Brookfield Infrastructure has announced:
the completion of its previously announced issuance of $100,000,000 of Senior Preferred Shares, Series 1 (“Series 1 Shares”). The offering was underwritten by a syndicate of underwriters led by TD Securities Inc., BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and Scotiabank.
The Series 1 Shares were issued by BIP Investment Corporation (“BIPIC”), a wholly-owned subsidiary of Brookfield Infrastructure, and are fully and unconditionally guaranteed by Brookfield Infrastructure and certain of its key holding subsidiaries. BIPIC issued 4,000,000 Series 1 Shares at a price of $25.00 per share, for total gross proceeds of $100,000,000. Holders of the Series 1 Shares will be entitled to receive a cumulative quarterly fixed dividend at a rate of 5.85% annually for the initial period ending March 31, 2024. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.96%, and (ii) 5.85%. The Series 1 Shares will commence trading on the Toronto Stock Exchange this morning under the ticker BIK.PR.A.
The net proceeds of the issue of the Series 1 Shares will be used to fund new investments and/or for general working capital purposes.
BIK.PR.A is a FixedReset, 5.85%+396M585, announced 2019-1-29. It will be tracked by HIMIPref™ and has been assigned to the FixedReset (Premium) sub-index.
The issue traded 327,789 shares today in a range of 24.95-15 before closing at 25.06-09. Vital statistics are:
| BIK.PR.A | FixedReset Prem | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-02-05 Maturity Price : 23.17 Evaluated at bid price : 25.06 Bid-YTW : 5.78 % |
James
In your view, is this issue comparable to the series BIP.PR.A to PR.F, or, being issued from a subsidiary, necessary to stand alone? They seem a lot closer than, for example, POW and PWF.
BIP is one of the guarantors of BIK.PR.A, so from a credit quality perspective BIK is no worse than equal to BIP.
I certainly recommend that the names be treated identically for issuer concentration calculation purposes.
However, the characterization of distributions from BIK.PR.A as dividends is a major difference, so whether or not you want to call them “comparable” depends on the particular comparison being made.
[…] was issued as a FixedReset, 5.85%+396M585, that commenced trading 2019-02-05 after being announced 2019-1-29. It is tracked by HIMIPref™ and is assigned to the FixedReset […]