Canadian Securities Discussion

There is plenty of discussion going on throughout the site on various Canadian securities so this post is for creation of a “Canadian Discussion” page.

This was requested by a reader and it is easy to do so we can do it quickly.

Hopefully this will be a page for those with Canadian interest will meet up.

119 thoughts on “Canadian Securities Discussion”

  1. EBGEF vs EBNNF – I sure don’t understand how EBNNF can be at 18.45 and EBGEF @ 18.98…. makes no friggin’ sense to me whatsoever…. Yeah I get it – smaller premium upon reset on EBGEF but to me that’s far outweighed by the greater amount of time EBGEF has before reset….. To me, EBNNF is far and away more liable to have a crappy reset rate than EBGEF when you’re talking about 2022 reset for it vs. 2024 for EBGEF. When you add in the current yield advantage for EBGEF of 7.08% vs EBNNF @ 6.72%, the spread between the two makes no sense to me whatsoever…. What am I missing???

    1. 2WR, they factor in a lot of things…But basically its woulda, coulda, shoulda, maybe, etc. projections on what you assume X to be at Y date. If both reset on present day yield off present day pricing (too many assumptions already) EBGEF will reset to 5.45% and EBBNF will reset to 6.08% (assuming my math is correct).
      This is why I own EBBNF at 2022 reset and EBGEF at 2024 and also have 2023 resets. So personally, I dont think one can properly assume either is better than the other. 2022 yield rate wise is a long ways away too. Heck it wasnt 6 months ago must assumed we were in a rising rate environment. And just like 2013 Taper Tantrum when 10 year jumped over 3% and people said it was going to 4% and preferreds tanked hard… Only for yields to dovetail rather quickly again.

      1. Sure I get all that, Grid, but my belief is that if interest rates keep falling, they will not stay down for the next 5 years but they might stay down for 3…. The market seems to be assuming, to paraphrase a saying I think you might be familiar with, what happens in ’22 stays in ’22 and beyond to ’24… I don’t buy that….On top of that, though I haven’t done the math, I bet the current yield differential of 36 basis between the two in favor of EBGEF will more than make up for higher reset for EBNNF if they happen to reset at the same time 3 years out instead of EBGEF resetting in 5 not 2. BTW, I think the difference is only 33 basis, 3.15 – 2.82 = 33, not 63 as you’ve done by memory, but I could be wrong…. I guess what I’m saying as a conclusion is that if I were SA’s Arb Trader, I’d be selling EBNNF and buying EBGEF in my arb account to take advantage of an anticipated widening of the differential between the two at current prices… As it is, I’m long both but will add to EBNNF if that widening happens by EBNNF falling relatively.

        1. 2WR, I cant remember what I wrote before, but I do know for sure, my reset projections above were using 3.15% and 2.82% like you mentioned. I agree with you, but only with volatility not projections. Within less than 2.5 years we went from record low interest rates to 7 year highs. That fits well within 2022 reset date. It could easily rise in 2022 and fall well below in 2024. Its unpredictable and unknowable. Place your bets… I am going my unknowable personally. Various resets dates at various years along with fixed perpetuals. I will simply apply all dividend proceeds and additional leftover monthly pension money into what is “sagging” at the moment as quality wont be a concern.

    2. It all comes down to rate expectations and the “kicker” Gb refers to.

      EBBNF resets 33 bp higher but it resets 1.5 yrs earlier than EBGEF. To my eye, makes perfect sense that EBBNF comes in at a 38 bp lower yield than EBGEF.

      I own both in roughly equal numbers.

  2. 1.37%. Yep that’s the rate on CN 5 year govt bond today. Topped out at 2.48% early Oct 2018. That is a yield panic. Seems like somebody is going to get slaughtered….at some point.
    Any prognostications on the rate in two to three years? I need to see good odds of 3.5% minimum on the bond to justify the reset risk say 2021-2022. Let’s see what the survey says…

    1. Joel, predicting interest rates is almost as fool hearty as betting on the Blues to win the cup in early February was. The veteran resets are still roughly 20% above their all time lows set when CAD 5 yr hit 0.50%.
      Presently I staying measured in holdings, spread out on reset dates, and hoping for more carnage to buy more. I got an issue at 2020, 2022, 2023, and 2024. The 2020 is the fixed floor issue and it is way above par and has went up since I bought. Too much premium is being paid for a 4.5% fixed floor on that issue. I should sell but I wont.

    2. Hmmmmmmmmm, but EBGEF and EBBNF both reset off the US 5 yr Treas not Canadian 5 yr… I wonder if that’s the source of the selling today which seems to be coming from Canada – that some Canadians might be forgetting resets are not vs. their own 5 yr…. Given I’ve done essentially nothing for weeks now, I “paid up” for EBGEF today at 19.14.

      1. I havent done too much lately. Bought a few hundred more Spire preferred when it dipped into mid 25.80s a couple days ago. Its already such a huge amount of what I own so whats a couple hundo shares more. I am going to try and buy a couple hundred more of a fixed Canadian ute to fill out a base position, then going to pay closer attention to EBBNF next week. If it sags more I may head to the kitchen for a second helping of it.
        Sentiment aside which is bad, it just becomes a projected plug and play. Assume a 1% 5 yr US Tbill at 2022. And one would have a 5.76% QDI. If Vola turd preferred is any indicator anything going to market BBB- at that point wont have a 5.76% initial rate, I would guess.

        1. I wanted to give a public shout out of appreciation to forum member Amy, personally establishing another Canadian reset preferred to be able to be traded OTC. The Canadian Utilities LTD Series DD fixed perpetual. This is not a reset but a normal fixed. This was a 4.5% fixed perpetual issued in 2013. Largely irrelevant now, but though its past call it cant be redeemed at par $25 until 2022. I noticed today getting home from golf my last purchase for my base position is finally all in place today at $15.50 ($20.51 close today TSX). Well under par obviously but a pedestrian 5.5% fixed yield. But a very high quality Baa1 rated preferred. Thank you much, Amy!

          1. Hi Grid,

            Given how generous you are with your time and expertise spent teaching us neophytes about the nuances of the preferred market, I’m always happy when I can reciprocate.

            I also learned a lot when getting EBGEF and CNUTF up and running….. but I think Schwab’s Global Investing team dreads the sound of my voice. :>)

            I laughed when the last representative said “where the heck did you find this obscure issue!?” I thought that was pretty funny.

            1. Amy, I take it they dont stay up late at night studying these preferreds, lol. Actually at $225 million it is the third largest of their 7 outstanding preferreds. But issue is apparently fairly institutionalized as it doesnt typically have much day to day trading volume on TSX. The most interesting facet was you had get the ticker “regenerated” as it was used once in 2017 for a ~ 200 share purchase at $16.66. Then the ticker became unusable despite being in the database until you cracked the whip on them for me. 🙂

              1. Ah, yes, now I remember. I had to wake the ticker up, not have it actually created like I had to do for EBGEF.

                I’m on another chat group that is a private spin off from one of your favorite SA authors and one of the members just posted there that his head was spinning because he was trying to learn about the Canadian resets and had just read a bunch on SI. I told him that I could relate to his headache. It has been a steeper learning curve than I would have thought. Lots of variables involved….. and like you have mentioned in this thread, absolutely no way to predict where interest rates are going to be in the coming years.

