New Issue: PVS 6 1/2 Year, USD, 5.40%

Partners Value Split Corp. has announced (but not yet on their website because, really, company management is a joke. It’s a good thing they have very, very limited responsibilities):

Partners Value Split Corp. (the “Company”) announced today that it has entered into an agreement to sell 3,000,000 Class AA Preferred Shares, Series 16 (the “Series 16 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 16 Preferred Shares will be issued at a price of US$25.00 per share, for gross proceeds of US$75,000,000. The Series 16 Preferred Shares will carry a fixed coupon of 5.40% and will have a final maturity of March 31, 2032. The Series 16 Preferred Shares have a provisional rating of Pfd-2 from DBRS Limited. The net proceeds of the offering will be used by the Company to make distributions to the holder of the Company’s capital shares.

The Company has granted the underwriters an option, exercisable in whole or part prior to closing, to purchase up to an additional 1,000,000 Series 16 Preferred Shares at the same offering price, which, if exercised in full, would increase the gross offering size to US$100,000,000. Closing of the offering is expected to occur on or about September 11, 2025.

The Company owns a portfolio consisting of approximately 120 million Class A Limited Voting Shares of Brookfield Corporation and approximately 30 million Class A Limited Voting Shares of Brookfield Asset Management Ltd. (collectively, the “Brookfield Securities”), which are expected to yield quarterly dividends that are sufficient to fund quarterly fixed cumulative preferential dividends for the holders of the Company’s preferred shares and to enable the holders of the Company’s capital shares to participate in any capital appreciation of the Brookfield Securities.

Brookfield Corporation is a leading global investment firm focused on building long-term wealth for institutions and individuals around the world. Brookfield Corporation has three core businesses: alternative asset management, wealth solutions, and its operating businesses which are in renewable power, infrastructure, business and industrial services, and real estate. Brookfield Corporation is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BN.

Brookfield Asset Management Ltd. (“BAM”) is a leading global alternative asset manager with over US$1 trillion of assets under management across renewable power & transition, infrastructure, private equity, real estate, and credit. BAM’s objective is to generate attractive, long-term risk-adjusted returns for the benefit of its clients and shareholders. BAM is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BAM.

Jason Weckwerth, Chief Financial Officer, will be available at (416) 363-9491 to answer any questions regarding the offering.

This issue will not be tracked by HIMIPref™ since it’s US-Pay.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Update, 2025-09-05: DBRS has announced that it:

assigned a provisional credit rating of (P) Pfd-2 to the Class AA Preferred Shares, Series 16 (the Series 16 Preferred Shares) to be issued by Partners Value Split Corp. (the Company). The Series 16 Preferred Shares will rank pari passu with the existing Class AA Preferred Shares, Series 9; the Class AA Preferred Shares, Series 10; the Class AA Preferred Shares, Series 12; the Class AA Preferred Shares, Series 13; the Class AA Preferred Shares, Series 14; and the Class AA Preferred Shares, Series 15 (collectively, the Class AA Preferred Shares).

The Series 16 Preferred Shares will be entitled to a fixed quarterly cumulative preferential dividend of [$] per share to yield [%] per annum on the issue price of USD 25.00. The maturity date for the Series 16 Preferred Shares will be March 31, 2032. Prior to the issuance of the Series 16 Preferred Shares, the Company will subdivide the existing Capital Shares, so that after the closing of the offering, the aggregate number of preferred shares (Class AA Preferred Shares and Junior Preferred Shares) outstanding and the aggregate number of Capital Shares outstanding will be equal.

The Company’s investment objective is to hold a portfolio (the Portfolio) of Class A Limited Voting Shares of Brookfield Corporation (the BN Class A Shares; Brookfield Corporation’s Issuer Rating is “A” with a Stable trend, and the credit rating on its Preferred Shares is Pfd-2 with a Stable trend). Brookfield Corporation was formerly known as Brookfield Asset Management Inc. (Brookfield). On December 9, 2022, Brookfield completed its public listing and distribution of a 25% interest in its asset management business, through Brookfield Asset Management Ltd. (BAM) by way of a plan arrangement. As a result of this plan arrangement, the Company received one Class A Limited Voting Share of BAM (the BAM Class A Shares, collectively with the BN Class A Shares, the Brookfield Shares) for every four BN Class A Shares it held. Currently, the Company holds 119,611,449 BN Class A Shares and 29,902,862 BAM Class A Shares. Dividends received from the Portfolio are used to fund the payment of interest on the debentures to the extent that any have been issued and to fund the payment of dividends on the Class AA Preferred Shares. There are currently no debentures outstanding.

The Company has issued a limited number of Class A Restricted Voting Shares and Class B Restricted Voting Shares that rank senior to the Class AA Preferred Shares in respect of capital upon the dissolution, wind-up, or insolvency of the Company. There are currently 100 of Class A Restricted Voting Shares outstanding with a book value of USD 8,000 and there are 1,000 of Class B Restricted Voting Shares outstanding with a book value of USD 800.

