17 Responses to “April 21, 2022”

1. newbiepref says:

   April 22, 2022 at 6:18 am

   03:25 PM EDT, 04/21/2022 (MT Newswires) — Global Dividend Growth Split Corp (GDV.TO) on Thursday said it plans an overnight offering of preferred and Class A shares.

   The company, which invests in the shares of large-capitalization global dividend-growth companies, said the preferred shares will be offered for C$10.00 to yield 5.1%, while the Class A shares are priced at C$11.65 to yield 10.3%.

   I wonder if in the current environment 5.1% is enough for the prefs.

2. newbiepref says:

   April 22, 2022 at 6:18 am

   03:25 PM EDT, 04/21/2022 (MT Newswires) — Global Dividend Growth Split Corp (GDV.TO) on Thursday said it plans an overnight offering of preferred and Class A shares.

   The company, which invests in the shares of large-capitalization global dividend-growth companies, said the preferred shares will be offered for C$10.00 to yield 5.1%, while the Class A shares are priced at C$11.65 to yield 10.3%.

   I wonder if in the current environment 5.1% is enough for the prefs.

3. ratchetrick says:

   April 22, 2022 at 7:56 am

   Hi newbie . . . not only is 5.1% totally out of date with the current market, but, being a split share issue, the shares are subject to the usual bleeding of value via management fees. This issue will open under water, almost certainly. The simple answer to your question, then is . . . no.

4. ratchetrick says:

   April 22, 2022 at 8:19 am

   And the central bankers keep chanting the mantra of mega hiking in what is almost now appearing to be a “last ditch” effort to control runaway inflation, using [seemingly] the only tool in their toolbox . . . yields are jumping again today, and stories like this one in the Globe today, just fan the flames of the bond market paranoia that results :

   “The Globe and Mail reports in its Friday, April 22, edition that the Bank of Canada might consider hiking its benchmark interest rate by more than 50 basis points in a single move as it pushes borrowing costs higher to try to quell runaway inflation, Governor Tiff Macklem suggested on Thursday. The Globe’s Mark Rendell writes that when asked whether the BOC would ever raise rates by more than half a percentage point in a single rate decision, Mr. Macklem said, “I’m not going to rule anything out.” He added, “We need to normalize monetary policy reasonably quickly, and we’re prepared to be as forceful as needed.” U.S. Federal Reserve Chairman Jerome Powell made similarly hawkish remarks on Thursday. Mr. Powell said that a hike of 50 basis points would “be on the table” for the May meeting, and that “there’s something in the idea of front-end loading” interest rate hikes. The comments from the two central bankers underscore the dramatic shift in recent months. The key concern for Mr. Macklem is making sure people do nor lose faith in the BOC’s ability to get inflation back to its target of 2 per cent. Many Bay Street economists have now penciled in a move of 50 basis points for the Bank of Canada’s June 1 meeting.”

5. niagara says:

   April 22, 2022 at 9:07 am

   ratchetrick, I dont think that the management fees are an issue for the pref component of the split corps, more so for the capital units since pref shares have first dibs on NAV up to par (usually $10). And given that the asset protection here is substantial (>50%) for pref holders, it would be a long time before mgmt fees carve enough into the overall NAV to matter to prefs. So the question is really, is 5% enough in light of 4% GICs for the retail investor? And also one needs to keep in mind that the new redemption /rate adjustment date for this is June 20, 2026, so this 5% will be around for a while….unless they adjust it before then, which is unlikely.

6. ratchetrick says:

   April 22, 2022 at 9:50 am

   I’m sure you’re absolutely correct on the fees item, but based on the next round of hikes almost certainly to be 50bp, but now rumblings about 75bp, the idea of locking in to 5%ish for 5 years sounds a little crazy. Is it possible that the issuer of this split issue might be faced with minimal demand, resulting in a reduction in the IPO price, or a change in the dividend coupon? I saw that happen several years ago with a Sun Life Pref that was so badly received, the issue price was dropped from $25, to [I believe] something south of $24? At the end of the day, it’s all about the participating brokers being able to blow the issue out, and based on their commission, they also have the option to reduce the IPO selling price. Scotia has recently started dealing with this issue in the RRIF space, by having a secondary offering of units, usually about 3 or 4 weeks after the initial one, at a reduced price. They refer to this as a “clean up” offering. But what it really is imo, is an admission of erring on the market demand side of the deal in the first place. (Remember, these “pros” never make a mistake lol!)

7. ratchetrick says:

   April 22, 2022 at 9:52 am

   sry . . . meant REIT space lol

8. skeptical says:

   April 22, 2022 at 10:05 am

   And we have first perpetual yielding 6% in the spanking new issue of BEP.PR.R.
   Expect many more to follow soon.

