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S&P has weighed in on the MFC LRCNs discussed yesterday:
S&P Global Ratings said today it assigned its ‘BBB+’ issue-level rating to Manulife Financial Corp.’s (MFC; A/Stable/–) Canadian dollar-denominated limited recourse capital notes.
The notes are subordinated obligations, not callable in the first five years, and have a 60-year maturity. At the same time, MFC will issue an equivalent amount of perpetual preferred shares, also not callable within the first five years, that offer a typical features of preferred shares including subordination to senior obligations and dividend payments payable at MFC’s discretion. The preferred shares will be held in a dedicated trust and the trustee will provide a revocable waiver for all dividends while the shares remain in the trust. We have assigned the same ‘BBB+’ issue-level rating to the preferred shares.
While the notes do not explicitly allow MFC to defer or cancel any payments of interest or principal, the sole recourse the noteholders have for any nonpayment or any event of default is their proportional part of the preferred shares held in the trust. MFC could decide at any point to stop payment on the notes, trigger the delivery of the preferred shares to the noteholders, simultaneously cancel the preferred shares’ dividends, and suffer no negative consequences thereafter. This, in our view, effectively renders the payments on the notes cancelable at MFC’s discretion.
The ‘BBB+’ ratings for both the notes and the preferred shares are two notches below MFC’s issuer credit rating, incorporating a deduction of one notch, reflecting subordination of the issuances; and a deduction of an additional notch, reflecting optional coupon and dividend cancelability.
We have assigned the equity content of the notes and the preferred shares as intermediate, because we view their features as contributing to MFC’s loss-absorption capacity. In addition, the notes and the preferred shares are only redeemable after five years, with no additional incentive to call either at that date. Therefore, the notes’ and preferred shares’ longevity is also a factor in our evaluation of their intermediate equity content.
We do not expect the issuance of the notes to materially change MFC’s financial leverage or fixed-charge coverage because we anticipate the company will use the proceeds mostly to fund upcoming maturities and redemptions. Since the preferred shares are held in trust solely for the purpose of potential recourse to the noteholders, we will exclude them from any capital, leverage, and coverage calculations while the shares remain in the trust.
TXPR closed at 645.98, up 0.68% on the day. Volume today was 5.49-million, by far the highest daily volume in the past 20 trading days, well ahead of second-place February 3 with 3.87-million.
CPD closed at 12.90, up 1.02% on the day. Volume was 59,103, perhaps a little below the median of the past 20 trading days.
ZPR closed at 10.45, up 0.97% on the day. Volume of 433,493 was second-highest of the past 20 trading days, behind only February 4.
Five-year Canada yields were unchanged at 0.49% today.
| 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 | 0.7018 % | 2,122.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.7018 % | 3,894.1 |
| Floater | 4.07 % | 4.12 % | 55,570 | 17.13 | 3 | 0.7018 % | 2,244.2 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0536 % | 3,642.1 |
| SplitShare | 4.69 % | 4.36 % | 36,451 | 3.68 | 8 | 0.0536 % | 4,349.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0536 % | 3,393.6 |
| Perpetual-Premium | 5.33 % | -5.20 % | 69,742 | 0.09 | 18 | 0.1063 % | 3,249.5 |
| Perpetual-Discount | 4.92 % | 4.92 % | 75,846 | 15.49 | 13 | 0.0747 % | 3,772.0 |
| FixedReset Disc | 4.70 % | 3.74 % | 166,883 | 17.86 | 56 | 0.7857 % | 2,498.7 |
| Insurance Straight | 4.94 % | 4.56 % | 86,183 | 4.07 | 22 | 0.3794 % | 3,636.6 |
| FloatingReset | 3.14 % | 2.57 % | 27,220 | 20.83 | 2 | 7.1845 % | 2,197.8 |
| FixedReset Prem | 5.12 % | 2.73 % | 213,592 | 0.93 | 20 | 0.1552 % | 2,710.7 |
| FixedReset Bank Non | 1.80 % | 1.66 % | 174,223 | 0.96 | 1 | 0.0000 % | 2,892.0 |
