PrefBlog

Laurentian Bank of Canada has announced:

the applicable dividend rates for its Non-Cumulative Class A Preferred Shares, Series 13 (the “Preferred Shares Series 13”) and Non-Cumulative Class A Preferred Shares, Series 14 (the “Preferred Shares Series 14”).

With respect to any Preferred Shares Series 13 that remain outstanding after June 17, 2024, being the first business day following the Saturday, June 15, 2024 conversion date identified in the prospectus supplement dated March 27, 2014 relating to the issuance of the Preferred Shares Series 13, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on June 15, 2024, and ending on June 14, 2029, will be 6.196% per annum, being equal to the sum of the five-year Government of Canada bond yield as at May 16, 2024, plus 2.55%, as determined in accordance with the terms of the Preferred Shares Series 13.

With respect to any Preferred Shares Series 14 that may be issued on June 17, 2024, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of the actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on June 15, 2024, and ending on September 14, 2024, will be 7.473% on an annualized basis, being equal to the sum of the threemonth Government of Canada Treasury bill yield as at May 16, 2024, plus 2.55%, as determined in accordance with the terms of the Preferred Shares Series 14.

Beneficial owners of Preferred Shares Series 13 who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Montreal time) on May 31, 2024. Conversion inquiries should be directed to the Bank’s Registrar and Transfer Agent, Computershare Investor Services Inc., at 1 800 564-6253.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Preferred Shares Series 14 effective upon conversion. Listing of the Preferred Shares Series 14 subject to the Bank fulfilling all the listing requirements of the TSX and, upon approval, the Preferred Shares Series 14 will be listed on the TSX under the trading symbol “LB.PR.I”.

They had previously announced (2024-4-18):

– Laurentian Bank of Canada (TSX: LB) (the “Bank”) announced today that it does not intend to exercise its right to redeem all or any of its currently outstanding Non-Cumulative Class A Preferred Shares, Series 13 (the “Preferred Shares Series 13”) (TSX: LB.PR.H) on June 15, 2024. As a result, subject to certain conditions described in the prospectus supplement dated March 27, 2014 relating to the issuance of the Preferred Shares Series 13 (the “Prospectus”), the holders of the Preferred Shares Series 13 have the right, at their option, to convert any or all of their Preferred Shares Series 13 into an equal number of the Bank’s Non-Cumulative Class A Preferred Shares, Series 14 (the “Preferred Shares Series 14”) on June 17, 2024. This date is the first business day following the conversion date of June 15, 2024, identified in the Prospectus, which falls on a Saturday. In accordance with the share conditions, a written notice of the right to convert Preferred Shares Series 13 into Preferred Shares Series 14 will be sent to the registered holders of the Preferred Shares Series 13. Holders of Preferred Shares Series 13 are not required to elect to convert all or any part of their Preferred Shares Series 13 into Preferred Shares Series 14. Holders who do not exercise their right to convert their Preferred Shares Series 13 into Preferred Shares Series 14 on such date will retain their Preferred Shares Series 13, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after May 31, 2024, the Bank determines that there would be less than 1,000,000 Preferred Shares Series 14 outstanding on June 17, 2024, then no Preferred Shares Series 13 will be converted into Preferred Shares Series 14, and (ii) alternatively, if after, May 31, 2024, the Bank determines that there would be less than 1,000,000 Preferred Shares Series 13 outstanding on June 17, 2024, then all remaining Preferred Shares Series 13 will automatically be converted into an equal number of Preferred Shares Series 14 on June 17, 2024. In either case, the Bank will give written notice to that effect to any registered holders of Preferred Shares Series 13 affected by the preceding minimums on or before June 7, 2024.

The dividend rate applicable to the Preferred Shares Series 13 for the five-year period from and including June 15, 2024 to, but excluding, June 15, 2029, and the dividend rate applicable to the Preferred Shares Series 14 for the three-month period from and including June 15, 2024 to, but excluding, September 15, 2024, will be determined and announced by way of a news release on May 16, 2024. The Bank will also give written notice of these dividend rates to the registered holders of Preferred Shares Series 13.

