As noted in the January 5, 2007, Commentary, the yieldToWorst on CL.PR.B has gone negative … again! This happened previously on November 29, 2006 and I suggested then – and I still suggest – that this issue is a prime candidate for redemption.
Great-West’s last issue, GWO.PR.I, was issued in mid-April 2006, is still trading heavily and is yielding 4.53% based on a limitMaturity and GWO (who own CL) may well decide that with all the money flying around during RRSP season, now is a good time to refinance.
I’ve uploaded a graph of yieldToWorst for the past year, along with another one of flatBidPrice.
CL.PR.B hasn’t been a particularly enthralling issue to own for the last year, as this data from the performanceBox shows:
| 2005-12-30 | 0.00 | 27.26 |
| 2006-01-31 | 0.00 | 26.50 |
| 2006-02-28 | 0.00 | 27.27 |
| 2006-03-01 | -0.39 | 26.72 |
| 2006-03-31 | 0.00 | 26.43 |
| 2006-04-28 | 0.00 | 26.20 |
| 2006-05-31 | -0.39 | 26.37 |
| 2006-06-30 | 0.00 | 26.08 |
| 2006-07-31 | 0.00 | 26.24 |
| 2006-08-30 | -0.39 | 26.14 |
| 2006-08-31 | 0.00 | 26.09 |
| 2006-09-29 | 0.00 | 26.25 |
| 2006-10-31 | 0.00 | 26.21 |
| 2006-11-29 | -0.39 | 26.30 |
| 2006-11-30 | 0.00 | 26.15 |
| 2006-12-29 | 0.00 | 26.05 |
| 2007-01-05 | 0.00 | 26.43 |
The quarterly numbers do not compare well with the quarterly returns posted by Malachite Aggressive Preferred Fund:
| Quarterly | ||
| Period Ending | CL.PR.B | MAPF |
| 2006-03-31 | -1.63 % | +1.45% |
| 2006-06-30 | 0.15 % | -1.37% |
| 2006-09-29 | 2.15 % | +3.51% |
| 2006-12-29 | 0.73 % | +3.20% |
Total return for the period 2005-12-30 to 2007-1-5 is 2.8266%
[…] This transaction might possibly explain the mystery of CL.PR.B, which has still not been called. If they have to push through a lot of net issuance, they’re probably not too enthusiastic about calling the old stuff – CL.PR.B has 6-million shares outstanding, so redeeming it at $26.00 would add $156-million to the amount of gross issuance required. […]
[…] Now with a pre-tax bid-YTW of 2.60% based on a bid of $27.52 and a call 2009-10-30 at $26.00. Even if it lasts until the softMaturity of 2013-9-29, the yield is only 3.22%. Putnam or no Putnam, GWO has paid $27.37 for these in the past year, so making it past the first call date seems a little iffy to me. If only I understood about CL.PR.B … then I’d be happier … […]
[…] TD crossed 47,800 at $28.10. This is the highest priced issue in the PerpetualPremium index and helps to justify a prejudice against premia by sporting a pre-tax bid-YTW of 1.84% based on a bid of $27.87 and a call 2008-10-30 at $26.00. Obviously, there are people who are prepared to slap their money down and bet on a call 2012-10-30 at $25, which will yield 3.84% (pre-tax) … but I’m not one of them! At an annual dividend of $1.475, there’s just too much chance GWO will refinance … but as I’ve said before, I’d be a lot happier if I knew exactly why CL.PR.B still exists! […]
[…] Readers will remember that I have been fascinated by CL.PR.B and its negative yield-to-worst for some time. Apart from very particular portfolio-management factors, there hasn’t seemed to be much rationale for holding it, other than a hope that it would continue to pay an annual dividend of 1.5625 forever. […]