          2. Save us the work and let us have the US ticker, please.

            Any bets on how long it takes Vanguard to block the issue? I ran the list yesterday and 100% were off limits. I give it until Wednesday.

      2. I think EBGEF is yielding about 7% now depending on where it is trading so you would think there would be a lot of downside support.

        BTW, Merrill Edge retirement accounts are not withholding on EBGEF or EBBNF.

  3. Brokerage transfer update… I have taken it as far as I can. Such irony…Besides consolidation the reason I was moving assets to TD was their ease of purchase of foreign originated F ending preferreds. The final result after appeals is they are refusing to accept any of these issues. Despite me holding them already in their accounts. So I have resets that I can easily buy from refusing to accept them, while I hold resets at Vanguard who refuse to allow purchases of them but will let me hold what I have.
    So at random, they transferred all of my Roth which had the Schulman preferred in it, but wont accept my Schulman preferred from a separate brokerage. And they will not accept my Indianapolis Power and Light. So I did wind up getting most of money transferred but I will be unable to close any of my other brokerages because they are unable to accept all the shares, and I am unwilling to sell them to transfer the cash. Instead of having less brokerage accounts, I have an additional one…So much for this plan near term anyways.

    1. Oh forgot to mention….they arent going to take any of my so called “unregistered securities” which included CNIGO, PFX, and FIISO. So if one thinks of transferring these types of issues and “Pink Sheet” type issues you may be in for more of a hassle than you think.

      1. Did they have any type of explanation for the refusal of transfer? It just seems so illogical that you can purchase but can’t transfer.

        1. Steve it does, I agree. But as I think Nomad referenced earlier, its about “misguided protections” and brokerages worried about getting on the wrong side of FINRA’s wrath. TD rep told me that they cant disclose FINRAs reasons for it. But I think a lot of it has to do with misguided “lumpings”. They dont want fancy sneaky shell game market manipulations of penny stocks and the underworld of securities. Unfortunately due to how these issues are having to be traded, they get lumped into that category.
          If I had 6 plus figure cash laying around, I could likely sell the resets and buying instantly with minimal price movement. But I dont. I dont want to sell move cash and then buy as that is too much lag. But it doesnt matter because my CNIGO and FIISOs of that ilk are still trapped regardless as I could sell but would never get them back. So since they are staying there is no need to move the others.

      2. What a blow… sorry man… best laid plans and all of that. Geesh… These new “low priced securities” rules are really becoming a problem for many of us. I’m on the phone now dealing with a bozo who tried to tell me that I can’t buy based on CUSIP. The security has to have a CUSIP and a ticker symbol. Wrong….

        1. A4I, Camroc said it best….Its the price you pay for getting low cost commissions. :). Well at least you havent had one tell you preferred stocks do not have ever have a prospectus like I have been told.

          1. I don’t pay any commissions… 🙂 Maybe I should start? Would have otherwise paid over $1.3K in commissions if I did. Uggh. I am not sure this guy even knew what the “bond desk” was, but I’m describing it to him. Back on hold again… Trying to buy some of the AMAHP. Their props in BMORE are 1/4 mile away from me. Looking for a flip on this one I think.

    2. Has anyone a Schwab Global Account? My understanding one can trade directly with top 12 foreign markets in their local currency. Curious if anyone has utilized and their experience. Thanks so much.

  4. I have a small position Enbridge Series F with Schwab. So I got my first dividend with foreign tax withheld. I hold the stock in an IRA. I called the foreign trading desk and they could not give me a satisfactory answer as to why the tax was withheld. They claimed it was because Citi is the transfer agent, which makes no sense. They say they have other stocks with DTC and with those stocks, the tax is not withheld. I am going to complain to their corporate office, but before I do, I would like to know if anyone else has Enbridge F in an IRA and if the tax is withheld. Pls give me the name of the broked and transfer agent, if you don’t mind. Thanks.

    1. I did not read the comments below before posting. So it looks like no one has success with Schwab. But I will call them any way. This is a matter of principal. I don’t care how much time I have to spend on it because I hate stuff like this. I will let everyone know where it winds up.

      1. I also had the withholding occur in my IRA at ETrade. Don’t know the transfer agent. I’m doing what ETrade said to recover the amount and prevent future withholdings – I completed my part of an NR7-R form (Canadian Revenue Agency form) and mailed it to ETrade to fill out it’s part and then send to the Canadian Revenue Agency. According to ETrade, this will:
        (1) recover the amount that was withheld, and
        (2) prevent (for 3 years) any future withholdings for any Canadian security held in that account.
        Based on other postings, I’m keeping my fingers crossed it works.

    2. My wife’s Schwab IRA holds three Canadian issues, all through Citibank, and the 15% tax is withheld on all of them. Got 5he same answer you did when I inquired why.

      1. Mikeo, my answer unfortunately is the exact same one as Timdman’s. IRA, TD, no withholding several divies, and also do not know the transfer agent.

    3. I’ve got Series F and series L through TDAM in a traditional IRA. Sorry, don’t know the transfer agent. Just through second round of dividends and no extra withholding

  5. Ok, boys and girls…More problems possibly with foreign issues held in tax free accounts… I only had a small amount of these in tax free, but I dont like getting cheated out of a nickle so I called about CDUTF having a witholding and my others were not, or at least they got corrected and then reversed.
    After several hours of research and calling people, he found out it was being taxed at the source. I then told him about the corrections on previous issues. He said yes he saw that and that was throwing him too. So after calling DTC and others he found out they didnt really reverse the tax. They just now “take out the tax” prior to submitting dividend to brokerage. So it looks like one clean package. I did the math and sure enough he was correct. Im not getting the true yield because they take it before now.
    So if I was you, I would look at the dividend and actually do the math to see if you are getting the entire yield. This may just be a “me issue” and hopefully others arent. But it was getting pulled without a separate “withholding” showing. This is why I have most in taxable as I knew I was going to get screwed somehow. Hopefully others arent. But its worth checking by doing the math to ensure you are not getting 15% withheld despite it not showing as a separate withholding transaction.

    1. Grid, In a prior conversation with a 20-year vet trader at TD he indicated similarly that the brokerage does not control the withholding and it starts at the source – the issuer, and is dependent on whatever agreement they have in place with the Canadian Revenue Agency.

      Keeping all in taxable, also for QDI bennie.

      1. Alpha, you are spot on. My preference because of my tax situation is QDI in taxable as it benefits me. I got pinned down a bit with brokerages blocking access so I had to. I redid the math on just last divi in tax free… It came out correct, he is wrong, there was no withholding. But CDUTF alone had it withheld. The guy spent hours on it and gave me multiple phone calls on updates. So the problem resides where you stated and what Amy mentioned on a previous post. So for now, I really only have one issue to move before next divi. If they had all been in taxable it wouldnt have been an issue.

