National Bank of Canada has announced:
that it does not intend to exercise its right to redeem all or part of the currently outstanding 16,000,000 Series 38 Shares on November 15, 2022. As a result, subject to certain conditions, the holders of the Series 38 Shares have the right to convert all or part of their Series 38 Shares on a one-for-one basis into Non-Cumulative Floating Rate First Preferred Shares, Series 39 (NVCC) (the “Series 39 Shares”) on November 15, 2022, in accordance with the terms of the Series 38 Shares described in the prospectus supplement dated June 5, 2017.
Holders who do not exercise their right to convert their Series 38 Shares into Series 39 Shares on November 15, 2022, will retain their Series 38 Shares.
The foregoing conversions are subject to the conditions that: (i) if National Bank determines that there would remain outstanding on November 15, 2022, less than 1,000,000 Series 39 Shares, after having taken into account all Series 38 Shares tendered for conversion into Series 39 Shares, then holders of Series 38 Shares will not be entitled to convert their shares into Series 39 Shares, and (ii) alternatively, if National Bank determines that there would remain outstanding on November 15, 2022, less than 1,000,000 Series 38 Shares, after having taken into account all Series 38 Shares tendered for conversion into Series 39 Shares, then all remaining Series 38 Shares will automatically be converted into Series 39 Shares without the consent of the holders on November 15, 2022.
In either case, National Bank shall give a notice to that effect to all registered holders of Series 38 Shares no later than November 8, 2022.
On October 17, 2022, National Bank will give notice of:
i. the annual fixed dividend rate applicable to the Series 38 Shares to which a holder of Series 38 Shares will be entitled for the 5-year period from November 16, 2022, up to and including November 15, 2027; and
ii. the floating quarterly dividend rate applicable to the Series 39 Shares to which a holder of Series 39 Shares will be entitled for the 3-month period from November 16, 2022, up to and including February 15, 2023.
Beneficial owners of Series 38 shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which will run from October 17, 2022, until October 31, 2022, at 5:00 p.m. (EDT).
NA.PR.C is a FixedReset, 4.45%+343, NVCC-compliant, that commenced trading 2017-6-13 after being announced 2017-6-1. It is tracked by HIMIPref™ and has been assigned to the FixedResets (Discount) subindex.
Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!
Dividend will get attractive! I am curious about what will be the investor appetite for the floating dividend option. I have recently come to the realization that the dividends for the floating series are set using the 3 month Canada rate observed 4 months before the dividend, such that the floating dividends will skyrocket in December with the recent rate increases.
i think investors and the market will be shocked that rates won’t come down very much if at all .. these prefs are incredibly cheap no matter how you look at things
At the moment prefs are out of favour so lots of issues where the pricing makes no sense. If you can hold out the cycle you should do well.