Capital Power Corporation has announced:
that it intends to redeem all of its 6,000,000 issued and outstanding 5.75% Cumulative Minimum Rate Reset Preference Shares, Series 9 (the “Series 9 Shares”) (TSX: CPX.PR.I) on September 30, 2022 (the “Redemption Date”) at a price of $25.00 per share (the “Redemption Price”) for an aggregate total of $150 million, less any tax required to be deducted and withheld by the Company.
As previously announced, the Company’s Board of Directors has declared a quarterly dividend of $0.359375 per Series 9 Share payable on September 30, 2022 (the “Q3 2022 Quarterly Dividend”). This will be the final quarterly dividend on the Series 9 Shares and, as the Redemption Date is also a dividend payment date, the Redemption Price will not include the Q3 2022 Quarterly Dividend. Instead, the Q3 2022 Quarterly Dividend will be paid on the Redemption Date separately to shareholders of record as of September 19, 2022.
The Company has provided notice today of the Redemption Price and the Redemption Date to the sole registered holder of the Series 9 Shares in accordance with their terms. Non-registered holders of Series 9 Shares should contact their broker or other intermediary for information regarding the redemption process for the Series 9 Shares in which they hold a beneficial interest.
CPX.PR.I is a FixedReset, 5.75%+412M575, that commenced trading 2017-8-9 after being announced 2017-7-27. The company announced on August 18 that they were considering redemption. The issue has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.
Thanks to Assiduous Reader CanSiamCyp for ensuring I was aware of this development!
Another one bites the dust:
ALTAGAS ANNOUNCES INTENTION TO REDEEM ALL OUTSTANDING SERIES C PREFERRED SHARES
Canada NewswireAug 22, 2022 8:00 AM EDT
CALGARY, AB , Aug. 22, 2022 /CNW/ – AltaGas Ltd. (“AltaGas” or the “Company”) (TSX: ALA) announces its intention to redeem – in accordance with the terms of the Cumulative Redeemable 5-Year Rate Reset Preferred Shares, Series C (the “Series C Shares”) as set out in the Company’s articles – all of its 8,000,000 issued and outstanding Series C Shares on September 30, 2022 (the “Redemption Date”) for a redemption price equal to US$25.00 per Series C Share, together with all accrued and unpaid dividends to, but excluding, the Redemption Date (the “Redemption Price”), less any tax required to be deducted or withheld by the Company.
As outlined in an August 17, 2022 press release, AltaGas intends to use the net proceeds from the $250 million of 7.35% Fixed-to-Fixed Rate Subordinated Notes, Series 2 due August 17, 2082 to redeem or repurchase its outstanding Series C Shares.
https://money.tmx.com/en/quote/ALA/news/8184009892216091/ALTAGAS_ANNOUNCES_INTENTION_TO_REDEEM_ALL_OUTSTANDING_SERIES_C_PREFERRED_SHARES
With this announcement, there have been 68 issues with announcements of redemption sine August of 2020 when RBC first announced its $1.5 Billion of redemptions. The total par value of these 68 redemptions is now over $20 Billion. In the same time period there have been 11 new issues announced. There were 3 new PVS issues, 7 perpetual issues and one FRR floor issue. The total par value for these 11 new issues is $1.87 Billion. So there has been a considerable shrinkage in the number of issues available over these 2 years.
The other split share issuers are regularly putting more units out. For example, the Brompton fund DFN has added rougly 43 million shares of DFN.PR.A to the market float to make it now over 98 million shares. (FFN.PR.A is up 36 million shares, DF.PR.A is up 18 million shares, but FTN.PR.A is down 16 million shares). I certainly do not follow them all but I believe the split share issuers have not added any more than $1 billion in par value to the available supply of preferred shares.
Any guesses on when this shrinkage of availability will end?
Any guesses on when this shrinkage of availability will end?
When the bond market cracks and marginal credit like Altagas can’t raise funding at a competitive rates. Or it becomes harder for even good credit to raise at good rates. Last time it happened was during 2015-18 timeframe and we saw a flurry of preferreds. It’s just a cost of money consideration for companies.
Any guesses on when this shrinkage of availability will end?
When preferred shares become a cheaper funding source compared to the alternatives – e.g., when they are relatively expensive for investors!
Assiduous Readers will be aware of my views on market timing …. but it strikes me that ‘net issuance’ would be a better timing indicator than most.
TMXMoney.com informs me that the Adjusted Market Cap of TXPR is now only 46.86-billion.
I keep wondering when Split-Shares will be added to the index. What’s the problem? There are plenty of splitShare issues available with very good liquidity nowadays.
“it strikes me that ‘net issuance’ would be a better timing indicator than most.”
I agree and was tracking this net negative issuance in detail for awhile with the thought that it must eventually lead to higher prices (less supply, higher price). I don’t have the horsepower to decompose market pricing for preferred shares to identify how much of current pricing can be attributed to this phenomenon; however, clearly we have not reached the point where … “preferred shares become a cheaper funding source compared to the alternatives – e.g., when they are relatively expensive for investors!”