    2. After many minutes on the phone with several different Schwab reps, I was finally told that my IRA rollover held Canadian preferred stocks are subject to the 15% Foreign tax. They all seemed to agree that they shoudn’t be but said that there was nothing they could do. The same stocks in my Interactive Brokers account are not having the tax withheld and I see no “discount” to take out the tax prior to receipt. I’ve been with Schwab since the 80’s but this may be the tipping point for them. I need a brokerage that has good trading fees, no foreign tax on Canadian stocks and the ability to purchase grey issues in a timely fashion. Haven’t found one yet that fits the bill….any suggestions?

      1. Steve, it goes back to what Amy said on where the shares are coming from, and not always the brokerage. I had these issues in Vanguard and TD tax free account. And they both at same time had some withheld inside tax free and some not at same time. Now that I am consolidating, I pruned ones that couldnt be fixed correctly and leaving alone the ones that are processed correctly.

        1. They did give me some mumbo jumbo about the source of the shares, but that’s ridiculous in my opinion. They’re either subject to the tax or they aren’t. I’m closing the Schwab positions for now and shopping for another brokerage.

          1. I am in the middle of the same argument with Schwab as well. If I don’t get a good answer I will call their corporate HQ. We’ll see where it winds up.

            1. Xwords, hope you do better than me..I am 0-3…And the reps put the time in for me. One guy did get ERRAF to change after repeated calls over and over.

            2. I to am in the same Schwab Canadian Tax boat with an IRA account. Give me a name/number of anyone you get results with please as I’m also batting 0 for 3.

              1. Ditto…if you hit pay dirt, please let us know. I even did the “I’m going to take my business elsewhere” line and it was a spitball at a battleship.

              2. Mikeo, I forgot to add it wasnt me who got it changed. Pig Pile did who reads some here. Maybe he will see this and chime in. But he worked his arse off to get it changed I know. I am still dabbling. Bought 300 of Ebbnf today. I flipped most of them a while back when it raced up a couple bucks in 20s. Not overbuying yet. But the allure here is the relative higher 3.15% kicker and it reset in 2017 off a sub 1.8% US. So it is not as exposed on a reset. Of course in todays sentiment that doesnt mean a lot.

                1. Yes, ERRAF was fixed but the sly crap with CDUTF pissed me off. Doesn’t even register as withholding, they just take it out before. Done with that one, sold it off yesterday. The Enbridge stuff seems to be ok.

          2. Steve, be careful about transferring if you got these types of issues. I am in process of transferring all my assets to TD and just got a reject letter. They basically want to reject over half of what I own…This defeats the entire purpose of consolidating. Instead of having one account, I now will have just added another one. They are wanting to classify ALL of the Canadian resets, SLMNP, my Indianapolis Power Light, Corning Natural Gas, and about half dozen others as “micro cap” penny stocks, highly speculative…Say what? Enbridge, Canadian Utilities, LyondellBasell, etc are multibillion dollar enterprises with investment grade rating…Hardly “penny stocks”…
            Anyhow the guy said I “had a case” and they will send it to review and I will know my answer Monday. He said FINRA really monitors this stuff and doesnt like these types of issues being transferred. He said they (Finra) doesnt like to disclose actual reasons. So its possible I now have another account to deal with instead of simplifying.
            The irony of it all is any of these securities I can buy on TD, and some I actually own. They are rejecting shares of issues I already own with them..Such irony…..

            1. Good to know…. Maybe we all need to start our own brokerage firm. Will be interesting to see what you hear on Monday.

            2. Grid, most if not all the brokerage firms in the US are running scared from the SEC, FINRA and definitely are afraid that you or your heirs will litigate against the firm(s). Illiquid securities pose great threats to their system of homogeneous retail brokerage for all. The cost, time and resources to defend these lawsuits is too high and the firms would rather not hold anything “sticky” that a conventional client wouldn’t have in their brokerage accounts. I left TD a few years back because their bond desk was just horrible (they assigned me a broker that knew zero about bonds/preferreds) with massive tax free debt markups and were basically rude when I asked to speak with supervisors to handle my “arduous” account transactions. I have accounts at Merrill Edge for most of my preferreds and equities (they are very professional and my assigned broker is outstanding) and Vanguard for my corporate and tax free bonds. Neither is perfect, but the price is right and they truly seem to care about me as a valued client.
              Please tell us what happens Monday with TD and I hope they can resolve the issues, Nomad

              1. Nomad, you are correct. But I just dont understand the mechanics of why it matters. If I own a piece of bread and move it from the kitchen to the living room, its still the same piece of bread I own. TD told me it was basically FINRA, not them. I just wish I understood why it mattered where they are at if they are mine and I bought them already and can buy them at brokerage where I am transferring to.
                Anyhow, I can tell you this, Nomad…Dont ever plan on transferring your PFX. I may squeeze some of these issues through, but PFX I bet has no chance in hell. In fact on reject issue it didnt even have a name…Just numbers, so I know it isnt going anywhere. I think another issue I am having are these initially “unregistered preferreds” such as FIISO and CNIGO. They were privately issued at inception and had tickers assigned later to them. I remember the guy telling me about “unregistered securities” as an issue. And of course that is problem with the Canadian issues also.
                I wont mention his name, unless he chimes in, but another forum member had one helluva time getting his CNLPL transferred to TD. They first blocked it, then after many a protest, they would accept it under condition he couldnt trade it…HUH???…So he protested more until he finally got it resolved in his favor if memory serves me correctly.
                Oh, but they did throw me a bone..They would transfer AILLL, lol…

                1. Grid, your experience with TD is a very valuable one for many reading and come with good learning about the financial industry. The brokerage firms are running scared and don’t want to get fined (happens every day) or even investigated by the SEC, FINRA or “probed” by wastrel and ruinous law firms (I went to Law School so I can be self deprecating). It just cost the brokerage firms too much time, effort and financial costs to hold securities they can get sued for holding. I was called many times as an expert witness to testify for both the prosecution and defendants for arbitration and mediation to see what really goes on. The reason why so many frivolous security lawsuits get settled is because; the firms know what each suit will cost them even if they feel they are 100% in the right. It may not be YOU that goes after them, but your heirs get in front of an attorney and they start the discovery process with the brokerage firm and the costs start to mount with the firm. Illiquidity equals issues and the firms want to avoid these unnecessary issues. What good do they get from it, at what cost or benefit is it to them to hold and service your account? Even IF TD decides to take in every security (PFX excluded) at some point you can expect them to change policy (Merrill Edge just changed policy and asked me to sell or transfer out a few securities) to force you to transfer them out or sell them as they will no long want these illiquid under their domain.
                  Smile my friend, Nomad

                  1. Nomad, The legal liability is also the origin of the infamous “mother-may-I” phone call required to FIDO whenever buying an FTF issue – even if you’re simply adding to an existing position.

