{"id":44113,"date":"2022-09-07T20:57:44","date_gmt":"2022-09-08T01:57:44","guid":{"rendered":"https:\/\/prefblog.com\/?p=44113"},"modified":"2022-09-07T20:57:44","modified_gmt":"2022-09-08T01:57:44","slug":"september-7-2022","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=44113","title":{"rendered":"September 7, 2022"},"content":{"rendered":"

I must say, I find the recent trend of issuing LRCNs and OTC Preferreds at enormous spreads to be perplexing. The latest one is<\/a>:<\/p>\n

The Toronto-Dominion Bank (“TD”) (TSX: TD) (NYSE: TD) today announced the pricing of a Canadian public offering of C$1.5 billion of 7.283% Non-Viability Contingent Capital (“NVCC”) Additional Tier 1 (“AT1”) Limited Recourse Capital Notes Series 2 (the “LRCNs”).<\/p>\n

The LRCNs will bear interest at a rate of 7.283 per cent annually, payable semi-annually, for the initial period ending on, but excluding, October 31, 2027. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 4.10 per cent. The LRCNs will mature on October 31, 2082. The expected closing date of the offering is September 14, 2022. TD Securities is acting as lead agent and sole bookrunner on the issue.<\/p>\n

Concurrently with the issuance of the LRCNs, TD will issue 1,500,000 Non-Cumulative 5-Year Fixed Rate Reset NVCC Preferred Shares, Series 29 (“Preferred Shares Series 29”) to be held by Computershare Trust Company of Canada, as trustee for TD LRCN Limited Recourse Trust\u2122 (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Preferred Shares Series 29 except in limited circumstances.<\/p>\n

With the prior written approval of the Superintendent of Financial Institutions (Canada), TD may redeem the LRCNs commencing on October 1, 2027, and every five years thereafter, during the period from and including October 1 to and including October 31. TD may redeem the LRCNs in whole or in part on not less than 10 days’ and not more than 60 days’ prior notice to the LRCN holders.<\/p>\n

The net proceeds from this transaction will be used for general corporate purposes.<\/p><\/blockquote>\n

Thanks to Assiduous Reader Yomgui<\/i> for bringing this to my attention<\/a>!<\/p>\n

