New Issue: RY Fixed-Reset 6.10%+413

Royal Bank has announced:

a domestic public offering of $200 million of Non-Cumulative, 5 year rate reset Preferred Shares Series AX.

The bank will issue 8 million Preferred Shares Series AX priced at $25 per share and holders will be entitled to receive non-cumulative quarterly fixed dividend for the initial period ending November 24, 2014 in the amount of $1.525 per share, to yield 6.10 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 3.0 million Preferred Shares at the same offering price.

Subject to regulatory approval, on or after November 24, 2014, the bank may redeem the Preferred Shares Series AX in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 4.13 per cent over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AX will, subject to certain conditions, have the right to convert all or any part of their shares to non-cumulative floating rate preferred shares Series AY (the “Preferred Shares Series AY”) on November 24, 2014 and on November 24 every five years thereafter.

Holders of the Preferred Shares Series AY will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 4.13 per cent. Holders of Preferred Shares Series AY will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AX on November 24, 2019 and on November 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is April 29, 2009.

… and very shortly after that announcement, announced:

that as a result of strong investor demand for its domestic public offering of Non-Cumulative, 5 year rate reset Preferred Shares Series AX (the “Preferred Shares Series AX”), the size of the offering has been increased to 12 million shares. The gross proceeds of the offering will now be $300 million. In addition, the bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 1 million Preferred Shares Series AX at a price of $25 per share. The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is April 29, 2009.

The first coupon is another fat one: $0.48884, payable August 24. Mark your calendars – there could be some good trades lying around just before the ex-Date!

This issue is good news for the continued health of the Fixed-Reset market: it marks the first time that a new issue has come out with a lower initial fixed rate and lower reset. The fact that they got advice to the effect that they only needed a week to bring it to market and then increased the issue size shows that – whatever else might be going on in the heads of the buyers – they are not blindly addicted to escalating coupons. A small item of cheer, but cheerful nevertheless.

3 Responses to “New Issue: RY Fixed-Reset 6.10%+413”

  1. […] PrefBlog Canadian Preferred Shares – Data and Discussion « New Issue: RY Fixed-Reset 6.10%+413 […]

  2. […] was a very good opening day for RY.PR.Y, the Fixed-Reset 6.10%+413 issue announced last week that settled […]

  3. […] There hasn’t been a new BNS Fixed-Reset since January and the market has changed a lot since then, so let’s do a quick comparison with the more recent RY.PR.Y 6.10%+413: […]

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