN5YR ( currently, 0.75%*$25/$16.4=1.1% for a total of 4%)

    Considering the pfd rating, and state of the market, why would you not jump on these floaters?

  2. jiHymas says:
    August 10, 2015 at 10:29 pm

    TRP.PR.F pays a dividend at a rate of 3-Month Bills + 192bp, reset quarterly. It is interconvertible with TRP.PR.A (which pays GOC5 + 192bp, reset on Exchange Dates) on 2019-12-31 and every five years thereafter.

    All I can tell you is that FloatingRate product is currently viewed with disfavour by the market. See my articles Preferred Pairs and Some Preferreds To Float Your Boat.

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