ANOTHER DBRS Mass Review of Splits

The credit crunch keeps rolling … portfolio values keep dropping … and last spring’s review is no longer operable.

DBRS has announced it:

has today placed the rating of certain structured preferred shares (Split Shares) Under Review with Negative Implications. Each of these split share companies has invested in a portfolio of securities (the Portfolio) funded by issuing two classes of shares – dividend-yielding preferred shares or securities (the Preferred Shares) and capital shares or units (the Capital Shares). The Preferred Shares benefit from a stable dividend yield and downside principal protection via the net asset value (NAV) of the Capital Shares against the percentage loss in the Portfolio’s NAV. Preferred Shares have experienced significant declines in downside protection during the past number of weeks due to the unprecedented volatility in the global equity markets. As a result of this share price volatility, DBRS has placed the Preferred Shares listed below Under Review with Negative Implications. DBRS will take final rating action on these Preferred Shares once a longer-term trend has been established for the NAVs of the affected split share companies.

DBRS Review Announced 2008-10-24
Ticker Rating Asset
FBS.PR.B Pfd-2(low) 1.4+:1
Downgraded SplitShare
ASC.PR.A Pfd-2(low) 0.9+:1
Downgraded Scraps
ALB.PR.A Pfd-2(low) 1.5+:1
Confirmed SplitShare
BSD.PR.A Pfd-2(low) 1.0-:1
Retraction Suspended InterestBearing
CIR.PR.A Pfd-4(low) 0.7-:1
Downgraded None
CBW.PR.A Pfd-5 0.7+:1
Downgraded None
DF.PR.A Pfd-2 1.6-:1
Don’t Panic!!! Scraps
DGS.PR.A Pfd-2 1.7-:1
Proposed Merger None
ES.PR.B Pfd-3(high) 1.2+:1
Small Redemption None
FCS.PR.A Pfd-2 1.3+:1
Partial Redemption None
GFV.PR.A Pfd-2 1.5-:1
Issuer Bid None
GBA.PR.A Pfd-5 0.7+:1
Downgraded None
HPF.PR.A Pfd-2(low) Their Numbers Note Calculation Dispute Massive Retraction Scraps
HPF.PR.B Pfd-4 Their Numbers Note Calculation Dispute Massive Retraction Scraps
FIG.PR.A Pfd-2 1.5-:1
see update
Partial Redemption InterestBearing
PIC.PR.A Pfd-3(high) 1.3-:1
Downgraded Yes
NBF.PR.A Pfd-2(low) 1.5+:1
Review – Developing
Never Resolved
SLS.PR.A Pfd-2(low) 1.2-:1
None None
SNH.PR.U Pfd-3(high) 1.2-:1
None None
SNP.PR.V Pfd-2(low) 1.3+:1
Partial Redemption None
YLD.PR.A Pfd-3 1.0+:1
Downgraded Scraps
TXT.PR.A Pfd-3(high) 1.4-:1
Downgraded None
WFS.PR.A Pfd-2(low) 1.4-:1
Monthly Retraction SplitShare

Update, 2008-10-26: There is an error in the calculation of the asset coverage for FIG.PR.A. As of the June 30 financials, the company had 9,964,308 preferreds outstanding and 7,061,762 capital units. Thus, net assets of $4.56 for the capital units equates to asset coverage of ((10 * 9,964,308) + (7,061,762 * 4.56))/9,964,308 = 1.32 … call it 1.3+:1.

19 Responses to “ANOTHER DBRS Mass Review of Splits”

  1. realboomer says:

    My calculation of asset coverage didn’t agree with the values shown shown in your table for the Scotia issues, such as ALB.PR.A. I think the problem is due to the NAV values shown on the Scotia website. In my calculations, I assumed that adding the NAV of the capital share plus the redemption price of the preferred share would equal the total NAV. That method seems to work for other issuers of split shares such as Brompton, but it doesn’t correspond with the values from Scotia Capital. For example, Scotia’s webpage shows a NAV of $38.10 for Allbanc Split Corp II. Scotia’s webpage also shows the capital shares have a NAV of $6.55. The preferred redemption price is $25.00. So I expected the total NAV would be $6.55 + $25.00 = $31.55. Can you tell me why this doesn’t correspond with Scotia Capital’s NAV of $38.10?

  2. jiHymas says:

    Allbanc Split Corp II has two capital shares per preferred share. So the total NAV is 2*6.55 + 25 = 38.10.

    However, there is a similar error in the post regarding FIG.PR.A – see the update.

  3. […] This issue was part of the DBRS Mass Review of Split Corporations. […]

  4. […] GBA.PR.A was reviewed as part of the DBRS Mass Review of Splits. […]

  5. […] CIR.PR.A was reviewed as part of the DBRS Mass Review of Splits. […]

  6. […] CBW.PR.A was reviewed as part of the DBRS Mass Review of Splits. […]

  7. […] ASC.PR.A was reviewed as part of the Mass DBRS Review of Splits […]

  8. […] is tracked by HIMIPref™. It is currently a member of the SplitShare index … but is under credit review negative by DBRS and I suspect a downgrade is […]

  9. […] was last mentioned on PrefBlog in the report that it had been caught up in the DBRS Mass Review of Splits. GFV.PR.A is not tracked by […]

  10. […] to the credit quality of CPD at August month-end. The fund has a position in FBS.PR.B, currently under review-negative by DBRS and the position in FFN.PR.A is vulnerable, but is should be noted that while the asset coverage […]

  11. […] issues were both reviewed as part of the DBRS Mass Review of Splits. The prior mention of them on PrefBlog was with respect to a massive retraction in […]

  12. […] was part of the DBRS Mass Review of Splits. Retractions and the Capital Unit dividend were suspended in October. The reported NAV has been […]

  13. […] was part of the DBRS Mass Review of Splits. It is not tracked by […]

  14. […] was part of the DBRS Mass Review of Splits. It is not tracked by […]

  15. […] is now valued below the preferred par value, but is still rated Pfd-2(low) by DBRS, and has been under review negative for three months […]

  16. […] hoping they would come to some resolution of their mass reviews of Split Corporations (two of them: October and December), but here we are at month-end and … […]

  17. […] as of January 29, according to Scotia. ALB.PR.A is currently under Review-Negative by DBRS – the mass review announced October 24 has not yet come to resolution … on October 23 the NAVPU was $38.10; it is now $27.76 […]

  18. […] last! The DBRS mass reviews of Split-Share preferreds announced in October and December have been resolved. DBRS has announced: today downgraded 26 ratings of structured […]

  19. […] Canadian Preferred Shares – Data and Discussion « ANOTHER DBRS Mass Review of Splits Split-Share Buy-Backs? WFS.PR.A & FIG.PR.A Examined […]

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