EFN.PR.I Firm On Good Volume

Element Fleet Management Corp. has announced:

that it has closed the previously announced offering of 6,000,000 5.75% Cumulative 5-Year Minimum Rate Reset Preferred Shares, Series I, including 2,000,000 shares issued pursuant to the underwriters’ option, which was exercised in full on April 28, 2017 (the “Series I Preferred Shares” or the “Offering”) at a price of $25.00 per share for aggregate gross proceeds of $150,000,000. The Offering was conducted by a syndicate of underwriters led by BMO Capital Markets, CIBC Capital Markets, National Bank Financial, RBC Capital Markets, TD Securities, Cormark Securities, Desjardins Securities, GMP Securities, HSBC Securities (Canada) and Raymond James.

The net proceeds will be used to fund the growth of Element’s business and for general corporate purposes.

The Series I Preferred Shares will commence trading today on the Toronto Stock Exchange under the symbol “EFN.PR.I”.

EFN.PR.I is a FixedReset, 5.75%+464M575, announced April 26. It will be tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

The issue traded 534,126 shares today in a range of 24.80-02 before closing at 24.98-00. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2047-05-05
Maturity Price : 23.14
Evaluated at bid price : 24.98
Bid-YTW : 5.70 %

The issue is attractively priced relative to its peer:

Click for Big

An interesting feature of the above FixedReset Volatility Analysis is that the minimum rate guarantee on EFN.PR.I is assumed to be effective. This, together with the small difference in reset spreads with some of the extant issues, results in EFN.PR.I having a lower spread but a higher expected dividend on reset, resulting in a higher Current Yield than would otherwise be the case, resulting in a jog in the usual straight line. I will have to do some thinking about the implications of this for the analysis!

One Response to “EFN.PR.I Firm On Good Volume”

  1. […] is a FixedReset, 5.75%+464M575, that commenced trading 2017-5-5 after being announced 2017-4-26. It has been tracked by HIMIPref™ but is relegated to the Scraps […]

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