Beneficial owners of Preferred Shares Series 13 who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Montreal time) on May 31, 2024. Conversion inquiries should be directed to the Bank’s Registrar and Transfer Agent, Computershare Investor Services Inc., at 1-800-564-6253

LB.PR.H was issued as a NVCC-compliant FixedReset, 4.30%+255, that commenced trading 2014-4-3 after being announced 2014-3-25. The extension was announced 2019-5-7. LB.PR.H reset At 4.123% effective June 15, 2019. I made no recommendation regarding conversion and there was no conversion.

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

DBRS has announced that it:

confirmed the Issuer Rating and Senior Unsecured Debt rating of Brookfield Property Partners L.P. (BPP) at BBB (low). Morningstar DBRS also confirmed the ratings on Brookfield Property Finance ULC’s Senior Unsecured Notes and Brookfield Office Properties Inc.’s Senior Unsecured Notes at BBB (low), and Brookfield Office Properties Inc.’s Cumulative Redeemable Preferred Shares, Class AAA at Pfd-3 (low). All trends are Stable. The ratings are based on the credit risk profile of the consolidated entity, including BPP and its subsidiaries (collectively, BPY or the Partnership).

KEY CREDIT RATING CONSIDERATIONS
The Stable trends consider the demonstrated ability of BPY to continue to access alternative sources of capital, including by asset monetization and through support from its parent, Brookfield Corporation (BN; rated “A,” Stable by Morningstar DBRS) by various means, including the downstreaming of capital. Recent examples of parental support include the repayment at maturity of the 4.30% Series 3 Senior Unsecured Notes and the extension of an intercompany revolving credit facility between BN and BPY. In Morningstar DBRS’ view, these examples, among others, continue to demonstrate the willingness and ability of BN to support BPY for the foreseeable future. The Stable trends also consider BPY’s modestly positive operating performance, affirming the stability of cash flow derived from its assets, particularly in its core Office segment, as well as BPY’s high leverage and variable-rate debt exposure and the resultant strain of high interest rates on BPY’s cash flows.

CREDIT RATING DRIVERS
Morningstar DBRS would consider a negative rating action if Morningstar DBRS were to change its views on the level and strength of implicit support provided by BN, or should BPY’s total debt-to-EBITDA not improve as expected such that it remains above 16.0 times (x), or if BPY’s EBITDA interest coverage were to remain below 1.0x on a sustained basis, all else equal. On the other hand, Morningstar DBRS would consider a positive rating action should Morningstar DBRS’ outlook for BPY’s total debt-to-EBITDA improve to 13.0x or better.

FINANCIAL OUTLOOK
Morningstar DBRS has revised its financial risk assessment of BPY modestly lower, based on revised expectations for BPY’s primary credit metrics. In the near to medium term, Morningstar DBRS expects that BPY will continue to demonstrate an improving trend in its total debt-to-EBITDA metric toward the 15x-range (from 16.9x for the last 12 months ended December 31, 2023 (LTM)), and that BPY’s EBITDA interest coverage metric will stabilize near current levels (0.93x for the LTM) and begin improving toward the low 1.0x-range.

CREDIT RATING RATIONALE
The ratings continue to be supported by (1) Morningstar DBRS’ view of implicit support from BN, as detailed above; (2) BPY’s market position as a pre-eminent global real estate company; (3) high-quality assets, particularly BPY’s core Office and Retail segments, with long-term leases to large, recognizable investment-grade-rated tenants; and (4) superior diversification, in particular by property, tenant, and geography. The ratings continue to be constrained by BPY’s weak financial risk assessment as reflected by both its highly leveraged balance sheet; a riskier retail leasing profile in terms of lease maturities and counterparty risk relative to BPY’s Office segment; a higher-risk opportunistic LP Investment segment composed primarily of office, retail, industrial, and multifamily assets, as well as alternatives; and Morningstar DBRS’ assessment of the unmitigated structural subordination of the Senior Unsecured Debt at the BPP level relative to a material amount of debt at its operating subsidiaries.

This follows the downgrade to P-4 by S&P in December, 2023, and the confirmation at Pfd-3(low) by DBRS in May, 2023.

Affected issues are: BPO.PR.A, BPO.PR.C, BPO.PR.E, BPO.PR.G, BPO.PR.I, BPO.PR.N, BPO.PR.P, BPO.PR.R, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y.