PerpetualDiscounts now yield 6.22%, equivalent to 8.09% interest at the standard equivalency factor of 1.3x. Long corporates<\/a> now yield 4.94%, so the pre-tax interest-equivalent spread (in this context, the \u201cSeniority Spread\u201d) has widened slightly (and perhaps spuriously) to 315bp from the 310bp reported August 31<\/a>.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref\u2122 Preferred Indices
\nThese values reflect the December 2008 revision of the HIMIPref\u2122 Indices<\/strong>
\nValues are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
\nCurrent
\nYield
\n(at bid)<\/td>\n		Median
\nYTW<\/td>\n		Median
\nAverage
\nTrading
\nValue<\/td>\n		Median
\nMod Dur
\n(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.4969 %<\/td>\n2,526.6<\/td>\n<\/tr>\n
FixedFloater<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.4969 %<\/td>\n4,846.0<\/td>\n<\/tr>\n
Floater<\/td>\n6.26 %<\/td>\n6.35 %<\/td>\n63,303<\/td>\n13.28<\/td>\n2<\/td>\n0.4969 %<\/td>\n2,792.7<\/td>\n<\/tr>\n
OpRet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.1525 %<\/td>\n3,454.5<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.92 %<\/td>\n5.74 %<\/td>\n33,090<\/td>\n3.00<\/td>\n8<\/td>\n-0.1525 %<\/td>\n4,125.4<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.1525 %<\/td>\n3,218.8<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.2602 %<\/td>\n2,806.9<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n6.07 %<\/td>\n6.22 %<\/td>\n58,323<\/td>\n13.54<\/td>\n35<\/td>\n-0.2602 %<\/td>\n3,060.8<\/td>\n<\/tr>\n
FixedReset Disc<\/td>\n4.74 %<\/td>\n6.45 %<\/td>\n91,902<\/td>\n13.28<\/td>\n58<\/td>\n0.0489 %<\/td>\n2,499.8<\/td>\n<\/tr>\n
Insurance Straight<\/td>\n6.10 %<\/td>\n6.10 %<\/td>\n79,488<\/td>\n13.75<\/td>\n19<\/td>\n-0.4278 %<\/td>\n2,948.5<\/td>\n<\/tr>\n
FloatingReset<\/td>\n7.82 %<\/td>\n8.02 %<\/td>\n35,784<\/td>\n11.42<\/td>\n2<\/td>\n0.0311 %<\/td>\n2,607.0<\/td>\n<\/tr>\n
FixedReset Prem<\/td>\n5.10 %<\/td>\n4.48 %<\/td>\n115,504<\/td>\n1.79<\/td>\n6<\/td>\n0.0788 %<\/td>\n2,598.5<\/td>\n<\/tr>\n
FixedReset Bank Non<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0489 %<\/td>\n2,555.3<\/td>\n<\/tr>\n
FixedReset Ins Non<\/td>\n4.78 %<\/td>\n6.78 %<\/td>\n56,164<\/td>\n13.19<\/td>\n14<\/td>\n-1.1831 %<\/td>\n2,550.2<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
MFC.PR.N<\/td>\nFixedReset Ins Non<\/td>\n-13.33 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 18.46
\nEvaluated at bid price : 18.46
\nBid-YTW : 7.24 %<\/td>\n<\/tr>\n
CM.PR.P<\/td>\nFixedReset Disc<\/td>\n-5.88 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.00
\nEvaluated at bid price : 20.00
\nBid-YTW : 6.73 %<\/td>\n<\/tr>\n
GWO.PR.T<\/td>\nInsurance Straight<\/td>\n-3.59 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.41
\nEvaluated at bid price : 20.41
\nBid-YTW : 6.33 %<\/td>\n<\/tr>\n
CU.PR.E<\/td>\nPerpetual-Discount<\/td>\n-3.23 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.10
\nEvaluated at bid price : 20.10
\nBid-YTW : 6.15 %<\/td>\n<\/tr>\n
TRP.PR.E<\/td>\nFixedReset Disc<\/td>\n-1.76 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 17.28
\nEvaluated at bid price : 17.28
\nBid-YTW : 7.94 %<\/td>\n<\/tr>\n
CU.PR.H<\/td>\nPerpetual-Discount<\/td>\n-1.76 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.27
\nEvaluated at bid price : 21.27
\nBid-YTW : 6.23 %<\/td>\n<\/tr>\n
CCS.PR.C<\/td>\nInsurance Straight<\/td>\n-1.67 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.57
\nEvaluated at bid price : 20.57
\nBid-YTW : 6.10 %<\/td>\n<\/tr>\n
SLF.PR.G<\/td>\nFixedReset Ins Non<\/td>\n-1.43 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 13.80
\nEvaluated at bid price : 13.80
\nBid-YTW : 7.63 %<\/td>\n<\/tr>\n
BMO.PR.T<\/td>\nFixedReset Disc<\/td>\n-1.42 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.90
\nEvaluated at bid price : 20.90
\nBid-YTW : 6.46 %<\/td>\n<\/tr>\n
BAM.PF.B<\/td>\nFixedReset Disc<\/td>\n-1.34 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 19.95
\nEvaluated at bid price : 19.95
\nBid-YTW : 7.41 %<\/td>\n<\/tr>\n
EIT.PR.A<\/td>\nSplitShare<\/td>\n-1.28 %<\/td>\nYTW SCENARIO
\nMaturity Type : Soft Maturity
\nMaturity Date\t: 2024-03-14
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.65
\nBid-YTW : 5.74 %<\/td>\n<\/tr>\n
SLF.PR.H<\/td>\nFixedReset Ins Non<\/td>\n-1.25 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 17.33
\nEvaluated at bid price : 17.33
\nBid-YTW : 7.02 %<\/td>\n<\/tr>\n
IAF.PR.I<\/td>\nFixedReset Ins Non<\/td>\n-1.25 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 22.97
\nEvaluated at bid price : 23.70
\nBid-YTW : 6.37 %<\/td>\n<\/tr>\n
TD.PF.C<\/td>\nFixedReset Disc<\/td>\n-1.18 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.00
\nEvaluated at bid price : 21.00
\nBid-YTW : 6.44 %<\/td>\n<\/tr>\n
TRP.PR.D<\/td>\nFixedReset Disc<\/td>\n-1.06 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 17.69
\nEvaluated at bid price : 17.69
\nBid-YTW : 7.93 %<\/td>\n<\/tr>\n
TRP.PR.G<\/td>\nFixedReset Disc<\/td>\n1.77 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.10
\nEvaluated at bid price : 20.10
\nBid-YTW : 7.07 %<\/td>\n<\/tr>\n
PWF.PR.P<\/td>\nFixedReset Disc<\/td>\n1.79 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 14.25
\nEvaluated at bid price : 14.25
\nBid-YTW : 7.57 %<\/td>\n<\/tr>\n
BMO.PR.W<\/td>\nFixedReset Disc<\/td>\n1.82 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.30
\nEvaluated at bid price : 21.30
\nBid-YTW : 6.32 %<\/td>\n<\/tr>\n
IFC.PR.C<\/td>\nFixedReset Disc<\/td>\n3.59 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 19.05
\nEvaluated at bid price : 19.05
\nBid-YTW : 7.12 %<\/td>\n<\/tr>\n
CM.PR.Q<\/td>\nFixedReset Disc<\/td>\n11.74 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.44
\nEvaluated at bid price : 21.79
\nBid-YTW : 6.43 %<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
\nTraded<\/td>\n		Notes<\/td>\n<\/tr>\n
MFC.PR.I<\/td>\nFixedReset Ins Non<\/td>\n110,500<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 22.80
\nEvaluated at bid price : 24.06
\nBid-YTW : 6.42 %<\/td>\n<\/tr>\n
TD.PF.K<\/td>\nFixedReset Disc<\/td>\n96,760<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 23.07
\nEvaluated at bid price : 23.58
\nBid-YTW : 6.28 %<\/td>\n<\/tr>\n
RY.PR.M<\/td>\nFixedReset Disc<\/td>\n53,100<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.06
\nEvaluated at bid price : 21.06
\nBid-YTW : 6.44 %<\/td>\n<\/tr>\n
SLF.PR.G<\/td>\nFixedReset Ins Non<\/td>\n30,400<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 13.80
\nEvaluated at bid price : 13.80
\nBid-YTW : 7.63 %<\/td>\n<\/tr>\n
BMO.PR.S<\/td>\nFixedReset Disc<\/td>\n29,145<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 21.51
\nEvaluated at bid price : 21.87
\nBid-YTW : 6.32 %<\/td>\n<\/tr>\n
BAM.PF.J<\/td>\nFixedReset Disc<\/td>\n28,771<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 24.15
\nEvaluated at bid price : 24.86
\nBid-YTW : 6.53 %<\/td>\n<\/tr>\n
There were 7 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
MIC.PR.A<\/td>\nPerpetual-Discount<\/td>\nQuote: 20.75 – 28.99
\nSpot Rate : 8.2400
\nAverage : 4.8389<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.75
\nEvaluated at bid price : 20.75
\nBid-YTW : 6.65 %<\/td>\n<\/tr>\n

