{"id":2076,"date":"2008-04-21T11:52:21","date_gmt":"2008-04-21T15:52:21","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=2076"},"modified":"2008-04-21T11:52:21","modified_gmt":"2008-04-21T15:52:21","slug":"new-issue-royal-bank-565-perpetual","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=2076","title":{"rendered":"New Issue: Royal Bank 5.65% Perpetual"},"content":{"rendered":"

Royal Bank has announced<\/a>:<\/p>\n

a domestic public offering of $200 million of Non-Cumulative First Preferred Shares Series AH.
\n\t The bank will issue eight million Preferred Shares priced at $25 per share and holders will be entitled to receive non-cumulative preferential quarterly dividends in the amount of $0.353125 per share, to yield 5.65 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 2 million Preferred Shares at the same offering price.
\n\t Subject to regulatory approval, on or after May 24, 2013, the bank may redeem the Preferred Shares in whole or in part at a declining premium.
\n\t The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is April 29, 2008.
\n\t The net proceeds of this transaction will be used for general business purposes and will strengthen the bank’s capital ratios.<\/p><\/blockquote>\n

Issue: 5.65% Non-Cumulative First Preferred Shares, Series AH<\/p>\n

Amount: 8-million shares @ $25 = $200-million. Greenshoe exercisable prior to closing, for up to 2-million shares.<\/p>\n

First Dividend: Long first dividend payable August 24, based on anticipated closing of April 29, of $0.452774.<\/p>\n

Redemption: Redeemable at $26.00 commencing May 24, 2013. Redemption price declines by $0.25 every May 24 until May 24, 2017; redeemable at $25.00 thereafter.<\/p>\n

Ratings (provisional): DBRS, Pfd-1; S&P, P-1(low).<\/p>\n

Underwriting: Bought deal, expected closing April 29, 2008.<\/p>\n

This is in addition to the $500-million Innovative Tier 1 Capital<\/a>, a pretend-10-year priced at Canadas +310bp.<\/p>\n

Later, More<\/b>: Some comparables:<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n
RY Perps 4\/21<\/td>\n<\/tr>\n
Issue<\/td>\nQuote
4\/21
(Intraday)<\/td>\n		Dividend<\/td>\nCurve
Price<\/td>\n		Pre-tax
Bid-YTW<\/td>\n<\/tr>\n
RY.PR.A<\/td>\n20.59-60<\/td>\n1.1125<\/td>\n20.75<\/td>\n5.50%<\/td>\n<\/tr>\n
RY.PR.B<\/td>\n21.18-22<\/td>\n1.1750<\/td>\n21.77<\/td>\n5.65%<\/td>\n<\/tr>\n
RY.PR.C<\/td>\n20.64-96<\/td>\n1.15<\/td>\n21.29<\/td>\n5.67%<\/td>\n<\/tr>\n
RY.PR.D<\/td>\n20.37-54<\/td>\n1.125<\/td>\n20.87<\/td>\n5.62%<\/td>\n<\/tr>\n
RY.PR.E<\/td>\n20.50-79<\/td>\n1.125<\/td>\n20.91<\/td>\n5.59%<\/td>\n<\/tr>\n
RY.PR.F<\/td>\n20.56-70<\/td>\n1.1125<\/td>\n20.75<\/td>\n5.51%<\/td>\n<\/tr>\n
RY.PR.G<\/td>\n20.38-55<\/td>\n1.125<\/td>\n20.87<\/td>\n5.62%<\/td>\n<\/tr>\n
RY.PR.W<\/td>\n22.12-56<\/td>\n1.225<\/td>\n22.50<\/td>\n5.63%<\/td>\n<\/tr>\n
RY.PR.H<\/td>\nIssue
Price
$25.00<\/td>\n		1.4125<\/td>\n24.61<\/td>\n5.67%<\/td>\n<\/tr>\n<\/table>\n<\/div>\n

Note that “Curve Price” is a static calculation – it assumes that the yield curve will not change in the future. Convexity effects decrease the value of near-par-by-curve-price issues<\/a><\/p>\n

It should also be noted – as indicated in the comments by Assiduous Reader madequota<\/i> – that today, April 21, is the last cum-dividend trading day for the Royal issues. They are all expected to drop in price tomorrow, April 22, to reflect the fact that tomorrow the buyer will not receive this quarter’s dividend.<\/p>\n

The conclusion to be drawn from the comparables is … this new issue is quite expensive. Avoid.<\/p>\n","protected":false},"excerpt":{"rendered":"

Royal Bank has announced: a domestic public offering of $200 million of Non-Cumulative First Preferred Shares Series AH. The bank will issue eight million Preferred Shares priced at $25 per share and holders will be …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[],"class_list":["post-2076","post","type-post","status-publish","format-standard","hentry","category-new-issues"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2076","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=2076"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2076\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}