| FixedReset Ins Non | 4.41 % | 3.34 % | 107,372 | 18.34 | 22 | 4.5276 % | 2,762.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BMO.PR.Y | FixedReset Disc | -3.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.25 Evaluated at bid price : 21.25 Bid-YTW : 3.74 % |
| MFC.PR.H | FixedReset Ins Non | 1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.93 Evaluated at bid price : 25.11 Bid-YTW : 3.60 % |
| BIP.PR.A | FixedReset Disc | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.99 Evaluated at bid price : 22.48 Bid-YTW : 4.51 % |
| BAM.PF.G | FixedReset Disc | 1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 18.57 Evaluated at bid price : 18.57 Bid-YTW : 4.52 % |
| BMO.PR.W | FixedReset Disc | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.35 Evaluated at bid price : 21.35 Bid-YTW : 3.42 % |
| SLF.PR.D | Insurance Straight | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 24.55 Evaluated at bid price : 24.80 Bid-YTW : 4.53 % |
| BMO.PR.S | FixedReset Disc | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.73 Evaluated at bid price : 22.00 Bid-YTW : 3.37 % |
| BMO.PR.E | FixedReset Disc | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.00 Evaluated at bid price : 23.98 Bid-YTW : 3.47 % |
| BAM.PR.Z | FixedReset Disc | 1.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.25 Evaluated at bid price : 20.25 Bid-YTW : 4.47 % |
| BMO.PR.T | FixedReset Disc | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.80 Evaluated at bid price : 20.80 Bid-YTW : 3.47 % |
| BAM.PF.A | FixedReset Disc | 1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.85 Evaluated at bid price : 20.85 Bid-YTW : 4.41 % |
| TRP.PR.E | FixedReset Disc | 1.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 17.15 Evaluated at bid price : 17.15 Bid-YTW : 4.43 % |
| NA.PR.S | FixedReset Disc | 1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.32 Evaluated at bid price : 21.32 Bid-YTW : 3.62 % |
| BAM.PR.X | FixedReset Disc | 1.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 13.81 Evaluated at bid price : 13.81 Bid-YTW : 4.25 % |
| SLF.PR.E | Insurance Straight | 1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 24.64 Evaluated at bid price : 24.90 Bid-YTW : 4.56 % |
| TRP.PR.G | FixedReset Disc | 1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 19.15 Evaluated at bid price : 19.15 Bid-YTW : 4.48 % |
| TRP.PR.D | FixedReset Disc | 1.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 4.38 % |
| PWF.PR.T | FixedReset Disc | 1.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.35 Evaluated at bid price : 20.35 Bid-YTW : 3.78 % |
| SLF.PR.C | Insurance Straight | 1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 24.64 Evaluated at bid price : 24.90 Bid-YTW : 4.51 % |
| TRP.PR.B | FixedReset Disc | 2.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 11.18 Evaluated at bid price : 11.18 Bid-YTW : 3.97 % |
| IAF.PR.G | FixedReset Ins Non | 2.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 24.13 Evaluated at bid price : 24.50 Bid-YTW : 3.45 % |
| TRP.PR.A | FixedReset Disc | 2.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 15.02 Evaluated at bid price : 15.02 Bid-YTW : 4.44 % |
| MFC.PR.I | FixedReset Ins Non | 2.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.62 Evaluated at bid price : 24.80 Bid-YTW : 3.41 % |
| MFC.PR.G | FixedReset Ins Non | 2.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 24.52 Evaluated at bid price : 24.92 Bid-YTW : 3.43 % |
| MFC.PR.J | FixedReset Ins Non | 2.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.43 Evaluated at bid price : 23.75 Bid-YTW : 3.46 % |
| NA.PR.W | FixedReset Disc | 2.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.80 Evaluated at bid price : 20.80 Bid-YTW : 3.56 % |
| IAF.PR.I | FixedReset Ins Non | 2.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.51 Evaluated at bid price : 24.89 Bid-YTW : 3.34 % |
| BAM.PR.C | Floater | 2.92 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 10.59 Evaluated at bid price : 10.59 Bid-YTW : 4.09 % |
| CU.PR.C | FixedReset Disc | 2.92 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 19.40 Evaluated at bid price : 19.40 Bid-YTW : 3.77 % |
| SLF.PR.I | FixedReset Ins Non | 3.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.42 Evaluated at bid price : 24.00 Bid-YTW : 3.37 % |
