National Bank of Canada has announced:
that it has closed its domestic public offering of non-cumulative 5-year rate reset first preferred shares series 36 (non-viability contingent capital (NVCC)) (the “Series 36 Preferred Shares”). National Bank issued 16 million Series 36 Preferred Shares at a price of $25.00 per share to raise gross proceeds of $400 million.
The offering was underwritten by a syndicate led by National Bank Financial Inc.
The Series 36 Preferred Shares will commence trading on the Toronto Stock Exchange today under the ticker symbol NA.PR.A.
The Series 36 Preferred Shares were issued under a prospectus supplement dated June 6, 2016 to National Bank’s short form base shelf prospectus dated December 1, 2014.
NA.PR.A is a FixedReset, 5.40%+466, NVCC issue announced 2016-6-2.
This issue will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex. Vital statistics are:
| NA.PR.A |
FixedReset |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-08-15
Maturity Price : 25.00
Evaluated at bid price : 25.61
Bid-YTW : 4.90 % |
As has so often been the case recently, using Implied Volatility analysis to determine whether the pricing of this issue is rich or cheap yields ambiguous results:
Click for BigThe new issue fits in very well with the line determined by the three extant NVCC-compliant issues, but the Implied Volatility is very high. Thus, if one believes that spreads are very high and will eventually regress to more usual levels, one will buy the low-spread low-price issues in order to capture the expected capital gain. However, if one believes that current conditions represent the new normal (with low GOC-5 yields and spreads that are high relative to historical norms) then one will buy the high-spread high-price issues in order to avoid the capital loss that one expects on the low-spread issues as Implied Volatility declines and the curve flattens.
This entry was posted on Tuesday, June 14th, 2016 at 11:00 am 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.
NA.PR.A Achieves High Premium on Excellent Volume
National Bank of Canada has announced:
NA.PR.A is a FixedReset, 5.40%+466, NVCC issue announced 2016-6-2.
This issue will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex. Vital statistics are:
Maturity Type : Call
Maturity Date : 2021-08-15
Maturity Price : 25.00
Evaluated at bid price : 25.61
Bid-YTW : 4.90 %
As has so often been the case recently, using Implied Volatility analysis to determine whether the pricing of this issue is rich or cheap yields ambiguous results:
Click for Big
The new issue fits in very well with the line determined by the three extant NVCC-compliant issues, but the Implied Volatility is very high. Thus, if one believes that spreads are very high and will eventually regress to more usual levels, one will buy the low-spread low-price issues in order to capture the expected capital gain. However, if one believes that current conditions represent the new normal (with low GOC-5 yields and spreads that are high relative to historical norms) then one will buy the high-spread high-price issues in order to avoid the capital loss that one expects on the low-spread issues as Implied Volatility declines and the curve flattens.
This entry was posted on Tuesday, June 14th, 2016 at 11:00 am 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.