Capital Power Corporation has announced:

that it intends to redeem all of its 6,000,000 issued and outstanding 5.75% Cumulative Minimum Rate Reset Preference Shares, Series 11 (the “Series 11 Shares”) (TSX: CPX.PR.K) on June 30, 2024 (the “Redemption Date”) at a price of $25.00 per share (the “Redemption Price”) for an aggregate total of $150 million, less any tax required to be deducted and withheld by the Company. As June 30, 2024 is not a business day payment of the Redemption Price will occur on July 2, 2024.

As previously announced, the Company’s Board of Directors has declared a quarterly dividend of $0.359375 per Series 11 Share payable on June 28, 2024 (the “Q2 2024 Quarterly Dividend”) to shareholders of record as of June 17, 2024. This will be the final quarterly dividend on the Series 11 Shares.

The Company has provided notice today of the Redemption Price and the Redemption Date to the sole registered holder of the Series 11 Shares in accordance with their terms. Non-registered holders of Series 11 Shares should contact their broker or other intermediary for information regarding the redemption process for the Series 11 Shares in which they hold a beneficial interest.

This follows yesterday’s announcement of the possibility and indicates that the company was able to raise funds at an attractive price on the hybrid bond market – which may be taken as an indication that not only is the preferred share market cheap relative to other markets, but that even junk issuers are able to access financing at a better price.

CPX.PR.K was issued as a FixedReset 5.75%+415M575 issue that commenced trading 2019-5-16 after being announced 2019-5-7. The potential for redemption was announced 2024-5-14. The issue has been tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

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

Update, 2024-6-5: Interesting addendum to the refunding:

DBRS Limited (Morningstar DBRS) assigned a rating of BB with a Stable trend to Capital Power Corporation’s (CPC or the Company) $450 million 8.125% Fixed-to-Fixed Rate Subordinated Notes, Series 2 due June 5, 2054 (Subordinated Notes Series 2). Concurrently, Morningstar DBRS placed CPC’s existing 7.95% Fixed-to-Fixed Rate Subordinated Notes, Series 1 due September 9, 2082 (Subordinated Notes Series 1) Under Review with Developing Implications.

The Subordinated Notes Series 1 and Subordinated Notes Series 2 rank equally in right of payment until the occurrence of certain bankruptcy and related events at which time the Subordinated Notes Series 1 would automatically convert into preferred shares. The Subordinated Notes Series 1 would then rank below the Subordinated Notes Series 2. According to Morningstar DBRS’ Hierarchy Principle, as outlined in the Morningstar DBRS “Credit Ratings Global Policy,” the Subordinated Notes Series 1 would be subordinate to the Subordinated Notes Series 2 in the event of insolvency of the Company. Due to our Hierarchy Principle the Subordinated Notes Series 1 should be rated one notch below the Subordinated Notes Series 2, implying a downgrade to BB (low) from BB.

However, CPC has indicated that it is evaluating possible options, including a potential solicitation process to amend the terms so the Subordinated Notes Series 1 rank pari passu in the event of insolvency with the Subordinated Notes Series 2. Based on the Company’s intent to seek noteholder approval to make the subordinated notes pari passu, Morningstar DBRS has placed the Subordinated Notes Series 1 Under Review with Developing Implications. Following a successful process that would result in the Subordinated Notes Series 1 being ranked pari passu in the event of insolvency with the Subordinated Notes Series 2, Morningstar DBRS will remove the Under Review with Developing Implications designation from the Subordinated Notes Series 1 and confirm their rating at BB with a Stable trend. Conversely, a lack of progress to make the notes pari passu over the next few months could result in Morningstar DBRS downgrading the Subordinated Notes Series 1 to BB (low). Morningstar DBRS aims to resolve any Under Review action within 90 days.

Element Fleet Management has announced (in their 24Q1 earnings release, I don’t see a redemption press release):

Capital structure

Redemption of all outstanding 6.21% Cumulative 5-Year Rate Reset Preferred Shares Series C

To further optimize the Company’s balance sheet and mature its capital structure, the Company announced today its intention to redeem – in accordance with the terms of the 6.21% Cumulative 5-Year Rate Reset Preferred Shares Series C (the “Series C Shares”) as set out in the Company’s articles – all of its 5,126,400 issued and outstanding Series C Shares on June 30, 2024 (the “Share Redemption Date”) for a redemption price equal to CAD$25.00 per Series C Share for an aggregate total amount of approximately US$94.6 million (CAD$128 million), together with all accrued and unpaid dividends up to but excluding the Share Redemption Date (the “Redemption Price”), less any tax required to be deducted and withheld by the Company.