                    Different, but related, are the market makers. During a recent run-in with FIDO for which I dragged in the SEC and FINRA (and prevailed), it was obvious the market makers were cornering the preferred share which I was trying to trade. And skimming not with spoons, but with buckets, while ignoring some orders and filling others, likely their own or for their golf buddies. They actually told the SEC they had to take down their system because it had been “overwhelmed.” The trading during the 15-minute period in question was under 2,000 shares – and by some miracle the trades did occur through that same period at extremely favorable prices – not seen since.

                  2. Nomad, I am dense and dont get it. Why is transferring these issues any different than selling all and then buying the same ones in brokerage that refused to accept them in the first place?

                    1. Grid, each brokerage firm has a different compliance area, legal team, outside counsel, client lawsuit experiences and senior management/board members that set liens policies. The main issue is to avoid spending incredible precious dollars on legal fees or issues that can be avoided through their compliance to rules. These rules are in place to ONLY protect the firm (have you ever read your new client contract? It’s a nightmare and protects the firm…
                      Be well my friend, Nomad

                    2. Nomad, I saw the retiring CEO of Interactive Brokerage on CNBC say that consumers have rights and protections, but nobody ever reads them…So true, guilty as charged, I am!
                      Pig Pile, you were a rock star pulling off a miracle getting ERRAF changed correctly to where the withholding didnt occur. But its like beating your head against the wall and playing whack a mole with any others. So I surrendered also.
                      Inspbudget what are you going to do know if they are impounded? Funny how you and Camroc struggled with AILLL and its one of the few they approved to transfer. Odd isnt it. Camroc’s problem is he made it a mission to buy up the entire float of AILLL. 🙂
                      P, you are right about it being a FINRA issue. The odd part is TD says they cant disclose WHY FINRA disallows. He basically implied, we could tell you, but then we would then have to kill you . 🙂 Like its some state secret.

                    3. Grid, It really is aggravating to hit such roadblocks, just to transfer Securities from one broker to another.
                      I’m going to the Schwab office next week to meet with the FC assigned to me, and they will be effecting the transfer from Merrill.
                      The ironic thing is the shares were originally bought from Merrill, and now they won’t let me sell them? Sheesh.
                      Unlike Camroc, I only have a modest amount, so I don’t expect any problems. But we’ll see.

            3. Amazing. Can’t transfer them in but you can buy them? I suppose you could sell all you can of the ones they’re choking on, xfer the funds and repurchase afterward. None of it makes sense, does it?

              You need a good advocate to argue with the transfer team, like I had when they choked on all my Ameren pfds coming in. Took a lot of his time for over a week but he finally got ‘er done.

              They transferred him out of personal rep service shortly thereafter. I’m not kidding.

              1. Just saw your post, Camroc…You were my reference…You had all sorts of problems with the Connecticut Power and Light preferreds didnt you?

                1. Well, good to know I’m not alone.

                  I am in the process of transferring AILLL & CNLPL from one brokerage to another.

                  The outfit holding these securities refused to let me buy or sell them, said they were low capitalization stocks. I even had a letter saying they would not let me trade them, but reassuring me that ” customer Interests ” were their TOP priority.

                  Go figure.

                    1. Grid, some grey and OTC stuff is regulated only by FINRA and not the SEC. Maybe brokerages are starting to draw the line for retail. It’s intended for institutional trading only. The stuff crashed the world financial system awhile back as I recall. They don’t want to be responsible or liable (as Nomad stated) for sorting through that stuff. Your pile high enough to be qualified then can do pretty much whatever you want.

                2. Nope, GB. It was Ameren because, they said, I owned too much of it. Everything else was fine.

                  My guy was a bulldog, though, and got it done. He was the best, most tenacious customer rep I ever had. I think he saw the arbitrary ridiculousness of the stated position of the transfer folks and just shamed them into caving. I think they are unable to cope with anything outside their normal parameters and make up excuses and laughable excuses on the fly–as you have experienced before on other issues.

                  But how much expertise can you expect for such cheap commissions? You gotta cut something. 🙂

                  JMO

            4. That’s ridiculous Grid. As you know I’ve had all those at one point in time or another with no issues at TD. I bought them there. I predict this one will work for you. Silly they have to look into it further though.

              1. One thing to add to this thread – whenever you’re involved with any long running battle with the TDAmeritrades of the world, whether you win or lose, and especially when you win, be sure to ask them for compensation for your time and aggravation. I’ve discovered they’re quite willing to hand out boatloads of free trades after episodes like these.

    3. After many years of investing in preferred stocks and other income securities, this thread has to be one of the worst I have seen…..

      Any foreign securities should be held in a taxable account, to get credit for any type of withholding. Nuff said!

      In regards to any type of Canadian holdings, it sounds like investors here are losing about $1 per share now to get about $1.46 in dividends. As President Bush used to say, “that’s fuzzy math.” Hold true to great preferreds, great income stocks and securities that will produce increased income in the future.

      1. Kaptain Lou, I think your presently correct but for the wrong reasons. A “great preferred” or “great income stock” can have a down cycles as it can depend on the interest rate cycle, not the company. We have talked enough to know you have had them go into the tank before. But these issues I freely admit most are better served avoiding….As far as foreign securities being held in taxable, I agree, but as always it depends. I have several that are following the tax treaty and nothing is being withheld from them, so I am fine leaving them there.
        For example in reference to quality, Canadian Utilities preferreds are rated Baa1, 47 consecutive years of common stock dividend increases, and debt is in A rated range. Yet their resets have been stung, so its not about the quality but about the inverse correlation of long end to resets and getting correct entry point as reset preferreds are a bit counter intuitive. Their purpose is different than a fixed perpetual which are benefitting now from long end decline.
        So quality is not the issue. For me I am very comfortable slowly increasing position on secular downward pressure in yield of a high quality company reset. As I am reinvesting all divies and extra income. I in time will be increasing my yield, potential cap gain as the ever increasing possibility of the coiled spring jumping when the rate cycle of increasing rates begins down the road. Now if one views rates as heading to zero and largely never budging then this would not only make a bad near term investment but also long term too….Depends one ones horizons….July 2016, all time low of 10 year was reached at 1.35%, within 27 months a seven year high in 10 year was reached at 3.25%. Things change….

      2. I hope you can find the time to help me. I don’t understand how investors in CAN holdings “are losing $1 per share now to get $1.46 in dividends”. If purchasing under par (due to reset issue), where is the $1 loss? I am certainly not arguing, just trying to understand. As most of my investment is in equities, I assume they will increase if interest rates lower; so any loss on CAN resets will be well offset. On the other hand if interest rates rise… I hope CAN will help compensate for loss in equities. Does this make sense? Thanks!

