{"id":41306,"date":"2020-09-02T18:34:56","date_gmt":"2020-09-02T23:34:56","guid":{"rendered":"http:\/\/prefblog.com\/?p=41306"},"modified":"2020-09-02T18:34:56","modified_gmt":"2020-09-02T23:34:56","slug":"september-2-2020","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=41306","title":{"rendered":"September 2, 2020"},"content":{"rendered":"

National Bank of Canada is issuing LRCNs<\/a>:<\/p>\n

it has entered into an agreement with a group of agents led by National Bank Financial Inc. for the issuance of $500 million of Limited Recourse Capital Notes, Series 1 (Non-viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the \u201cNotes\u201d).<\/p>\n

The Notes will bear interest at a rate of 4.300% annually, payable semi-annually, for the initial period ending on but excluding November 15, 2025. Thereafter, the interest rate on the Notes will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 3.943%. The Notes will mature on November 15, 2080.<\/p>\n

Concurrently with the issuance of the Notes, National Bank will issue Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series 44 (non-viability contingent capital (NVCC)) (the \u201cSeries 44 Preferred Shares\u201d) to be held by Computershare Trust Company of Canada as trustee for a newly-formed trust (the \u201cLimited Recourse Trust\u201d). In case of non-payment of interest on or principal of the Notes when due, the recourse of each Note holder will be limited to that holder\u2019s proportionate share of the Limited Recourse Trust\u2019s assets, which will consist of Series 44 Preferred Shares except in limited circumstances.<\/p>\n

National Bank may redeem the Notes during the period from October 15 to and including November 15, commencing in 2025 and every five years thereafter, only upon the redemption by National Bank of the Series 44 Preferred Shares held in the Limited Recourse Trust, in accordance with the terms of such shares and with the prior written approval of the Superintendent of Financial Institutions (Canada) (the \u201cSuperintendent\u201d), in whole on not less than 15 nor more than 60 days\u2019 prior notice.<\/p>\n

The purpose of the sale of the Notes is to enlarge National Bank\u2019s Tier 1 capital base with a view to optimizing National Bank\u2019s capital structure within the parameters prescribed by the Superintendent for bank capital requirements. The net proceeds from the sale of the Notes will be added to National Bank\u2019s general funds and will be utilized for general banking purposes. The expected closing date is on or about September 9, 2020. National Bank intends to file in Canada a prospectus supplement to its August 17, 2020 base shelf prospectus in respect of this issue.<\/p><\/blockquote>\n

This issue is rated BBB by DBRS<\/a>:<\/p>\n

DBRS Limited (DBRS Morningstar) assigned a provisional rating of BBB with a Stable trend to the National Bank of Canada\u2019s (National or the Bank) NVCC Additional Tier 1 (AT1) Limited Recourse Capital Notes (the Capital Notes). DBRS Morningstar assigned the rating equal to the Bank\u2019s Intrinsic Assessment of A (high) less four rating notches, which is consistent with DBRS Morningstar\u2019s standard notching for capital instruments with contingent risks and its ratings for the Bank\u2019s NVCC Preferred Shares. The provisional rating for the Capital Notes is one notch below the rating of National\u2019s NVCC Subordinated Debt.<\/p>\n

DBRS Morningstar notes that the Office of the Superintendent of Financial Institutions granted Tier 1 capital treatment to the Capital Notes.<\/p><\/blockquote>\n

S&P has them at BB+<\/a>:<\/p>\n

The ‘BB+’ issue rating is four notches below NBC’s SACP, incorporating:<\/p>\n