| BAM.PR.T | FixedReset Disc | 3.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 16.25 Evaluated at bid price : 16.25 Bid-YTW : 4.42 % |
| TRP.PR.C | FixedReset Disc | 3.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 11.92 Evaluated at bid price : 11.92 Bid-YTW : 4.29 % |
| MFC.PR.Q | FixedReset Ins Non | 3.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.06 Evaluated at bid price : 23.95 Bid-YTW : 3.34 % |
| IFC.PR.G | FixedReset Ins Non | 4.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.38 Evaluated at bid price : 22.79 Bid-YTW : 3.58 % |
| IFC.PR.C | FixedReset Ins Non | 4.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.82 Evaluated at bid price : 22.30 Bid-YTW : 3.53 % |
| IFC.PR.A | FixedReset Ins Non | 4.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 3.39 % |
| PWF.PR.P | FixedReset Disc | 5.95 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 13.90 Evaluated at bid price : 13.90 Bid-YTW : 3.78 % |
| MFC.PR.K | FixedReset Ins Non | 7.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.26 Evaluated at bid price : 22.65 Bid-YTW : 3.23 % |
| SLF.PR.H | FixedReset Ins Non | 7.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.55 Evaluated at bid price : 20.55 Bid-YTW : 3.28 % |
| MFC.PR.M | FixedReset Ins Non | 8.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.14 Evaluated at bid price : 22.65 Bid-YTW : 3.34 % |
| MFC.PR.N | FixedReset Ins Non | 9.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.07 Evaluated at bid price : 22.57 Bid-YTW : 3.28 % |
| MFC.PR.L | FixedReset Ins Non | 9.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 21.36 Evaluated at bid price : 21.67 Bid-YTW : 3.28 % |
| SLF.PR.G | FixedReset Ins Non | 10.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 15.15 Evaluated at bid price : 15.15 Bid-YTW : 3.14 % |
| GWO.PR.N | FixedReset Ins Non | 12.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 14.40 Evaluated at bid price : 14.40 Bid-YTW : 3.12 % |
| SLF.PR.J | FloatingReset | 14.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 14.50 Evaluated at bid price : 14.50 Bid-YTW : 2.57 % |
| MFC.PR.F | FixedReset Ins Non | 14.97 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 15.82 Evaluated at bid price : 15.82 Bid-YTW : 3.04 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.G | FixedReset Prem | 1,314,100 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-07-25 Maturity Price : 25.00 Evaluated at bid price : 25.37 Bid-YTW : 2.73 % |
| MFC.PR.F | FixedReset Ins Non | 480,225 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 15.82 Evaluated at bid price : 15.82 Bid-YTW : 3.04 % |
| TD.PF.D | FixedReset Disc | 340,823 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.47 Evaluated at bid price : 23.30 Bid-YTW : 3.45 % |
| SLF.PR.H | FixedReset Ins Non | 240,940 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 20.55 Evaluated at bid price : 20.55 Bid-YTW : 3.28 % |
| MFC.PR.M | FixedReset Ins Non | 176,930 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.14 Evaluated at bid price : 22.65 Bid-YTW : 3.34 % |
| MFC.PR.K | FixedReset Ins Non | 149,924 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 22.26 Evaluated at bid price : 22.65 Bid-YTW : 3.23 % |
| SLF.PR.B | Insurance Straight | 108,500 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-03-13 Maturity Price : 25.00 Evaluated at bid price : 25.21 Bid-YTW : 1.29 % |
| CM.PR.R | FixedReset Disc | 100,650 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2051-02-11 Maturity Price : 23.76 Evaluated at bid price : 25.05 Bid-YTW : 3.84 % |
| There were 50 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BMO.PR.Y | FixedReset Disc | Quote: 21.25 – 22.85 Spot Rate : 1.6000 Average : 0.9658 YTW SCENARIO |
| TRP.PR.E | FixedReset Disc | Quote: 17.15 – 18.55 Spot Rate : 1.4000 Average : 0.8419 YTW SCENARIO |
| RY.PR.J | FixedReset Disc | Quote: 22.70 – 23.56 Spot Rate : 0.8600 Average : 0.5139 YTW SCENARIO |
| BAM.PR.Z | FixedReset Disc | Quote: 20.25 – 21.00 Spot Rate : 0.7500 Average : 0.4486 YTW SCENARIO |
| BAM.PR.R | FixedReset Disc | Quote: 15.62 – 16.45 Spot Rate : 0.8300 Average : 0.5388 YTW SCENARIO |
| SLF.PR.J | FloatingReset | Quote: 14.50 – 15.30 Spot Rate : 0.8000 Average : 0.5671 YTW SCENARIO |