Royal Bank has announced a new issue of 4.5% Perpetuals – I am advised that the redemption schedule commences 2012-2-24 at $26.00, but have not yet confirmed this.
This would not appear, at first blush, to be a particularly attractive issue considering the most obvious comparables. Reasonable, but not particularly attractive:
| Recent RY Perpetuals | ||
| Issue | Dividend Rate | Quote 11/30 |
| RY.PR.A | 4.45% | 24.98-00 |
| RY.PR.B | 4.70% | 25.90-22 |
| RY.PR.C | 4.60% | 25.35-37 |
More later.
Later, more:
| Royal Bank Perpetuals Analysis Using AFTER-TAX Curve (except as noted) |
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| Curve price Component | RY.PR.A | RY.PR.B | RY.PR.C | RY.PR.W | RY.PR.? |
| Price due to base-rate | 23.12 | 23.91 | 23.69 | 24.44 | 23.29 |
| Price due to short-term | 0.04 | 0.05 | 0.05 | 0.04 | 0.05 |
| Price due to long-term | 0.56 | 0.59 | 0.57 | 0.61 | 0.54 |
| Price to to Cumulative Dividends | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Price due to Liquidity | 1.46 | 1.50 | 1.49 | 0.66 | 1.49? |
| Price due to error | -0.03 | -0.03 | -0.03 | -0.02 | -0.00 |
| CurvePrice | 25.16 | 26.01 | 25.77 | 25.74 | 25.36 |
| Annual Dividend | 1.1125 | 1.1750 | 1.1500 | 1.2250 | 1.1250 |
| 2006-12-01 Quote | 25.00-08 | 25.90-09 | 25.40-50 | 26.45-52 | Issue: $25.00 |
| After-tax Bid YTW | 3.55% | 3.37% | 3.54% | 3.19% | 3.58% |
| Pre-Tax Bid YTW | 4.47% | 4.24% | 4.46% | 4.01% | 4.50% |
Tax has been included in the calculation of the elements of the above table in accordance with the Ontario Highest Marginal Rate.
This issue has been added to the HIMIPref™ database on a preIssue basis with the securityCode P75000.
[…] Now with a pre-tax bid-YTW of 4.50%, based on a limit maturity. In other words, these are trading near-as-dammit to even yield with the Royal new issue, which is expected to settle Dec. 13. […]
[…] The best an investor can reasonably hope for is a yield of 4.03% if it lasts until its $25.00 call; there are lots of issues with similar characterists that have such a yield without the risk of negative returns. The new RY.PR.D issue settles tomorrow and yields 4.50%. RY.PR.W has a yield to worst of 4.02%, with a similar call date, without the risk of an intervening call. The same can be said for POW.PR.D, pre-tax bid-YTW of 4.36% based on a call 2014-11-30, with no intervening call risk – and it’s a more active trader and the same name! […]
[…] The Royal Bank new issue got off to a solid start today, trading 249,115 shares and closing above the issue price at 25.10-11, 84×10. […]