PrefBlog

There is something odd going on with the calculated reset rates announced today:

So, delving into the prospectuses:

All the prospectuses contain language to the effect that (taken from BAM.PF.F prospectus):

“Government of Canada Yield” on any date means the yield to maturity on such date (assuming semi-annual compounding) of a Canadian dollar denominated non-callable Government of Canada bond with a term to maturity of five years as quoted as of 10:00 a.m. (Toronto time) on such date and which appears on the Bloomberg Screen GCAN5YR Page on such date; provided that, if such rate does not appear on the Bloomberg Screen GCAN5YR Page on such date, the Government of Canada Yield will mean the average of the yields determined by two registered Canadian investment dealers selected by the Company, as being the yield to maturity on such date (assuming semi-annual compounding) which a Canadian dollar denominated non-callable Government of Canada bond would carry if issued in Canadian dollars at 100% of its principal amount on such date with a term to maturity of five years.

The ALA.PR.G prospectus specifies:

“Business Day” means a day on which banks are generally open for business in both Calgary, Alberta and Toronto, Ontario.
…
If any day on which any dividend on the Series G Shares is payable by AltaGas or on or by which any other action is required to be taken by AltaGas is not a Business Day, then such dividend shall be payable and such other action may be taken on or by the next succeeding day that is a Business Day.

This is echoed in the EFN.PR.E and DC.PR.B prospectuses.

The BAM.PF.F prospectus does not define Business Day, but specifies that both conversion and redemption will occur on the next business date following the dates for these actions, if the calculated date is not a business day. However, they do not specify what will happen if the Fixed Rate Calculation Date is not a business day.

So, I’m a bit puzzled. I have sent an inquiry to the Investor Relations department of each of the four companies, asking them to specify the date, time and method of calculation of the Government of Canada yield:

Sirs,

I find myself perplexed by discrepancies between the four Reset Rates that were announced on September 3, [relevant ticker symbol] among them. Each announcement implies a slightly different Government of Canada 5-year yield, although the prospectuses appear to specify identical dates, times and data sources for this calculation.

For greater certainty, could you please tell me the date, time and data source for your calculation?

Sincerely,

Update, 2019-9-5: I have obtained the following screenshot for the Bloomberg GCAN5YR screen on September 3:

Another update, 2019-9-5: I have obtained another screenshot!

Another update, 2019-9-12: It was like pulling teeth, but I got a third screenshot:

Another update, 2019-9-12: And, finally:

This entry was posted on Wednesday, September 4th, 2019 at 1:28 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.