{"id":25043,"date":"2014-04-23T20:03:04","date_gmt":"2014-04-24T01:03:04","guid":{"rendered":"http:\/\/prefblog.com\/?p=25043"},"modified":"2014-04-23T20:03:04","modified_gmt":"2014-04-24T01:03:04","slug":"bmo-pr-s-surges-on-enormous-volume","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=25043","title":{"rendered":"BMO.PR.S Surges On Enormous Volume"},"content":{"rendered":"<p>Bank of Montreal <a href=\"http:\/\/newsroom.bmo.com\/press-releases\/bank-of-montreal-announces-closing-of-500-million-tsx-bmo-201404230940892003\">has announced<\/a>:<\/p>\n<blockquote><p> it has closed its inaugural Basel III-compliant public offering of Non-Cumulative 5-year Rate Reset Class B Preferred Shares Series 27 (the &#8220;Preferred Shares Series 27&#8221;). The offering was underwritten on a bought deal basis by a syndicate led by BMO Capital Markets. Bank of Montreal issued 20 million Preferred Shares Series 27 at a price of $25 per share to raise gross proceeds of $500 million.<\/p>\n<p>The Preferred Shares Series 27 were issued under a prospectus supplement dated April 16, 2014, to the Bank&#8217;s short form base shelf prospectus dated March 13, 2014. Such shares will commence trading on the Toronto Stock Exchange today under the ticker symbol BMO.PR.S.<\/p><\/blockquote>\n<p>BMO.PR.S is a FixedReset, 4.00%+233, NVCC-compliant issue <a href=\"http:\/\/prefblog.com\/?p=24977\">announced April 14<\/a>. It will be tracked by HIMIPref&trade; and is assigned to the FixedReset Sub-Index. DBRS has <a href=\"http:\/\/dbrs.com\/research\/267177\/dbrs-finalizes-provisional-rating-on-bank-of-montreal-s-non-viability-contingent-capital-preferred-shares-at-pfd-2-stable.html\">confirmed their Pfd-2(stable)<\/a> preliminary rating on the issue. Note that this is one notch below the other BMO issues due to NVCC uncertainty.<\/p>\n<p>The issue traded 1,557,213 shares today in a range of 25.31-43 before closing at 25.42-44, 89&#215;30. Vital statistics are:<\/p>\n<div align=\"center\">\n<table border=\"1\">\n<tr>\n<td>BMO.PR.S<\/td>\n<td>FixedReset<\/td>\n<td>YTW SCENARIO<br \/>\nMaturity Type   : Call<br \/>\nMaturity Date\t: 2019-05-25<br \/>\nMaturity Price  : 25.00<br \/>\nEvaluated at bid price : 25.42<br \/>\nBid-YTW : 3.65 %<\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p>If we compare BMO.PR.S to its sort-of peers with volatility theory, we find:<\/p>\n<div align=\"center\"><a href=\"http:\/\/prefblog.com\/wp-content\/uploads\/2014\/04\/Volatility_BMO_FR.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/prefblog.com\/wp-content\/uploads\/2014\/04\/Volatility_BMO_FR-300x246.jpg\" alt=\"Volatility_BMO_FR\" width=\"300\" height=\"246\" class=\"alignnone size-medium wp-image-25054\" \/><\/a><br \/><i>Click for Big<\/i><\/div>\n<p>So, we see that BMO.PR.S is still cheap to the theoretical curve, and that the theoretical curve is absurdly steep, which favours higher-spread issue such as BMO.PR.S. On the other hand, BMO.PR.S has over five years to go until its call date, well in excess of the 3-year figure I use for convenience, and that it&#8217;s NVCC compliant unlike the other plotted members, and that an assumption of directionality in price (and therefore a steep curve) is entirely rational for the non-NVCC issues. So take your choice.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bank of Montreal has announced: it has closed its inaugural Basel III-compliant public offering of Non-Cumulative 5-year Rate Reset Class B Preferred Shares Series 27 (the &#8220;Preferred Shares Series 27&#8221;). The offering was underwritten on &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-25043","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/25043","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=25043"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/25043\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}