Each series of Class AA Preferred Shares ranks pari passu with all other Class AA Preferred Shares and senior to the following:
— the Class AAA Preferred Shares,
— the Junior Preferred Shares, which currently consists of the Junior Preferred Shares, Series 1; the Junior Preferred Shares, Series 2; the Junior Preferred Shares, Series 3; and the Junior Preferred Shares, Series 4; and
— the Capital Shares, with respect to payment of dividends and repayment of principal.

There are currently no Class AAA Preferred Shares outstanding. The Junior Preferred Shareholders are entitled to receive quarterly noncumulative cash distributions at an annual rate of 5% when declared by the board of directors. There is $472 million worth of Junior Preferred Shares currently outstanding. The Company’s Capital Shareholders will only receive excess dividend income after interest on the debentures, Class AA Preferred Share distributions, Junior Preferred Share distributions, and other Company expenses have been paid, provided that the net asset value (NAV) per unit (one unit comprises one Capital Share and either one Class AA Preferred Share or one Junior Preferred Share) exceeds $36.00.

Any capital appreciation of the Brookfield Shares will benefit the Capital Shareholders, which rank junior to all preferred shares of any class or series.

Following the issuance of the Series 16 Preferred Shares, the downside protection available to the Class AA Preferred Shares is expected to be approximately 91.8%, and the dividend coverage ratio is expected to be higher than 1.0 times (x; based on the Canadian dollar and U.S. dollar exchange rate as of August 26, 2025). If the underwriters’ overallotment option is exercised, the downside protection is expected to be 91.6% and the dividend coverage is expected to remain higher than 1.0x. Because of the excess-only nature of both Junior Preferred Shares and Capital Share dividends, there is no grind on the Portfolio.

As the Brookfield Shares receive dividends in U.S. dollars, the Company is exposed to foreign currency risk relating to the Canadian-U.S. exchange rate, specifically the appreciation of the Canadian dollar versus the U.S. dollar. This may have a negative impact on the dividend coverage ratio of the Class AA Preferred Shares as these dividends (except for the dividends on the Series 16 Preferred Shares) are paid in Canadian dollars. In the event of a shortfall, the Company may sell some of the Portfolio’s securities, engage in security lending, or write covered call options to generate sufficient income to satisfy its obligations to pay the Class AA Preferred Shares’ dividends. If the Company chooses to lend its holdings, the Portfolio would be exposed to potential losses in the event that the borrower defaults on its obligations to return the borrowed securities. The Class AA Preferred Shares, excluding the Series 16 Preferred Shares, are exposed to currency risk for the return of their principal. However, this risk is mitigated by the current level of downside protection of 91.8%.

On or about September 19, 2025, the Company intends to use approximately 5 million of its BAM Class A Shares to redeem in kind all of its outstanding Junior Preferred Shares and pay a special dividend in kind with the residual value to the Capital Shares. In connection with the redemption of the Junior Preferred Shares, the Capital Shares will be consolidated so that the number of Capital Shares outstanding will equal the number of Preferred Shares outstanding.

Following the issuance of the new Preferred Shares Series 16 (including the overallotment option if exercised), the redemption of all of the Junior Preferred Shares and the special dividend payment to the Capital Shares; the level of adjusted downside protection is expected to decline to approximately 91.3% and the dividend coverage is expected to remain higher than 1.0x.

The main constraints to the credit rating are the following:
— The downside protection available to the Class AA Preferred Shareholders depends solely on the market value of the Brookfield Shares held in the Portfolio, which will fluctuate over time.
— There is a lack of diversification, as the Portfolio is entirely made up of Brookfield Shares.
— Changes in the dividend policy of Brookfield Corporation and BAM may result in reductions in the Class AA Preferred Shares’ dividend coverage.
— As the Brookfield Shares receive dividends in U.S. dollars, the Company is exposed to foreign currency risk relating to the Canadian-U.S. exchange rate, specifically the appreciation of the Canadian dollar versus the U.S. dollar. This may have a negative impact on the dividend coverage ratio of the Class AA Preferred Shares as these dividends (except for the dividends on the Series 16 Preferred Shares) are paid in Canadian dollars.
— The Class AA Preferred Shares, excluding the Series 16 Preferred Shares, are exposed to currency risk for the return of their principal. However, this risk is mitigated by the current level of downside protection of 91.8%.

Morningstar DBRS’ credit rating on the Series 16 Preferred Shares addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the quarterly fixed cumulative preferential dividends and the return of principal on the maturity date.

Morningstar DBRS’ credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations.

It is of great interest that the Junior Preferreds are all getting redeemed.

Update, 2025-9-11: Finalized:

DBRS Limited (Morningstar DBRS) finalized its provisional credit rating of Pfd-2 on the Class AA Preferred Shares, Series 16 (the Series 16 Preferred Shares) issued by Partners Value Split Corp. (the Company). Morningstar DBRS also confirmed the credit ratings on the Class AA Preferred Shares, Series 9; the Class AA Preferred Shares, Series 10; the Class AA Preferred Shares, Series 12; the Class AA Preferred Shares, Series 13; the Class AA Preferred Shares, Series 14 and the Class AA Preferred Shares, Series 15 (collectively, the Class AA Preferred Shares) at Pfd-2.