CL.PR.B : YTW Returns to Positive Territory!

Readers will remember that I have been fascinated by CL.PR.B and its negative yield-to-worst for some time. Apart from very particular portfolio-management factors, there hasn’t seemed to be much rationale for holding it, other than a hope that it would continue to pay an annual dividend of 1.5625 forever.

The chance of this has never seemed too large to me, given that CL (Canada Life) is part of the GWO (Great-West) group of companies which is in turn controlled by PWF (Power Financial) … a conglomerate that has something of a reputation for knowing how many beans make five.

Even four months after I expected them to be redeemed, I am still a little confused, since paying 1.5625 on a perp when new perps are paying 1.125 – and I can’t see a GWO issue having to pay more that 1.30, no matter how sick the Street is of seeing the name – doesn’t make a lot of sense to me. However, as I have mentioned numerous times, the purchase of Putnam still needs to be financed and maybe they’re just delaying a little until they’ve got all that stuff squared away.

Today, however, the bid broke down and while the trading range was 26.31-42 (on volume of 1,950 shares), the closing quotation was 26.09-40, 5×25. So, in celebration, I’ve uploaded a few graphs:

The recent decline in price of CL.PR.B (and consequent increase in yieldToWorst) has had a salutary effect on the calculated mean-average-YTW of the PerpetualPremium index, which now has no members with a negative Yield-to-Worst and consequently a more meaningful mean. Problems with computing the meanĀ – even less meaningful when negatives are included than it is with all positive numbersĀ – has led me to use the median for the official HIMI Preferred Indices … and don’t worry, guys, I’m having scheduling problems at the moment, but will return to those computations in the near future. Unless a piano falls on my head.

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