CWB.PR.D Reprices Extant Issues on Decent Volume

Canadian Western Bank has announced:

that it has closed its domestic public offering of non-cumulative 5-year rate reset First Preferred Shares Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Preferred Shares”). CWB issued 5,000,000 Series 9 Preferred Shares at a price of $25 per share to raise gross proceeds of $125 million. The offering was underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. and BMO Capital Markets. Net proceeds from the offering will be added to CWB’s general funds and utilized for general banking purposes.

The Series 9 Preferred Shares will commence trading on the Toronto Stock Exchange today under the ticker symbol CWB.PR.D. The Series 9 Preferred Shares were issued under a prospectus supplement dated January 22, 2019 to CWB’s short form base shelf prospectus dated January 4, 2019.

CWB.PR.D is a FixedReset, 6.00%+404, NVCC-Compliant, announced 2019-01-21. It will be tracked by HIMIPref™ but is relegated to the Scraps FixedReset-Discount subindex on credit concerns.

CWB.PR.D traded 301,959 shares today in a range of 24.61-89 before settling at 24.83-85. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2049-01-29
Maturity Price : 23.09
Evaluated at bid price : 24.83
Bid-YTW : 5.95 %

There are only three CWB issues, including the new issue, so we can’t do a meaningful Implied Volatility analysis, but we can look at the comparators:

Ticker Quote Issue
Yield-to-Worst (YTW) YTW Scenario
CWB.PR.B 19.83-54 276 5.90% Limit Maturity at 19.83
CWB.PR.D 24.83-85 404 5.95% Limit Maturity at 23.09
CWB.PR.C 25.31-44 547 5.75% Call 2021-7-31 at 25.00

The new issue has caused a dramatic re-pricing of the two pre-existing issues, with CWB.PR.C down 1.29% since January 18, the last close prior to the announcement, and CWB.PR.B down a horrific 9.52%.

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