With the release of the Great-West Lifeco full year financials we can have a look at the progress of the issuer bid on their retractible preferreds – a bid which, I repeat ad nauseum, casts considerable doubt as to whether these issues will survive past their first redemption date.
| GWO Retractible Shares Outstanding | |||||
| Issue | 4Q05 | 1Q06 | 2Q06 | 3Q06 | 4Q06 |
| GWO.PR.E | 7,978,900 | 7,978,900 | 7,978,900 | 7,978,900 | 7,978,900 |
| GWO.PR.X | 23,499,915 | 23,499,915 | 23,022,915 | 22,422,215 | 22,282,215 |
…which allows us to calculate the changes…
| GWO Changes in Retractible Shares Outstanding | |||||
| Issue | 4Q05 | 1Q06 | 2Q06 | 3Q06 | 4Q06 |
| GWO.PR.E | N/A | 0 | 0 | 0 | 0 |
| GWO.PR.X | N/A | 0 | -477,000 | -600,700 | -140,000 |
We can also look at some graphs of GWO.PR.X data over the past year:
These shares pay $1.20 p.a.; if we assume that the average “accrued dividend” was $0.15, then the average price Great-West actually paid ($27.39) can be reduced to $27.24 flat-bid-price equivalent – which I find surprisingly high, given that the FBP was well below this level from about May 15 to August 31, as shown on the FBP graph. This was the same period in which average volume declined from its high for the year of about 8,000 shares per day to about 4,000.
All that aside, it seems that GWO has shown a clear intention to get these shares off its books at the first opportunity – the only surprise is that they are willing to buy them at such a paltry YTW. Why not stick the money in something else and save it for the (extremely big!) redemption at $26.00?
Update : I forgot the links to aid navigation! The issuer bid was last discussed January 25; it remains to be seen how the cash required for the Putnam Purchase will affect the buyback.
[…] Now with a pre-tax bid-YTW of 2.11% based on a bid of $26.75 and a call 2009-4-30 at $25.50. The pre-tax yield is 2.83% if they last until they’re callable at par, 2011-4-30. And 3.53% if they last until their softMaturity 2014-3-30 ! So place your bets … but remember the issuer bid. […]
[…] Still on”>http://www.prefblog.com/?p=543″>on credit watch by dbrshttp://www.dbrs.com”>DBRS> as the market awaits information regarding their financing of the Putnam purchase. This issue has an issuer”>http://www.prefblog.com/?p=619″>issuer bid outstanding, although no shares were purchased under last year’s plan. Now with a pre-tax bid-YTW of 2.41% based on a bid of 26.62 and a call 2009-4-30 at $25.50 … if the company waits until the first possible par-value call, 2011-4-30, it will have yielded 3.00%; and if the issue lasts until its softMaturityhttp://www.prefshares.com/glossary.html#softMaturity”>softMaturity> 2014-3-30, it will have yielded 3.64%. Take your pick! […]
[…] Desjardins crossed 58,000 at 27.65, in a blatant attempt to capture the coveted “Biggest trades is low-yielding securities” tropy for March. Now with a pre-tax bid-YTW of 2.14% based on a bid of $27.60 and a call 2009-10-30 at $26.00. This is an interesting issue, with the issuer bid and Putnam financing to be considered. […]
[…] (i) GWO.PR.X / GWO.PR.E Issuer Bid: Nothing happened! The company did not purchase any shares of either target on the open market in the first quarter. There was also no announcement regarding the possible redemption of CL.PR.B … I suspect they’re still getting their ducks in a row for … […]
[…] Still on credit watch by DBRS as the market awaits information regarding their financing of the Putnam purchase. This issue has an issuer bid outstanding, although no shares were purchased under last year’s plan. Now with a pre-tax bid-YTW of 2.41% based on a bid of 26.62 and a call 2009-4-30 at $25.50 … if the company waits until the first possible par-value call, 2011-4-30, it will have yielded 3.00%; and if the issue lasts until its softMaturity 2014-3-30, it will have yielded 3.64%. Take your pick! […]
[…] Strange trading near the close – possibly an error, although not in and of itself enough to explain the sharply lower closing bid. HSBC bought 105 shares at 26.96 from “Anonymous” and Jones Gable (the odd lot) at 3:54pm, then sold 155 shares at 26.65 to Anonymous and Jones Gable (again the odd-lot). Huh. I wonder if there’s a story there … but there was a block trade and a bunch of odd lots trading at 26.65 prior to this, with lots of time for anyone to put in a better bid, so it doesn’t seem that the error (if that’s what it was) affected the price. Now with a pre-tax bid-YTW of 2.33% based on a bid of 26.64 and a call 2009-04-30 at $26.00. The yield is 2.95% if it survives until 2011-4-30 @ $25.00! Woo-hoo! Interest equivalent of almost a bond! This issue is on Credit Watch Developing and GWO has an issuer bid in place. […]
[…] Now with a pre-tax bid-YTW of 2.07% based on a bid of $27.65 and a call 2009-10-30 at 26.00. Again, the market is hoping for the softMaturity, this one 2013-9-29 to yield 3.00% … but that’s still only bond-equivalent of 4.2%, which is less than corporate bonds of that tenor, so why? Note that this still has the Issuer Bid and Putnam financing to be considered. […]