{"id":32262,"date":"2006-09-06T21:46:55","date_gmt":"2006-09-07T01:46:55","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=101"},"modified":"2006-09-06T21:46:55","modified_gmt":"2006-09-07T01:46:55","slug":"bceprs","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=32262","title":{"rendered":"BCE.PR.S"},"content":{"rendered":"<p>Here&#8217;s an interesting issue.<\/p>\n<p>\u00a0You can get\u00a0<a href=\"http:\/\/www.bce.ca\/en\/investors\/bondpreferreds\/preferredshares\/bce\/\">quick overview<\/a> of it at BCE&#8217;s website or go through all the detail in the <a href=\"http:\/\/www.bce.ca\/data\/documents\/ps_s_en.pdf\">prospectus<\/a> (which BCE has published on their site! Good for them!).<\/p>\n<p>There are a few major points:<\/p>\n<ul>\n<li>BCE.PR.S is a &#8220;ratchet-rate&#8221; preferred, that is, its dividend is based on a variable proportion of Canadian prime.<\/li>\n<li>This variable proportion will be increased upwards when the Calculated Trading Price (as defined in the prospectus) is less than $24.875, and downwards when the CTP is greater than $25.125.<\/li>\n<li>They are about to become convertable into reset-rate preferreds. BCE has not yet announced the rate (applicable for five years) on the reset-rate issue, but they have issued a <a href=\"http:\/\/www.bce.ca\/data\/documents\/Series_S_reminder_notice_en.pdf\">reminder notice<\/a> to BCE.PR.S holders.<\/li>\n<li>BCE.PR.S is currently paying monthly dividends of $0.08, which is $0.96 annually, which is 3.84% of face value, which is 64% of Canadian Prime.<\/li>\n<li>The limits on the variable-proportion of Canadian Prime are 50% and 100%.<\/li>\n<li>Bell can force conversion (from the less popular series) if voluntary holders of either series amount to less than 1,000,000 shares.<\/li>\n<li>BCE.PR.S closed today at $24.35-61 5&#215;5<\/li>\n<\/ul>\n<p>Looking at all the above information, we can draw some interesting conclusions: like, f&#8217;rinstance, for people who actually want to own floating-rate prefs, this seems like a reasonable deal (PROVIDED, of course, that you can trade cheaply! Full-Service brokerage charges of $0.25\/share bugger up ALL the calculations!).<\/p>\n<p>Say we can buy this issue in the size we want at $24.50. There are two things that can happen:<\/p>\n<ul>\n<li>The price remains below $24.875 &#8230; maybe even lower than our purchase price. In this case, the dividend rate will increase to 100% of Canadian Prime on Face Value &#8230; pretty good for a floater!<\/li>\n<li>The price increases above $24.875. Then we can&#8217;t depend on the variable proportion of Prime increasing &#8230; but we make a pretty good capital gain &#8230; and can flip the thing for something else.<\/li>\n<\/ul>\n<p>BCE Inc. was recently confirmed at Pfd-2(low) by <a href=\"http:\/\/www.dbrs.com\">DBRS<\/a>. Short of default, the only* risk I can see to this strategy is that BCE might announce a really lousy rate on the Series T shares, but practically all holders of the Series S converts anyway.<\/p>\n<p>It is interesting!\u00a0I wonder who&#8217;s selling and forcing the price down? People may be comparing to <a href=\"http:\/\/www.prefblog.com\/?p=48\">BC.PR.C<\/a> and assuming that there will be a forced-conversion into an issue with a 4.65% coupon that will trade below par &#8230; but BC.PR.C is holding its own, quoted at 25.05-23 today on heavy volume.<\/p>\n<p>\u00a0<\/p>\n<p>*I mean, &#8220;only risk&#8221; OTHER THAN that of actually holding a floater, of course. I don&#8217;t like floaters, not in this environment at these prices, I don&#8217;t. But they\u00a0can make sense for people who are offsetting a specific liability.\n<\/p>\n<p><!--2a882d2d98aad013654dab060ed7563b--><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s an interesting issue. \u00a0You can get\u00a0quick overview of it at BCE&#8217;s website or go through all the detail in the prospectus (which BCE has published on their site! Good for them!). There are a &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-32262","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/32262","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=32262"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/32262\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32262"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32262"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32262"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}