        1. TNTowanda, I can explain my thought process. First, like Tim, I am a mark to market guy. So if something drops a buck so to say, Im not the type to say “its only a loss if I sell”. So current down trend is real to me despite I am looking out longer term (on this subset of issues, I own, as I am certainly not “all in”).
          But market doesnt shout out the tops or bottoms. The down cycle has been in and just as important market “psychology” is down on these too. But in time the psychology changes before the actual “bell ringing” occurs. So I am personally buying on the 20% haircut recently and will buy more within reason if I can get more downward pressure or negative psychology.
          So in general the charts definitively prove a correlation of reset equity pricing to inverse correlation to rates just as the fixed perpetuals in general have a positive correlation in prices to lowering rates. Now you have other issues too that can effect anything as you know…Shareholders in general voting with their feet on a market stampede, recessionary impacts to companies financial well being, or secular changes that permanently impair issues like a Kodak for example. Despite that you also can throw currency issues into the equation.
          In a perfect world I would rather own US currency utility reset issues from US exchange to mitigate some variables. But they not there other than NI-B (that one has been an incredible buy and frequent flipper for me) The Enbridge issues are closest being priced in US, but it is not a “utility” though it has some very modest “utility like” features.
          Admittedly, I am being a bit aggressive looking longer term, because I am on house money a bit. I suffered no losses in December “tantrum” and rolled into the blown out fixed perpetuals and then flipped out. Last couple months I have been sagging some losing some of those early gains by getting in early too early.
          The losing $1 to make a $1.46 is just arbitrary references. Take EBBNF, which is down about 20% from 52 weeks ago. But personally I am still up 7% ish because I bought heavy around 18 and end of last yearish and sold most over $20. Now I am buying again, but admittedly it could go down more. The Emera despite a few early flipps I am down probably 4-6% ish. The entry points and current price determines current losses, not a formula.
          One could be also be right and still be wrong though. Long end could jump 300 basis points, but if Emera was heading towards bankruptcy at same time, it isnt going to mitigate the big losses. 🙂
          Sorry for long post, but I like to explain the thought process a bit and toss out the negative feature, because ANY decision will have its benefits and negatives. Some more muted than others while others more pronounced by the very nature of the purchase. Even money stuffed in a mattress has its own risks and rewards.
          Its always good to know what issues align with each persons needs and comfort level. The last thing I would want is someone read… Gee, EBBNF at 6.7% investment grade below par QDI, US currency is just what I want….Only to find out in 2022 if 5 yr US T Note is at 0% that EBBNF is now a 3.17% par yield and priced dropped to say $12.50 (6.34% then current yield) and then belatedly realized they didnt want their capital blown up by 1/3 in this event.
          Of course at that point one would see more fixed perpetuals redeemed and reissued at even lower yields, thus making resets look even more promising down the road being they are paid off par yield but 50% under par…But that is another separate theoretical discussion, lol.

  6. Any thoughts as to why EMERA’ s Series C preferred ERRAF is setting new 52-week lows. It hit 13.99 today morning. I understand that the reset is not until the summer of 2023.

    1. SPM, Its just joining the gang on resets dropping. All the quality ute lower kicking utes are following suit. If you notice Emera common has raced to 52 week high all while its reset preferred has went sub 52 week low. Its the nature of the game.
      I already have an upper end “low entry share” count of ERRAF already, and of course it is down. So Im at the point where I want it to drop $1-$2 more before I buy my next round. Its low point was $15 in early 2016 when CAD Tbill was sitting around 0.50%. So if Tbill keeps dropping this preferred will also in kind. So you have to think hard here on what the tolerance level you have for a potential pain trade. Personally for me, Im fine and at this point I want it to go down more to buy more. This isnt a falling knife quality of issue fear, but a falling knife yield collapse issue. Different scenario but losses will be real either way.

      1. Thanks Gridbird for your explanation. Yes, I did notice that recently both Emera and Canadian Utilities, Ltd. are hitting 52-week highs.

      2. Gridbird, My gratitude for your time in responding! I read the lose $1 for $1.46 in dividends literally. 🙂 I understand the CAN risk (I think). Like you I am a mark to market. But, even during the great recession – I never sold. I ensure I have liquidity to live and consider my investments for the long term return. I never put myself in a position where I am forced to sell at a bad market price. I like the CAN re-sets as I believe they will serve to off set the strong position I have in equities (and will maintain for the long term). There could be deflation; inflation who knows? I try to ensure I own my investments and they do not own me.

      1. MrInprophet, glad you joined the club, but are you comfortable riding out the cycle? I am but I feel a bit guilty discussing issues that will be pushing a boulder up hill for a while. Doesnt look good for awhile in these resets.

        1. I also picked up another 1,000 shares of EBBNF (2k total). I’m not too concerned about the current direction of interest rates as long as the resets are a ways out. I’m more afraid of stagflation so the drop in prices is just an opportunity. I’ll be happy to collect 6.5% QDI to be patient. I’ll pick up more if we break 18. 🙂

        2. Hey Grid – we’re all big boys and girls and make out own trades. Your help (along with others) on this site has been invaluable. I feel like I’m taking an investment-accounting-ethics course all at once. I think most of us understand that just about every stock gets it’s day in the sun and the day when you say “why did I buy this *&%^? So, no guilt – we just move forward and keep learning as we go. Thanks!

    2. The US Fed / talking heads have gone from spewing that there will be no rate increases in 2019 to spewing that there will actually be 1 to 2 cuts this year. The 10-yr hits sub 2.1%… Inversion of yield curve in other matchups… Not looking too good right now for those looking for a quick buck in these resets – but like Grid says, it’s about a longer time horizon – but soooo much of it is based solely off of what the US T-bills are yielding.

      1. A4I, and it certainly has room for more downward pressure. Most of these resets went through the 2016 rate cratering when 5 yr CAD went to 0.50%. That is kind of my baseline in how much lower the resets could drop. Emera Series C (ERRAF) cratered early 2016 around $15 (TSX). The 5 year muddled along for most of year around there, but market sentiment changed many months before rates moved and it quickly bounced back in $17-$18 range. So sentiment has a pull on price also. And that is even more unpredictable than rate movement. I certainly agree its too early fishing for cap gains, just slow position building for me. But these things are volatile. I played around with my free trades buying again just a couple hundred shares of the CU fixed floor reset FF series earlier last week it when it suddenly dropped under par. And just a couple days later it is right back at $25.48 (TSX) moving 68 cents off its low point of the week. So there is always random bouncing going on.

        1. Grid,
          Can you recap the QDI and IG ratings on ENBBF, ERRAF, and EBBNF please? Thanks!

          1. Be glad to A4I. Here below is Enbridge credit ratings from 4 rating agencies.
            The company credit profile has gotten stronger with recent credit upgrades this year. EBBNF/EBGEF will be the same basically BBB-/Ba1
            https://www.enbridge.com/investment-center/stock-and-dividend-information/credit-ratings
            Emera is still engorged from acquisitions such as Tampa Electric, this has nearer term stressed the balance sheet. Their debt ratings are below so preferreds are in BB+/BB range. This will take a few years. They started process by announcing a sale of Emera Maine. They are looking to do other things also. Moodys has said these actions will be credit positive down the road. Their intent is to conduct asset sales by end of this year. Company is performing well and common has recently broken out to all time highs.
            http://investors.emera.com/creditratingsdetail.aspx?IID=4072693&Key=4072693&Sub=0

            1. Many thanks Grid… 🙂
              I tip-toed back into ENBBF today. Trying to redeploy all of my redeemed KMPA $$.
              What would be your favorite of the CAN holdings you have now?

