{"id":30645,"date":"2015-09-25T01:03:17","date_gmt":"2015-09-25T06:03:17","guid":{"rendered":"http:\/\/prefblog.com\/?p=30645"},"modified":"2015-09-25T01:03:17","modified_gmt":"2015-09-25T06:03:17","slug":"new-issue-ry-straight-5-25-nvcc","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=30645","title":{"rendered":"New Issue: RY Straight, 5.25%, NVCC"},"content":{"rendered":"<p>Royal Bank of Canada <a href=\"http:\/\/www.rbc.com\/newsroom\/news\/2015\/20150924-nvcc-prefshs.html\">has announced<\/a>:<\/p>\n<blockquote><p>announced a domestic public offering of Non-Cumulative, Preferred Shares Series BJ.<\/p>\n<p>Royal Bank of Canada will issue 6 million Preferred Shares Series BJ priced at $25 per share to raise gross proceeds of $150 million. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 2 million Preferred Shares Series BJ at the same offering price.<\/p>\n<p>The Preferred Shares Series BJ will yield 5.25 per cent annually, payable quarterly, as and when declared by the Board of Directors of Royal Bank of Canada.<\/p>\n<p>Subject to regulatory approval, on or after February 24, 2021, the bank may redeem the Preferred Shares Series BJ in whole or in part at a declining premium.<\/p>\n<p>The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is October 2, 2015.<\/p>\n<p>We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes.<\/p><\/blockquote>\n<p>It&#8217;s nice to see another Straight!<\/p>\n<p>Implied Volatility analysis shows that market differentiation between NVCC compliant and non-compliant issues is significant:<\/p>\n<div align=\"center\"><a href=\"http:\/\/prefblog.com\/wp-content\/uploads\/2015\/09\/impVol_RYStraight__All_150924.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/prefblog.com\/wp-content\/uploads\/2015\/09\/impVol_RYStraight__All_150924-300x246.jpg\" alt=\"impVol_RYStraight__All_150924\" width=\"400\" height=\"328\" class=\"alignnone size-medium wp-image-30646\" \/><\/a><br \/><i>Click for Big<\/i><\/div>\n<p>When only the NVCC-compliant issues are used for fitting, it appears that Implied Volatility is very low (which suggests that the relationship will steepen somewhat in the future) implying that higher-coupon issues are relatively expensive. However, there are only four data points to support this conclusion and the variety of coupon rates is minimal, so don&#8217;t mortgage the farm!<\/p>\n<div align=\"center\"><a href=\"http:\/\/prefblog.com\/wp-content\/uploads\/2015\/09\/impVol_RYStraight__NVCC_150924.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/prefblog.com\/wp-content\/uploads\/2015\/09\/impVol_RYStraight__NVCC_150924-300x246.jpg\" alt=\"impVol_RYStraight__NVCC_150924\" width=\"400\" height=\"328\" class=\"alignnone size-medium wp-image-30647\" \/><\/a><br \/><i>Click for Big<\/i><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Royal Bank of Canada has announced: announced a domestic public offering of Non-Cumulative, Preferred Shares Series BJ. Royal Bank of Canada will issue 6 million Preferred Shares Series BJ priced at $25 per share to &hellip;<\/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-30645","post","type-post","status-publish","format-standard","hentry","category-new-issues"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/30645","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=30645"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/30645\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}