{"id":49121,"date":"2018-01-23T11:19:00","date_gmt":"2018-01-23T16:19:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=49121"},"modified":"2025-08-06T11:21:12","modified_gmt":"2025-08-06T15:21:12","slug":"bip-pr-e-settles-firm-on-modest-volume","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=49121","title":{"rendered":"BIP.PR.E Settles Firm on Modest Volume"},"content":{"rendered":"<p>p>Brookfield Infrastructure hasn&#8217;t announced anything, but their new issue of BIP.PR.E settled today.<\/p>\n<p>BIP.PR.E is a FixedReset, 5.00%+300M500, ROC, <a href=\"https:\/\/prefblog.com\/?p=36001\">announced January 15<\/a>. It will be tracked by HIMIPref&trade; and has been assigned to the FixedResets subindex on the basis of its <a href=\"https:\/\/www.standardandpoors.com\/en_US\/web\/guest\/article\/-\/view\/type\/HTML\/id\/1980751\">P-2(low) rating from S&#038;P<\/a> (it is not rated by DBRS).<\/p>\n<p>The issue traded 421,809 shares today in a range of 24.85-00 before closing at 24.93-95. Vital statistics are:<\/p>\n<div align=\"center\">\n<table border=\"1\">\n<tr>\n<td>BIP.PR.E<\/td>\n<td>FixedReset<\/td>\n<td>YTW SCENARIO<br \/>\nMaturity Type   : Limit Maturity<br \/>\nMaturity Date\t: 2048-01-23<br \/>\nMaturity Price  : 23.13<br \/>\nEvaluated at bid price : 24.93<br \/>\nBid-YTW : 4.96 %<\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p>This issue looks quite expensive to me, according to <a href=\"https:\/\/prefblog.com\/?p=32354\">Implied Volatility Analysis<\/a>:<\/p>\n<div align=\"center\"><a href=\"https:\/\/prefblog.com\/wp-content\/uploads\/2018\/01\/impVol_BIP_180123.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/prefblog.com\/wp-content\/uploads\/2018\/01\/impVol_BIP_180123-300x247.jpg\" alt=\"impvol_bip_180123\" width=\"400\" height=\"329\" class=\"alignnone size-medium wp-image-36065\"><\/a><br \/><i>Click for Big<\/i><\/div>\n<p>We see in this chart many of the same features we saw when reviewing the recent new issues of <a href=\"https:\/\/prefblog.com\/?p=36045\">NA.PR.E<\/a>, <a href=\"https:\/\/prefblog.com\/?p=35965\">BEP.PR.M<\/a> and <a href=\"https:\/\/prefblog.com\/?p=36027\">CM.PR.S<\/a>:<\/p>\n<ul>\n<li>The curve is very steep, with Implied Volatility equal to 40% (a ridiculously large figure), and\n<li>The prior issues are trading relatively near to, or well above par<\/ul>\n<p>The ludicrously high figure of Implied Volatility is something I take to mean that the underlying assumption of the Black-Scholes model, that of no directionality of prices, is not accepted by the market; the market seems to be taking the view that since things seem rosy now, they will always be rosy and everything will trade near par in the future.<\/p>\n<p>I balk at ascribing a 100% probability to this outcome. There may still be a few old geezers amongst the Assiduous Readers of this blog who can still (faintly) remember the Great Bear Market of 2014-16, in which quite a few similar assumptions made earlier turned out to be slightly inaccurate.<\/p>\n<p>For the long term, I suggest that any change in the slope of the curve will be a flattening, with a very high degree of confidence. This will imply that the higher-spread issues will outperform the lower-spread issues.<\/p>\n<p>All told, though, I have no hesitation in slapping an &#8216;Expensive&#8217; label on this issue &#8211; according to the Implied Volatility analysis shown above, the theoretical price of the new issue is 23.41, down from the announcement day estimate of 23.50 &#8211; and, remember, that is before making any adjustments for the ridiculously steep Implied Volatility calculation curve.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>p>Brookfield Infrastructure hasn&#8217;t announced anything, but their new issue of BIP.PR.E settled today. BIP.PR.E is a FixedReset, 5.00%+300M500, ROC, announced January 15. It will be tracked by HIMIPref&trade; and has been assigned to the FixedResets &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-49121","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49121","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=49121"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49121\/revisions"}],"predecessor-version":[{"id":49122,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49121\/revisions\/49122"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}