{"id":1038,"date":"2007-08-03T14:48:12","date_gmt":"2007-08-03T18:48:12","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=1038"},"modified":"2007-08-03T14:48:12","modified_gmt":"2007-08-03T18:48:12","slug":"bbdprb-bbdprd-arbitrage-closes","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=1038","title":{"rendered":"BBD.PR.B \/ BBD.PR.D Arbitrage Closes"},"content":{"rendered":"<p>As fanatical devotees of the preferred share market will know, the two captioned issues are exchangeable into each other every five years &#8230; which gives rise to <a href=\"http:\/\/www.prefblog.com\/?p=576\">opportunities for arbitrage<\/a>.<\/p>\n<p>There are tax and liquidity headaches associated with this arbitrage, but it can be profitable &#8211; I have,\u00a0for instance, received the following communication:<\/p>\n<blockquote><p>I can finally report that the BBD Pref B\/D Arbitrage trades have finally closed.\u00a0 I received the Pref B floating rate shares yesterday and swapped them into my shorting accounts to close out the positions today.\u00a0 For 8-9 months, these trades returned a little over 10% annualized after costs &#8212; exactly as expected. \u00a0I see there are still 2.4M Pref D shares still outstanding, so we might get other arbitrage chances in the future.\u00a0 Unlike my previous arbitrage trades of a couple of years ago when a $2.00\u00a0price difference\u00a0evaporated in 2-3 months, this trade took the full period.\u00a0 Indeed, the Aug 2 closing price difference of\u00a0$1.60 is basically the same as when I started, so you could say the market is a wonderful forecaster!<\/p><\/blockquote>\n<p>So which pension fund wants to be first to give me a $50-million hedge fund mandate?<\/p>\n<p><strong>Update, 2007-08-10<\/strong>: The dividend going forward on the BBD.PR.D has <a href=\"http:\/\/www.prefblog.com\/?p=978\">been previously reported<\/a> as 5.267%.<\/p>\n<p><strong>Update, 2007-08-12:<\/strong> I note from the <a href=\"http:\/\/www.bombardier.com\">Bombardier website<\/a> that:<\/p>\n<blockquote><p>Following the conversion privilege of August 1, 2007, 82,736 Series 2 preferred shares were converted into 82,736 Series 3 preferred shares and 6,949,749 Series 3 preferred shares were converted into 6,949,749 Series 2 preferred shares.<\/p><\/blockquote>\n<p>Series 3 is BBD.PR.D, the Fixed-Rate element of the pair.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As fanatical devotees of the preferred share market will know, the two captioned issues are exchangeable into each other every five years &#8230; which gives rise to opportunities for arbitrage. There are tax and liquidity &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-1038","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1038"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1038\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}