              1. A4I, none if they keep falling, lol… I only own 3 company resets. Enbridge, Emera, and Canadian Utilities LTD. I restocked my EBBNF kitty last week, and am just in sit mode for now. Need more of a selloff to buy more. Company financials aside, the safer play if one assume worst of 0% rate TNotes is the higher kicker which EBBNF provides at 3.15%.
                2WhiteRoses and I were just discussing theoretical this morning. In a total counter intuitive manner, eventually if yields got low enough over time some resets would become the desirable “fixed perpetuals”. Keep in mind this is just theory…But assume TNote went to 0%. Quality fixed perpetuals would drift back to par in fear of redemptions and reissued at even lower yields. One could easily see 4 handle perpetuals issued exposing one to even more rate risk. Would EBBNF then crash to $12.50?
                It would seem not at that point because at that price it would become a “fixed perpetual” of a 6.30% yield. That would be considerably higher yield than a new fixed issue would come to market at (talking IG rated issues). So at some point in pricing of the issue and rates dropping lower the reset would carry a higher fixed yield. Issues with lower resets would of course be exposed more. But some of that is baked in a bit already. My point isnt to say its a buy now, or rates are going to zero but to show at some point they could counter intuitively become “relative high yield fixed floor issues” with upside potential unlike future new issued low yield fixed perpetuals that could get smoked down the road….These useless thoughts help keep the fog from taking over my brain. 🙂

                1. Grid…. This matches up with my line of thinking. Of all the issues I’ve looked at (and I’m way behind many of you), I think EBBNF is the most attractive for the reason you suggest. The 3.15% spread, in conjunction with the below PAR price, makes it attractive if rates continue to fall because there is a floor of sorts, and the reset hedges what is the biggest risk for me over the next 20 years, which is stagflation. I know stagflation is a low likelihood, but it’s the most destructive scenario, IMO. After thinking more about it, I think I’ll double/triple my position sizing for that specific issue.

                  WFC/L, BAC/L, SLMNP, EBBNF, AGM/D, ERRAF

  7. Those of you with Schwab tax-exempt accounts that own Canadian ute EBGEF (Enbridge Inc.), is Schwab withholding the 15% Canadian Tax in your tax-exempt account? They just did in our IRA, and Schwab Global Investing Dept. says that it is supposed to be withheld. Who do I talk to if this is wrong?

    Thanks, Mike

  8. We had the 15% Canadian Tax withheld on Enbridge (EBGEF) distribution 6/1 in our Schwab IRA account. Schwab Global Investing Dept. says this is correct. Any users here have different experience at Schwab?

  9. P and Alpha got me thinking (as we were not posting in correct section, lol.), so I thought I may consolidate a few Canadian reset thoughts (other commenters please add to mine) as random disjointed posts may create false impressions to newbees who are just reading bits and pieces..
    1). Currency risk… The stronger the dollar, the lower the value of the preferred even if unchanged on TSX. CAD has currently been fading against dollar lately and is currently a bit under .74. In past 5 years alone is has ranged from near par value of USD to below .70. Something to ponder if issue is priced in CAD.
    2) They tend to trade negatively when long end of yield curve is dropping. This is presently happening. So at times fixed perpetuals could be rising, while reset preferreds falling at same time.
    3) As P mentioned yesterday based in a foreign country they will have their own economic and financial issues unrelated to US. This in turn would show up in currency exchange (or problems within the company itself) which once again could negatively impact the preferred price.
    4) Resets without fixed floor minimums, could be significantly impaired in pricing if long end heads towards zero. In early 2016 CAD 5 yr went to near 0.50%, this is about 80 bps lower than today.. Canadian Utilities Series Y which is presently $17.49 (CAD) traded below $15 briefly during that time. So there is plenty of room to drop further or more than even the 2016 low. As Alpha mentioned in a separate thread, take ERRAF (Emera Series C). Right now the yield is a relative tasty 6%. But if at reset time in 2023, the 5 yr is 0%, then its new yield would drop to 3.35%. And who knows how much capital loss on stock price would have occurred by then either.
    5) The reset issues tend to perform better when expectation of higher long end yields are on the horizon. This is presently not the case.
    6) Just like any other preferred, it can get trashed with entire market sentiment. During 08-09 crisis many investment grade preferreds totally unrelated to financial crises dropped by a third or even halved even though the company was fine and not a bank.

    1. Grid, I own one Canadian security that I largely ignored until last week or so when I went “what the heck?” and started looking. First thing I see that unlike in US, none of these type securities in Canada ever really got up off the mat after December. They struggled a bit to get up, then headed back down. So why different than US? I watch fixed vs 5 year ARM anyway just because I like to see how banks are viewing the spread fixed to F/F and they are allegedly smarter than us. Nothing in last 6 months there, in fact the 5 year ARM was very strong this year up until a week ago. Also, in the general US market the resets were trading fine, in fact I’d say good. So I’m discounting F/F as a rational reason for YTD declines unless that data has been looking very different up in Canada. Then I looked at C$ denominated vs US$ trying for apples to apple, which was a small sample size by necessity. The US$ held up slightly better than C$, I believe in part because a US Gov reset has been more favorable than C Gov reset in the past and also it’s a hedge for their currency which is under pressure. Even so, the US$ denominated looks very bloody. Last but not least I looked at reset rate and the higher it is, the better it held up. No surprise there. Higher was still bloody and only slightly less. Oil, lumber, currency, interest rates, export levels, tariffs, and I don’t know what all can make the Canadian market very different than ours at times. That’s a lot of moving parts potentially creating variations from US. Something or some combination of those things has spooked investors in this area. I have miniscule Canadian and since I think enb is solid and it’s paying me over 7% I’m not digging further . I’ll keep it and just grumble (like a curmudgeon) about buying a Canadian security in the first place.

      1. P, if you check the charts, it wasnt December (like US market) but late October and Nov where the resets got rocked. And then as you said only a small bounce after Dec before recently sagging with drop of Tbill. I dont follow the entire US preferred market, but what US issues are you referencing as resets? I dont know of any but NI-B, but I dont look in all segments.
        The Libor types are adjustables that change quarterly and as a general rule have a higher kicker. Plus Libor hasnt sagged nearly to degree 5 yr Tbill has. Also, the Canadian ones from the quality utes have lower kickers. This in turn puts a more disproportionate responsibility on the tbill to “carry the water” so to speak yield wise. And sentiment is horrible now. Its not a quality concern issue “falling knife” but a yield “falling knife”… Just as dangerous as no one knows how low it will go.
        Take a look at Canadian Utilities common stock versus its Series Y issue. Complete opposites. In October the common stock was its low point of past 52 weeks from now. It is now up 28% since that low..The Y issue in Oct was near its upward range of past year from today. It is down 24% from then. So they have went in total inverse directions. I do not see a near term catalyst to change the sentiment as world rates are all under pressure. I would like to see Y retest its 2015 lows in $15 range when TBill was 0.50%. And then I would really get interested as a long term play. Until yield descent reverses, the safer play as you well know is the fixed yielding perpetuals. So I will stay mostly there myself.

