{"id":361,"date":"2006-12-02T19:24:27","date_gmt":"2006-12-02T23:24:27","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=361"},"modified":"2006-12-02T19:24:27","modified_gmt":"2006-12-02T23:24:27","slug":"5banc-split-new-issue","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=361","title":{"rendered":"5Banc Split New Issue"},"content":{"rendered":"

The 5Banc Split Inc.<\/a> new issue has been added to the HIMIPref\u2122 database.<\/p>\n

The anticipated closing date is 2006-12-15; it pays 4.75% as a cumulative dividend; it’s provisionally rated Pfd-2 by DBRS<\/a>; and it’s a split share backed by … (wait for it) … five banks! BMO, BNS, CM, RY & TD are the portfolio shares.<\/p>\n

I had a hard time deciding whether or not to include this issue in the database. It’s redeemable annually at the $10 issue price and I don’t like that. It means, for one thing, that the YTW will almost always be based on a call at the next annual date (assuming it trades at a premium, which, with a 4.75% dividend, seems likely for the forseeable future). I like the system whereby a declining schedule is put in place … like, f’rinstance, BSD.PR.A has. I’d be prepared to give up a little coupon for such a feature (how much? Consultancy can be easily arranged at a moderate fee).<\/p>\n

In the end, I decided – sure, let’s include it. After all, it’s just replacing the FBS.PR.A and given that I expect a lot of redemptions over the next few years, I’d like to ensure I have a lot of issues with some history at all times, just to maintain continuity of the calculations.<\/p>\n

The annual no-fee no-pain\u00a0redemption feature for the capital units just creates a lot of churn (which may be the point, given that the selling commission is 3% on the prefs, 6% on the capital units.). This is a refinancing for 5Banc, with the old capital units eligible for tax-free conversion into the new capital units; the historical units outstanding have been<\/a>:<\/p>\n

\n\n\n\n\n\n\n\n\n\n
5Banc Split Inc. Unit Activity<\/td>\n<\/tr>\n
Date<\/td>\nUnits<\/td>\n<\/tr>\n
2001-12-28 (Issue)<\/td>\n+3,250,000<\/td>\n<\/tr>\n
2002<\/td>\n-168,855<\/td>\n<\/tr>\n
2003<\/td>\n-1,408,167<\/td>\n<\/tr>\n
2004<\/td>\n-605,827<\/td>\n<\/tr>\n
2005<\/td>\n-254,044<\/td>\n<\/tr>\n
For Redemption 2006-12-15<\/a><\/td>\n813,107<\/td>\n<\/tr>\n<\/table>\n<\/div>\n

The dividend is certainly attractive and the issue should go to\u00a0a premium immediately after issue – and the underwriters are selling the prefs separately. The upside is limited by the very onerous redemption schedule, though, and I calculate a curvePrice<\/a> of $10.26 (excluding liquidity considerations). One thing to remember about this kind of issue is that redemption will be driven by Capital Unitholders trying to cash in on the Next Big Thing – it will not necessarily have anything to do with prevailing interest rates. You could get redeemed (and receive the $10 par value) if rates are at 10% and the prefs are trading at $7.50. I can’t model that possibility\u00a0though, and I wouldn’t count on it!<\/p>\n

The preIssue<\/a> securityCode<\/a> for this issue is P50008.\n<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The 5Banc Split Inc. new issue has been added to the HIMIPref\u2122 database. The anticipated closing date is 2006-12-15; it pays 4.75% as a cumulative dividend; it’s provisionally rated Pfd-2 by DBRS; and it’s a …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33,17],"tags":[],"class_list":["post-361","post","type-post","status-publish","format-standard","hentry","category-data-fixes","category-new-issues"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/361","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=361"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/361\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}