BCE Inc. has announced that:
BCE Inc. will, on August 1, 2016, continue to have Cumulative Redeemable First Preferred Shares, Series AI (“Series AI Preferred Shares”) outstanding if, following the end of the conversion period on July 22, 2016, BCE Inc. determines that at least 2 million Series AI Preferred Shares would remain outstanding. In such a case, as of August 1, 2016, the Series AI Preferred Shares will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be based on an annual fixed dividend rate equal to 2.75%.
The pending Exchange Date has been previously reported. As noted there, this FixedFloater issue is interconvertible with the Ratchet Rate preferred, BCE.PR.J:
In order to convert your shares, you must exercise your right of conversion during the conversion period, which runs from June 17, 2016 to July 22, 2016, inclusively.
I will make a recommendation regarding conversion on July 18, but at this point I’m leaning towards the RatchetRate issue, BCE.PR.J, on the grounds that Canada Prime is 2.70% and I find it much easier to believe in an increase over the next five years than a decrease, the current breakeven rate (given bids of 13.48 for BCE.PR.I and 13.59 for BCE.PR.J) of 2.86% is in line with other issues, and the prices are – given current conditions – likely to be so close together after the exchange that there’s not much point trying to make a trading profit based on the conversion.
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Does the entry on prefinfo for BCE.PR.I need some updating… It looks like a blend of the .PR.I and PR.J entries are shown against PR.I
I am unclear how the fixed-floaters are shown in Prefinfo traditionally. I’ve not bought any personally in the past.
The entry does show the 1.0375 dividend (the old 4.15%) and is that all that changes (and would now show the new 2.75%) on reset dates?
Thanks!