        1. Grid, the stuff I looked at rolled over November bottomed in December. I compared AQNA and NI-B for price and reset rate since December. The pr.v had 3.14% base but traded to 4% base when I bought and it’s still raising. This compares to base 3.68 AQNA and 3.63 NI-B which have traded in opposite direction. I have no idea about future rates although it certainly appears down at present. I hold a basket of both F/F and perpetual, the pr.v is the only Canadian and it’s anomaly amongst all the others.

        2. P and Grid, Clearly the sentiment on the 5 year is negative – and I do believe a 0% FVX is a possibility. Just the same, while I’ve been adding to IG perpetual holdings for ballast, still greatly valuing the CNs…in particular, the refreshed 5yr reset bridge provided by EBGEF across what may be a gulf of new lows in rates. Five years is a long span.

          True the IG 6.75%+ QDI divvy may be offest by falling cap value, though that can be mitigated through strategic averaging down. To that end, I believe we can bookend the potential pricing via the tickers. Even without a floor, take a look at EBGEF with a ticker of 2.82. If in 5 years FVX went to 0% and EBGEF went say to 15, it would then be yielding around 4.7%. That would be fairly spectacular in a FVX=0% world – meaning it would provide considerable price support at that level.

          The flip-side is that the CN resets provide a tremendous hedge against the possibity of rising rates. Six months ago we were averaging down on perpetuals (KTBA comes to mind) with the fed talking about three hikes in 2019. Well that did a 180. So now will be strategically averaging down on resets. Provided there are no credit or enterprise issues, and with appropriate allocations, appears the CNs should provide considerable balance to holdings. My average down buy prices are already set.

          1. Alpha, Libor is the ticket last couple months, how fast it changed. I won’t add any US Gov at present but you’re right it could wind up being the ticket somewhere down the road. I bought the pr.v has a 3.15% ticker, double cousin to the pf.v (EBGEF). Upside down for now either way.

          2. Alpha, that is exactly why my interest level is strong here. Low yielding kicker preferreds have a disproportionate pull from yield rises and lows. If a reset has a 2.4% kicker, the increase or decrease in Tbill will carry a more pronounced impact on issue. And then when you get one purchased buried even further below par the coiled spring will jump higher from impact on Tbill as dividend is based off par not current price. The key is what you mentioned last about setting ave down prices. Have a plan and dont chase on nickle drops, but wait for more pronounced drops.

            1. Grid, current rates… if Libor = 100 (2.47) then US = ~75% (1.87) and C = ~50% (1.3). The US is getting little or no credit for the spread which seemed a bit odd to me, it’s like everybody in Canada is stuck on everything going to 0 and nothing else is possible. Oil entered a bear market today and lumber futures are down 30% in last few months, both are large contributors to Canadian economy. Then add the worries about slowdown in general, the effect of tariffs, and it bodes ill for Canadians. They’re screaming “forget about the tease down the road and just show me the money”. I wonder if that degree of fervor moves south at some point.

              1. P, its definitely all about lower yield fear, which hits reset preferreds right between the eyes…Ute Fortis common stock is all time high today, Emera all time high today, Canadian Utilities 52 week high and approaching all time high. So its not a sector issue but a yield expectancy issue. Over ten trillion dollars in bonds world wide are currently negative yielding.
                If NI-B was bought at todays price and tbill was zero at reset its yield would be 3.41%. If ERRAF reset at zero off todays price, its reset yield would be 3.49%. If both reset at 3% T bill ERRAF would yield 7.43%, while NI-B would reset at 6.23%. That is the power of below par buying if rates ever rise again. Its just all mental math though as it is what it is.. I would like a little more drop so I could buy a little more. 🙂

                1. Grid, I’m not a fan of F/F but own a few and they are not behaving anything like Canadian. I don’t have interest in adding Canadian unless fixed F/F yields are close to converging. My interest at this point is if this becomes an emerging trend in US we might be looking at a playbook.

                  1. P, I don’t blame you from staying away. You dont have any resets in US that have reset already stinging investors and attracting the memory of 2015-2016 (reset hell for CA, see they have had one reset gobsmack cycle already, creating outcry for fixed floor issues) F/F are not resets, and cant be compared to them. Different payouts, higher kickers, and different benchmark. In fact you cant just use reset in vanilla sense either. The fixed floor resets have traded very differently than just reset preferreds. I think you are looking for a deeper reason than what it is.
                    The pure resets are down, but most not down nearly as far as 2016 when TBill was 0.50%. Low kickers needing tbill yield to carry the “yield water” in terms of pricing are exposed when Tbill drops.

                    1. Grid, not looking for deeper reasons, just trying to understand the obvious. I’m not the brightest so that can be a challenge. I have a 3.14% bought to yield almost 4% if zero reset with comparable fixed presently trading at 5.7%. I’ll look at US$ (C$ is another wildcard) in absolute terms and leave the rest to speculation. My F/F would decline about 25% for yields to converge. In a situation where fixed yield gets bid down, it would converge at less than 25% but in a situation where people dump equity fixed yield goes up and converges at over 25% with some ugly math possible. Speculating on the actual market yield spread, direction of interest rates, lower tickers, economic climate and things I forgot changes everything. It’s a lot of moving parts and has potential to be quite profitable somewhere in all of this. It’s way over my head but it was a F/F refresher course and I made some notes as it pertains to my other F/F holdings. They sold the crap out of them and people were gobbling them up like candy.

                    2. P, understanding the obvious is difficult enough for me too!! All of your questions and concerns are legitimate especially as you stated when you mix in all the other moving parts and sentiment.
                      I havent looked too deeply but some of the US naked floor libor with very low kickers issued by some banks have been starting to sag. They never really ever got to par ever during upswing and are starting to sag well below par. If Libor starts dropping from any Fed related cut issues down the road, I expect more pain is coming there too.
                      A 3.5%- 4% par perpetual with a 0% isnt out of realm. They were issued in 1940s when Tbill was 1.5% range. Some still trade today. Quality of issue aside, generally over time, the trend is your friend or enemy…When rates are declining fixed issues hold their weight or appreciate and resets will decline…And vice versa applies.
                      The problem is the asymmetric risk one has on fixed perpetuals. You ultimately cant hold the appreciation in declining rates over time as the issue will sag towards par in anticipation of a redemption. And then one is forced to buy a new issue at lower yield. If one was just 100% certain rates are going lower and longer you have to dig for the non callables. Of course there are few and many are already priced fairly high.
                      So dont think I know anymore than you do, P. And I just proved it. But that doesnt mean I dont enjoy discussing it. 🙂

                    3. Grid and P, Thanks for this discussion. I’m learning a lot. I’m also learning that my brain is getting old and feeble and I have to re-read these discussions several times before it sinks in. Problem is, it doesn’t stay sunken in and I forget everything within a week.

