The Toronto-Dominion Bank has announced:
that it will exercise its right to redeem all of its 14,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class A First Preferred Shares, Series 22 (Non-Viability Contingent Capital) (the “Series 22 Shares”) on April 30, 2024 at the price of $25.00 per Series 22 Share for an aggregate total of approximately $350 million. The redemption has been approved by the Office of the Superintendent of Financial Institutions.
On February 29, 2024, TD announced that dividends of $0.325 per Series 22 Share had been declared. These will be the final dividends on the Series 22 Shares, and will be paid in the usual manner on April 30, 2024 to shareholders of record on April 9, 2024, as previously announced. After April 30, 2024, the Series 22 Shares will cease to be entitled to dividends and the only remaining rights of holders of such shares will be to receive payment of the redemption amount.
Beneficial holders who are not directly the registered holder of Series 22 Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Inquiries should be directed to our Registrar and Transfer Agent, TSX Trust Company, at 1-800-387-0825 (or in Toronto 416-682-3860).
TD.PF.L was issued as a FixedReset, 5.20%+327, that commenced trading 2019-1-28 after being announced 2019-01-17. It is currently assigned to the FixedReset-Discount subindex.
Thanks to Assiduous Reader IrateAR for bringing this to my attention!
Thanks for making this website a public service.
The announcement of the call on TD.PF.L led me on a hunt to see if another similar issue, CM.PR.T Series 49 5.20% 30APR24 +331 bps, had issued an announcement. I haven’t found anything as of 11:45 AM on Mar 15 but ran across this news release. I don’t believe there has been any mention of it on your site.
FYI: TORONTO, March 5, 2024 /CNW/ – CIBC (TSX: CM) (NYSE: CM) today announced a domestic public offering of $500 million of Non-Cumulative 5-Year Fixed Rate Reset Class A Preferred Shares Series 57 (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares”). The Preferred Shares will be sold to certain institutional investors through a dealer syndicate led by CIBC Capital Markets.
The Preferred Shares will be issued at a price of $1,000 per share and will yield 7.334% annually. The Preferred Shares will pay dividends at a rate of 7.337% annually, payable semi-annually, as and when declared by the Board of Directors of CIBC, for the initial period ending on, but excluding, April 12, 2029. Thereafter, the dividend rate on the Preferred Shares will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 3.90%. The expected closing date of the offering is March 12, 2024.
CIBC may redeem the Preferred Shares during the period from March 12 to and including April 12, commencing on March 12, 2029 and every five years thereafter with the prior written approval of the Superintendent of Financial Institutions (Canada), in whole or in part on not less than 10 days’ nor more than 60 days’ prior notice.
The net proceeds from this transaction will be used for general purposes of CIBC.
I think that it is a reasonable assumption that CM.PR.T (and CM.PR.Y in 3 months time) will be redeemed, likely the proceeds from the above being used to fund those redemptions.
Perhaps James could share his views on what the rationale might be for the OFSI apparently pushing the banks to only issuing institutional Prefs. I cannot imagine that CM would have trouble selling a rate reset with an initial div of 7.34% and a reset rate 390bps to retail investors. A $500mm issue would be scooped up very quickly. In fact, I’d suggest something like 6.9%, +330bp would sell to retail investors right now. Something is odd here.
“Perhaps James could share his views on what the rationale might be for the OFSI apparently pushing the banks to only issuing institutional Prefs. “
Perhaps you are thinking of James’ post back in March 25 2022 and his reference to the Addenda Capital article about the regulator’s interest in seeing the development of a viable OTC institutional market. As per James: “which I have been meaning to highlight for some time.” 🙂
https://prefblog.com/?p=43180#comment-197031
It’s certainly a sizeable chunk of “retail” that may end up removed from the market. If you add up all the Bank redemptions since last fall (BNS, TD.K & L), and add in those where there is quite reasonable speculation of redemption in the next few months (CM.T, TD.PF.M, CM..I and CM.Y) I get 1.625 Billion (not factoring in over-allotments if any).
Perhaps James could share his views on what the rationale might be for the OFSI apparently pushing the banks to only issuing institutional Prefs.
OSFI hates the volatility that comes with the retail market of preferred shares. In addition, they want to ensure that a viable market in institutional preferreds developes so that nobody will every worry about LRCNs choosing to deliver completely illiquid preferreds instead of cash upon maturity.
Thank you, James. Sad for us retail scum, sorry, investors.
Peet, you mention CM.PR.I. I cannot find that issue, did you perhaps mean CM.PR.O, which is coming up for redemption/reset on Jul 31, the same date as CM.PR.Y? This has a 232bp spread (vs 362bp for Y). I can certainly see CM redeeming Y, but O seems much less certain. CET1 for CM was 13.0% as of Jan 31, so who knows?
Niagara, a long story, sigh, cut-and-paste but also not knowing how to edit once posted. My apologies, and thank you for your courteous query!
As a parting comment, FWIW one could also add the BMO.BR.F issue to the list of possible candidates for redemption. It’s 350 million, reset May 25 2024, spread to GOC of 351. That said, their Tier 1 ratio in Q2 is estimated (by RBC ) to down around 12.7%, well down from earlier estimates , and they had a disappointing last quarter.
However, the market at $24.90 seems to be trading on the basis of a likely redemption.
Perhaps not surprising given their announcement
TORONTO, Feb. 29, 2024 /CNW/ – Bank of Montreal (TSX: BMO) (NYSE: BMO) (or the “Bank”) today announced the pricing of USD $1.0 billion of non-viability contingent capital (“NVCC”) Additional Tier 1 (AT1) Limited Recourse Capital Notes, Series 4 (the “LRCNs”).
peet wrote:
“It’s certainly a sizeable chunk of “retail” that may end up removed from the market. If you add up all the Bank redemptions since last fall (BNS, TD.K & L), and add in those where there is quite reasonable speculation of redemption in the next few months (CM.T, TD.PF.M, CM..I and CM.Y) I get 1.625 Billion (not factoring in over-allotments if any).”
Since 2020, I have tried to keep track of redemptions and issues of preferred shares after RY redeemed 6 preferred issues subsequent to a LRCN being issued.
With the recently announced TD.PF.L and CM.PR.T redemptions there been a total of $22.44 billion of redemptions (par value) since August of 2020. There have also been $1.87 billion of new issues in that same time period. There have been no new issues since April of 2022.
My calulations do not include the market price redemptions done by BCE and various Brookfield entities discussed elsewhere in Prefblog. My calculations do not include split share issues other than PVS issues.
By these figures over $20 billion (par value) of preferred shares have disappeared in the past 3.5 years.
As noted above, there is a narrative that, consistent with OSFI’s desire to have fewer Bank pref’s in the hands of us fickle retail investors, this latter part of the market will increasingly be replaced with institutional ownership through LRCNs and the OTC market.
I read some recent speculation by an institutional talking head that Bank issues with reset spreads [as low as] between 200 and 300 basis points may, in the eyes of some market participants, soon be candidates for redemption , despite similar issues not being redeemed recently.
Lots of moving parts here, but I could also speculate further that (likely?) redemptions at BMO, CM and TD could then become a “supply side” tailwind for the pref market in general. But then again, in a broader context , wouldn’t less liquidity in the market be a bad thing?