Manulife will be issuing LRCNs, provisionally rated A(low) by DBRS:
DBRS Limited (DBRS Morningstar) assigned a provisional rating of A (low) with a Stable trend to Manulife Financial Corporation’s (Manulife or the Company) Limited Recourse Capital Notes (the Capital Notes). DBRS Morningstar assigned the rating equal to the Company’s Issuer Rating of A (high) less two rating notches, which is consistent with DBRS Morningstar’s notching approach for capital instruments issued by insurance holding companies. This is one notch below the rating of Manulife’s Unsecured Subordinated Debentures.
RATING DRIVERS
Given Manulife’s recent ratings upgrade, DBRS Morningstar does not see upward ratings pressure over the intermediate term. Over the longer term, if Manulife continues to improve profitability and de-risk by further reducing its exposures to product guarantees and long-term care products, while maintaining its capital profile, the ratings would be upgraded.Conversely, persistent weaker and volatile profitability combined with a sustained deterioration in financial leverage and coverage ratios would result in a ratings downgrade. An adverse event causing regulatory capital to decline substantially would also result in a ratings downgrade.
PerpetualDiscounts now yield 4.66%, equivalent to 6.06% interest at the standard equivalency factor of 1.3x. Long corporates now yield 2.98%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is sharply narrower at 310bp than the 355bp reported February 3.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0638 % | 2,107.4 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0638 % | 3,867.0 |
| Floater | 4.10 % | 4.12 % | 55,566 | 17.15 | 3 | -0.0638 % | 2,228.5 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0683 % | 3,640.1 |
| SplitShare | 4.69 % | 4.42 % | 37,950 | 3.68 | 8 | 0.0683 % | 4,347.1 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0683 % | 3,391.8 |
| Perpetual-Premium | 5.34 % | -5.08 % | 69,402 | 0.08 | 18 | -0.0065 % | 3,246.1 |
| Perpetual-Discount | 4.92 % | 4.66 % | 76,890 | 15.48 | 13 | 0.2810 % | 3,769.1 |
| FixedReset Disc | 4.73 % | 3.69 % | 156,210 | 17.68 | 56 | -0.0535 % | 2,479.2 |
| Insurance Straight | 4.96 % | 4.63 % | 89,713 | 15.37 | 22 | 0.1085 % | 3,622.9 |
| FloatingReset | 3.37 % | 3.83 % | 29,131 | 17.74 | 2 | 3.5384 % | 2,050.5 |
| FixedReset Prem | 5.13 % | 2.92 % | 215,579 | 0.93 | 20 | -0.1687 % | 2,706.5 |
| FixedReset Bank Non | 1.80 % | 1.65 % | 175,874 | 0.96 | 1 | 0.0000 % | 2,892.0 |
| FixedReset Ins Non | 4.61 % | 3.53 % | 104,092 | 17.95 | 22 | 0.5705 % | 2,642.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.C | Floater | -2.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 10.29 Evaluated at bid price : 10.29 Bid-YTW : 4.21 % |
| CU.PR.C | FixedReset Disc | -2.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 18.85 Evaluated at bid price : 18.85 Bid-YTW : 3.88 % |
| RY.PR.M | FixedReset Disc | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 21.40 Evaluated at bid price : 21.67 Bid-YTW : 3.54 % |
| MFC.PR.K | FixedReset Ins Non | 1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 3.51 % |
| MFC.PR.F | FixedReset Ins Non | 1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 13.76 Evaluated at bid price : 13.76 Bid-YTW : 3.50 % |
| CM.PR.Q | FixedReset Disc | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 21.97 Evaluated at bid price : 22.45 Bid-YTW : 3.60 % |
| MFC.PR.G | FixedReset Ins Non | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 23.80 Evaluated at bid price : 24.35 Bid-YTW : 3.50 % |
| BAM.PF.D | Perpetual-Discount | 1.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 24.67 Evaluated at bid price : 24.90 Bid-YTW : 4.97 % |
| SLF.PR.G | FixedReset Ins Non | 1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 13.75 Evaluated at bid price : 13.75 Bid-YTW : 3.46 % |
| MFC.PR.J | FixedReset Ins Non | 2.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 22.88 Evaluated at bid price : 23.20 Bid-YTW : 3.55 % |
| IFC.PR.A | FixedReset Ins Non | 2.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 3.55 % |
| PWF.PR.T | FixedReset Disc | 2.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 3.85 % |
| BAM.PR.K | Floater | 2.94 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 10.52 Evaluated at bid price : 10.52 Bid-YTW : 4.12 % |
| TRP.PR.F | FloatingReset | 7.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 13.10 Evaluated at bid price : 13.10 Bid-YTW : 3.83 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.A | FixedReset Disc | 151,770 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 14.69 Evaluated at bid price : 14.69 Bid-YTW : 4.54 % |
| SLF.PR.I | FixedReset Ins Non | 113,777 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 22.72 Evaluated at bid price : 23.30 Bid-YTW : 3.47 % |
| TD.PF.G | FixedReset Prem | 112,350 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.17 Bid-YTW : 2.98 % |
| MFC.PR.C | Insurance Straight | 111,501 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 24.57 Evaluated at bid price : 24.83 Bid-YTW : 4.58 % |
| BAM.PF.D | Perpetual-Discount | 108,722 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 24.67 Evaluated at bid price : 24.90 Bid-YTW : 4.97 % |
| TRP.PR.B | FixedReset Disc | 84,680 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-10 Maturity Price : 10.96 Evaluated at bid price : 10.96 Bid-YTW : 4.04 % |
| There were 39 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.N | FixedReset Ins Non | Quote: 20.60 – 21.50 Spot Rate : 0.9000 Average : 0.5756 YTW SCENARIO |
| CU.PR.D | Perpetual-Discount | Quote: 25.00 – 25.50 Spot Rate : 0.5000 Average : 0.3047 YTW SCENARIO |
| BIK.PR.A | FixedReset Prem | Quote: 25.75 – 26.25 Spot Rate : 0.5000 Average : 0.3160 YTW SCENARIO |
| SLF.PR.H | FixedReset Ins Non | Quote: 19.10 – 19.80 Spot Rate : 0.7000 Average : 0.5262 YTW SCENARIO |
| BAM.PR.C | Floater | Quote: 10.29 – 10.75 Spot Rate : 0.4600 Average : 0.3008 YTW SCENARIO |
| IFC.PR.C | FixedReset Ins Non | Quote: 21.40 – 21.90 Spot Rate : 0.5000 Average : 0.3491 YTW SCENARIO |
so i guess we can expect some manulife pref issues to be called
Given the price increases in MFC preferred shares today the market is certainly pricing it in.
it’s all the insurance prefs making huge moves today. not just manulife. the implication is they will all do it ..
A joyous day! The chickens have come home to roost in a good way!
I noticed that GWO prefs went way up but that PWF prefs (I think Power Financial owns about two thirds of Great West Life) only went up a little today.
I assume this is because GWO is a pure life insurance company and can thus issue a LRCN but PWF also owns other businesses and thus can’t issue a LRCN.
Does that sound right??
Also, I’m curious why a pref such as GWO.N would rise 13% today. Surely with a reset spread of only 1.30% it is in no danger of being called any time soon?
Thanks for any input, Brian
GWO.pr.n probably jumped so much because its the “cheapest share price” of the group… Could newbie’s simply be pricing them all the same….
so why not FFH?… is the deal the same as PWF above? Is it not considered insurance? There have been decent gains this week – but nothing like MFC/SLF. Thoughts?