The Company has provided notice today of the Redemption Price and the Share Redemption Date to the sole registered holder of the Series C Shares in accordance with the terms of the Series C Shares as set out in the Company’s articles. Non-registered holders of Series C Shares should contact their broker or other intermediary for information regarding the redemption process for the Series C Shares in which they hold a beneficial interest. The Company’s transfer agent for the Series C Shares is Computershare Investor Services Inc. (“Computershare Investor Services”). Questions regarding the redemption process may be directed to Computershare Investor Services at 1-800-564-6253 or by email to corporateactions@computershare.com.

Following their redemption on June 30, 2024, the Series C Shares will be de-listed from and no longer trade on the Toronto Stock Exchange (“TSX”).

The Company also currently anticipates using a portion of its free cash flow to redeem all its outstanding 5.903% Cumulative 5-Year Rate Reset Preferred Shares Series E (due September 2024) for an approximate aggregate total amount of US$98.2 million (CAD$133 million).

This announcement validates their earlier anticipation of a redemption.

EFN.PR.C was announced 2014-2-26 as a FixedReset, 6.50%+481, but was not added to HIMIPref™ at that time as the company did not have a credit rating. The company received an initial rating from DBRS on 2015-9-24 and HIMIPref™ commenced tracking its four issues then outstanding shortly thereafter. The extension of the issue was announced 2019-5-22 and it was later announced that EFN.PR.C would reset at 6.210% effective June 30, 2019. I recommended against conversion and there was no conversion. The issue has been tracked by HIMIPref™ but is relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

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

Capital Power Corporation has announced:

that it is considering an offering of hybrid subordinated debt securities (the “Notes”) in Canada under its short form base shelf prospectus dated June 10, 2022.

If a successful offering is priced and completed, the Company intends to allocate an amount equal to the net proceeds from the sale of the Notes to repay certain amounts drawn on the Company’s credit facilities (which include amounts drawn for the acquisition of a 50% interest in New Harquahala Generating Company, LLC, and a 100% interest in CXA La Paloma, LLC, and related expenses, development purposes and in respect of ongoing operations), to potentially redeem all of the Company’s outstanding Cumulative Minimum Rate Reset Preferred Shares, Series 11 (TSX: CPX.PR.K) (the “Preferred Shares”), and for general corporate purposes.

There is no certainty that Capital Power will ultimately complete the offering being considered, or as to the timing or terms on which such an offering might be completed. This press release does not constitute a notice of redemption of the Preferred Shares and there is no certainty that the Company will redeem the Preferred Shares.

A preliminary prospectus supplement to the Company’s short form base shelf prospectus dated June 10, 2022 in respect of the potential offering of Notes has been filed with the securities regulatory authorities in each of the provinces and territories of Canada. Any potential offering, if and when launched, would only be made pursuant to a final prospectus supplement to the short form base shelf prospectus of the Company dated June 10, 2022. The short form base shelf prospectus and preliminary prospectus supplement contain important detailed information about the Notes. Copies of these documents are available electronically on the System for Electronic Document Analysis and Retrieval + at www.sedarplus.ca. Investors should read the short form base shelf prospectus and preliminary prospectus supplement, or any final prospectus supplement, before making an investment decision.

CPX.PR.K was issued as a FixedReset 5.75%+415M575 issue that commenced trading 2019-5-16 after being announced 2019-5-7. It has been tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Whether or not a redemption comes to pass, I suggest that this is good news for the Canadian preferred share market. The fact that the company can even consider redeeming the preferred issue using proceeds of an issue on the hybrid bond market is at least a small sign that refinancing there is not restricted to investment-grade banks – even the junkier issuers can participate! Of course, the massive 415bp spread over GOC-5 – and the minimum reset guarantee – make this an easier decision than most, but at least it’s another data point to reinforce the indication provided by ALA in November, 2023 that such money was available.

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