New Issue: GWO 5.65% STRAIGHT!

Great-West Lifeco has announced that it:

has today entered into an agreement … under which the underwriters have agreed to buy, on a bought deal basis, 6,000,000 Non-Cumulative First Preferred Shares, Series L … 5.65% per annum

The morons have copy-protected the PDF, since this press release is such a big secret. I’m not retyping all that!

Issue: Great-West Lifeco Inc. Non-Cumulative First Preferred Shares, Series L

Size: 6-million shares (=$150-million) + greenshoe 4-million shares (=$100-million)

Dividends: 5.65% p.a. (= $1.4125); first dividend payable 2009-12-31 for $0.34829 based on closing 2009-10-2

Redeemable: Black-out until 2014-12-31. Redeemable at $26.00 commencing 2014-12-31; redemption price declines by $0.25 p.a. until 2018-12-31; redeemable at $25.00 thereafter.

This issue has great significance: it is the first straight to be issued since RY.PR.H settled 2008-4-29 and … they didn’t fiddle with the standard redemption terms. I had been afraid that issuers would assume that market had been lulled into idiocy by the five-year redemption terms that are standard in the FixedReset sector and try to grab themselves a little more advantage.

The issue may be compared with extant GWO issues outstanding:

GWO Comparables
As of Close 2009-9-23
Ticker Dividend Quote Bid-YTW
GWO.PR.G 1.30 22.61-89 5.77%
GWO.PR.H 1.2125 20.85-90 5.85%
GWO.PR.I 1.125 19.52-63 5.80%
GWO.PR.F 1.475 25.19-43 5.63%

7 Responses to “New Issue: GWO 5.65% STRAIGHT!”

  1. prefhound says:

    I, too, welcome the appearance of a straight pref — clearly a better value for the investor, not to mention potentially stimulating more interest and trading in the straight asset class.

    However, I am wondering why the issuer would want a straight when he could likely save 105 bp with a fixed reset (comparing GWO with TRP) and apparently be able to sell it like hot cakes!!??

    It seems very remarkable — is it a signal of some kind?

  2. jiHymas says:

    All I can imagine is that GWO is genuinely seeking long-term funding at a known price; in other words, precisely the characteristics offered by straights.

    If we assume that GWO could issue a FixedReset at 4.60%+192, they are faced with some uncertainty regarding the situation five years hence; if 5-Year Canada hit a not-unreasonable 4% at that time (last seen 2007-11-14) their money is more expensive and there is the potential at having to refinance and incurring yet another underwriting fee.

  3. GAndreone says:

    Since GWO has not “flown of the shelf” like the TRP offering is the pricing for a straight too low?

  4. jiHymas says:

    POW / PWF / GWO has something of a reputation – with me, at any rate – of pricing their issues tight to market, favouring cheapness over quantity.

    The table certainly shows no new-issue concession; quite the opposite, in fact.

  5. […] Good volume, soft returns in the preferred market today, with PerpetualDiscounts down 11bp on the day while FixedResets lost 8bp. This may be related to all the new issuance … there are, presumably, people still selling to make room for the monster TRP FixedReset settling September 30 and there was a (long awaited) new straight issue announced by GWO. […]

  6. […] on the heels of the GWO 5.65% Straight announced last week comes an announcement from Power Financial Corporation: Power Financial […]

  7. […] issue was announced last week and was priced very tight to […]

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