MFC.PR.R Soft On Decent Volume

Manulife Financial Corporation has announced:

that it has completed its offering of 19 million Non-cumulative Rate Reset Class 1 Shares Series 23 (the “Series 23 Preferred Shares”) at a price of $25 per share to raise gross proceeds of $475 million.

The offering was underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank. The Series 23 Preferred Shares commence trading on the Toronto Stock Exchange today under the ticker symbol MFC.PR.R.

The Series 23 Preferred Shares were issued under a prospectus supplement dated November 15, 2016 to Manulife’s short form base shelf prospectus dated December 17, 2015.

MFC.PR.R is a FixedReset, 4.85%+383, announced November 14. The issue will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

As this issue is from an insurer and there is no provision for conversion into common shares at the option of the issuer, I consider this to be subject to my Deemed Retraction policy; accordingly I have placed a maturity entry dated 2025-1-31 at par in the call schedule of this instrument for analytical purposes. Note that this approach is due to analysis and there is no contractual provision in the terms of issue for any such maturity.

The issue traded 989,738 shares today in a range of 24.68-90 before closing at 24.84-89, 5×74. Vital statistics are:

MFC.PR.R FixedReset Not Calc! YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.84
Bid-YTW : 4.96 %

Implied Volatility analysis suggests the issue is rich relative to its peers – the theoretical price is 23.95.

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