BSD.PR.A : Name Change and Confirmation at Pfd-5(high)

DBRS has announced:

that, effective February 21, 2019, Brookfield Soundvest Split Trust changed its name to Soundvest Split Trust.

There’s nothing on the the sponsor’s website about this, which is par for this particular course.

DBRS also announced that it:

confirmed the rating on the Preferred Securities issued by Soundvest Split Trust (the Trust) at Pfd-5 (high). The Trust invests in a diversified portfolio of Canadian companies (the Portfolio). Eligible investments of the Trust currently include common shares and preferred shares, income trusts, income securities (including bonds and debentures), real estate investment trusts, Canadian mortgage-backed securities and other equity securities. The Trust may engage in securities lending to generate additional income.

Holders of the Preferred Securities receive fixed quarterly interest payments of $0.15, yielding 6.0% annually on the issue price of $10.00 per security. Holders of capital units of the Trust (the Capital Units) may receive regular monthly cash distributions, provided that the Preferred Security asset coverage ratio is greater than 1.4 times (x). Capital Unit distributions were suspended in August 2011 because the asset coverage test was not met.

Based on the latest Portfolio yield as at February 28, 2019, the Preferred Securities distribution coverage ratio was approximately 0.5x. The insufficient amount of Portfolio dividends to cover Preferred Security distributions is projected to create an average annual grind of approximately 3.1% until maturity. As at February 28, 2019, the downside protection available to the Preferred Securities was approximately 6.3%. Downside protection has experienced a decline in the past year, but has shown slow recovery in the last two months.

Considering the amount of downside protection available to the Preferred Securities and projected grind until the expected end of the term on March 31, 2020, DBRS confirmed the rating on the Preferred Securities issued by the Trust at Pfd-5 (high).

BSD.PR.A was last mentioned on PrefBlog when there was the possibility of a selling opportunity.The term was extended in March, 2015 to March 31, 2020. The manager has been severely criticized on PrefBlog for suspending redemptions during the Credit Crunch and requiring notice of retraction exercise before the right to retract even existed.

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