BMO.PR.T<\/td>\nFixedReset Disc<\/td>\nQuote: 20.90 – 24.00
\nSpot Rate : 3.1000
\nAverage : 1.8091<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.90
\nEvaluated at bid price : 20.90
\nBid-YTW : 6.46 %<\/td>\n<\/tr>\n

BAM.PR.M<\/td>\nPerpetual-Discount<\/td>\nQuote: 19.36 – 22.00
\nSpot Rate : 2.6400
\nAverage : 1.6730<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 19.36
\nEvaluated at bid price : 19.36
\nBid-YTW : 6.27 %<\/td>\n<\/tr>\n

IFC.PR.I<\/td>\nPerpetual-Discount<\/td>\nQuote: 22.49 – 23.89
\nSpot Rate : 1.4000
\nAverage : 0.9031<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 22.13
\nEvaluated at bid price : 22.49
\nBid-YTW : 6.11 %<\/td>\n<\/tr>\n

CCS.PR.C<\/td>\nInsurance Straight<\/td>\nQuote: 20.57 – 22.00
\nSpot Rate : 1.4300
\nAverage : 0.9972<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.57
\nEvaluated at bid price : 20.57
\nBid-YTW : 6.10 %<\/td>\n<\/tr>\n

CM.PR.P<\/td>\nFixedReset Disc<\/td>\nQuote: 20.00 – 21.49
\nSpot Rate : 1.4900
\nAverage : 1.0942<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2052-09-07
\nMaturity Price : 20.00
\nEvaluated at bid price : 20.00
\nBid-YTW : 6.73 %<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

I must say, I find the recent trend of issuing LRCNs and OTC Preferreds at enormous spreads to be perplexing. The latest one is: The Toronto-Dominion Bank (“TD”) (TSX: TD) (NYSE: TD) today announced the …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-44113","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/44113","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=44113"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/44113\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=44113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=44113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=44113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}