9. ratchetrick says:

   April 22, 2022 at 10:50 am

   No worries skeptical. The pref space is holding up quite nicely imo. We have down issues, and up issues . . . the retail market hasn’t made up its mind as to whether skyrocketing yields coming up are bad for resets, or not bad. We have a “confusion” market on the pref side, I’d say. The equity markets, on the other hand, have moved from “correction” into the first stages of “capitulation”. This, in the past, and pretty clearly now is the sole result of various facets of the media exaggerating the effect of assorted issues. Right now, warp speed rate hike policy is the “topic du jour”, and Powell tossed a tank of gas on that one yesterday . . . I think pref investors are still in pretty good shape . . . if capitulation sets in, that’s when we see downside moves far more significant than what we’ve seen so far. Look for widening spreads as the first sign . . . not sure it’s going to happen this time though . . . once the 6 number morphs up to 7, good chance the value people will put a floor under it. Just a few thoughts based on similar situations in the past!

10. skeptical says:

    April 22, 2022 at 11:08 am

    After a very long time, it seems money has some value, at least in the yield department. It’s going to create some very interesting environment for all kinds of investments. Last twenty years have been the TINA world, leading people into investments they would have avoided had there been some alternatives.

    Are we there, in a new new world? I’m not sure if the current tough talk by central bankers can translate into real actions without inflicting lots of pain in the real world. Let’s see how long they can continue on this path.

    For a fixed income investor, the raise has been spectacular- going from 4.5% yield last year to about 5.75 to 6%. That’s a hefty one third jump, beating inflation in the process.

    But for the moment, enjoy the world where money has some value again.

11. baffled says:

    April 22, 2022 at 1:11 pm

    ratchetrick , you comment ” Is it possible that the issuer of this split issue might be faced with minimal demand,” , when i looked today before the market opened on the td waterhouse new issues , it was already closed . so somebody is buying

12. ratchetrick says:

    April 22, 2022 at 2:06 pm

    often just the underwriters . . . if they’re getting 3% commission on a $25 issue price, they have up to .75/sh in wiggle room to blow the units out below “cost”, before holding them gets too uncomfortable. If the issue was to rise on the opening, then they make even more $$. There’s a reason the banks make $1B+ earnings per quarter . . . and it’s not just on bank fees!

13. RAV4guy says:

    April 24, 2022 at 2:30 pm

    BAM.PR.K
    “Dividends
    The holders of the Series 13 Preferred Shares are entitled to receive cumulative preferential cash dividends, accruing daily, as and when declared by the board of directors of Brookfield Asset Management, payable quarterly on the last day of March, June, September and December in each year in an amount per share equal to C$25.00 multiplied by one quarter of 70% of the “Average Prime Rate” (as defined in the share conditions).”

    I wonder if someone can help me. I have been looking for the prospectus for BAM.PR.K. I have looked on SEDAR, this website, BAM website and Google. I found documents which contain the above statement, but nothing explaining about “the share conditions”. My goal is to understand in detail how BAM will adjust the dividend for BAM.PR.K with the change in the Prime Rate.

14. skeptical says:

    April 24, 2022 at 7:01 pm

    The bam.pr.k/c/b pay 70% of prime. There’s nothing mysterious here other than the specific date that they choose for determining prime rate. The dividends are payable quarterly for this series as opposed to the monthly dividends for the BAM.PR.E series.
    The E series pays prime at this time because the price is well below $25. If the price reaches 25, they will begin to apply the 4% adjustments to dividends as laid out in the prospectus of E series.
    I once sent a query to BAM investor relations for E series dividend calculation and after a follow up and couple of moths wait, I got a response for dividend calculation. If anyone wants to read it, I will post it here.

15. RAV4guy says:

    April 25, 2022 at 2:45 pm

    Can anyone else offer any help with detailed information about how BAM.PR.K will have the floating rate dividend reset? I have emailed BAM today with doubts of receiving a reply. I am surprised the information is not more easily available.

16. jiHymas says:

    April 25, 2022 at 8:33 pm

    Can anyone else offer any help with detailed information about how BAM.PR.K will have the floating rate dividend reset?

    It’s difficult, because BAM.PR.K exists via exchange (2005-10-5) from BNN.PR.K, Brascan Corporation Cl ‘A’ Pr Series 13, which existed via exchange (2005-1-24) from BNF.PR.A, Brascan Financial Corp. Fltg Rate Cl ‘I’ Pr A, which existed via exchange (2002-5-30) from TFC.PR.A, Trilon Financial Corp. Fltg Rate Cl ‘I’ Pr A, which commenced trading 1984-6-5.

    So that’s pre-internet, and damn near the beginning of time as far as computers being used in the office is concerned. A prospectus might be hard to come by! I worked as a re-org clerk at Merrill Lynch Canada Inc. in … um … 1988 … and we didn’t have computers (not for doing anything like that, anyway). We had reference books published by the Financial Post, that’s what we had!

    I have emailed BAM today with doubts of receiving a reply.

    That’s your best bet. I suppose it’s possible that a very specialized reference library might have a paper copy of the prospectus, but that’s a long shot.

17. RAV4guy says:

    April 25, 2022 at 9:07 pm

    That is a complicated trail. The trail started in 1984. Thanks for helping James.