  10. I am trying to better understand how to price/estimate/guess the value of Canadian preferred stock on reset.
    For example, Canadian Utilities have 2 reset preferred stocks and 5 regular non-reset preferreds. The credit risk should be the same for the same utility whether the preferred is reset or not. The reset preferred Series “Y” currently is priced to yield 4.82% until the reset/redemption date on June 1, 2022 which is a risk premium of 3.36% over current 5 year Canadian government bond rate (versus a reset dividend rate = 2.4% spread over the then 5 year government bond on reset) with no floor on reset.
    There is also a Series “FF” reset preferred which trades at a 4.42% yield until the reset/redemption date on December 1, 2020 which is a risk premium of 2.96% over the current 5 year Canadian government bond rate (versus a dividend reset rate = 3.69% spread + the then 5 year government bond rate on reset) with a 4.50% reset floor on $25 par. The yield to call is 3.33% which is a 1.87% risk premium to 5 year government rate.
    The 5 remaining preferred stocks on the other hand, trade at a non-stripped average current yield of 5.38% which is a risk premium of 3.92% over the 5 year government rate.
    So the current risk premiums to hold Canadian Utilities preferred are 1.87% (YTcall), 2.96% for a 12-2020 reset if not redeemed, 3.36% for a 6-2022 reset, and 3.92% for no reset.
    The buyer is forfeiting the equivalent of approximately 4 months of dividend income for the reset option.
    My question is, given a certain 5 year government bond rate on the 12-2020 and 6-2022 reset dates, how would you calculate/guess the value on reset? If the risk premiums did not change would the 2.96% and 3.66% risk premiums over the then 5 year government bond rate based on the new revised dividend rate after the reset be a good estimate/approximation of the value?
    4.42% and 4.82% are not competitive annual QDI ute yields for me unless their is a capital gain potential/probability on the back end.
    Would appreciate any thoughts or comments.
    THANKS!

    1. Dave, I suspect you answered your own question. Predicting future interest rates 2 to 4 years out is basically unknowable. Jeff Gundlach is the bond king and he keeps missing the mark frequently with his predictions. If you find the yield uninspiring (and quite frankly it is uninspiring) I wouldnt buy on the hopes of a cap gain (though if you see the 5 year chart there is appreciable movement north and south).
      To further explain my thought you cant pin anything down because there is an additional variable with the L and FF…The right to convert to 3 month Tbill quarterly floating rate at reset. If conditions warranted where the floating rate is the play, that would impact price of preferred also.
      The Series FF was their latest issue and it is the fixed floor. The market values resets and places at premium. But their are additional factors here…The kicker yield of 3.69% screams redemption if Tbill yield topples the floor yield appreciably at reset. Plus its shorter duration to reset will also cause a closer anchoring to par. But if tbill sinks under 1% and heads south below that, the anchoring effect would loosen as likelihood of redemption would decrease if not become nonexistent.
      I bought mine basically as par as I bought a divi over par when it was getting close to exD. So my thought is Im getting 4.5% until call but have a decent kicker to support me if issue isnt and yields rise.
      These are all just kind of pieces to a puzzle for me. I dont intentionally buy the best issue with best yield or cap gain….You can get a glimpse of pricing by tracking 5 yr Tbill to stock price. For example late Sept. 2018 5 yr peaked at around 2.50%. Thus no surprise that the Series L was priced almost $5 a share higher during that time frame than present….Current tbill yield and general bond yield sentiment is weighing on issue now.

      1. Thank you Grid. You have explained well. By Series “L” I assume that you meant Series “Y”, i.e. PR. C? You are right. There is NO 100% correlation between the 5 year Canadian government yield and the Series “L” preferred stock yield. The Series “L” and “FF” have many moving parts.
        I like Canadian Utilities Limited. They have a good consistent dividend record with the common, have a reasonable credit rating, just sold 2 of their coal fired power plants and may be shopping for lower cost hydroelectric power as a replacement.
        The US economic expansion is now 10 years in duration. With an inevitable recession coming down the road someday (no one knows when), IMHO in an economic slowdown or recession, with the exception of California, dividends from ute’s have better reliability and predictability.
        Still leaning about Canadian income issues.
        Thanks again for taking the time to respond.

        1. Lol, Dave….Apparently if I dont like the letter of a preferred series, I just create one magically from thin air and change it…Thanks for correcting me for others reading not to be confused. Too many tickers…I should have refreshed my brain before typing. But yes thankfully, you knew I meant the Y series.
          CU looks to just about be getting out of power production all together. I like that myself as that is usually the source of financial problems of utes if they get in trouble. So yes I really like this company and its safety. But being Baa1 and a ute you pay through the nose in low yield to own it though.
          I do not know more than anyone so my interest rate directional opinions mean nothing. But personally, I think I am early on the resets and will see more price dropping. That is why I have more money in perpetual preferreds that are call dated. That Spire preferred was a nice bone tossed to me at issuance that I gobbled up bigly a few weeks ago. Bit my tongue and bought the Algonquin issue also to hold. Not a big fan of their ute model, but went ahead and played the card I was dealt.
          I would like to see the 2016 bottoming on rates revisited and corresponding drop in reset issues. And then aggressively buy more. Who knows if that chance will occur though.

          1. To comments above: Looks like the details are being accurately covered. I know there is an element built into the American Market that speculating on Cap Gains is ‘part of the game’ and a real Money Magazine Cover ideal. Seems that preferred issues can be managed as an income thrust particularly for that phase of life where making mistakes on speculation can be quite harmful.
            For me, I have personally witnessed that ‘programming’ my mind to understand something…anything…like the CN prefs is an upfront preparation of later possible recognition, then resolute execution.
            Watching for a sure thrust in global interest rate may initiate a buy on resets say 2 years out, maybe they just got hammered in a sell-off?
            Or maybe buying very recent resets that have an acceptable yield now, but reset in 4.5 years when the odds of a higher interest rate may be signif higher, especially if interest rates are higher because of inflation that the govts are trying to ignite?
            It’s hard to say, but familiarity and an ‘organic’ understanding is good and may get a super stimulation at some point in the future.
            Like my bro-in-law used to say, “not every disco hottie is marriage material”. Dated but true…I suppose it is like ‘dating’. J

    1. Hi Affinity
      Thank you so much for that link. I’ll study it carefully before I decide to invest. I really appreciate your help!!
      Jeff

  11. Desktime!: Here are some F symbols I have documented. In TD when entered onto their Watch List you can hover over them and they will flash up the CN designation like Series X or # for cross reference:
    Enbridge which seem to be a focus of research: erraf, ebrgf, ebbnf, ebgef, ebrzf, enbbf, enbff,
    Bonus symbols with no referral value: Bombardier: bdrpf, bdrxf, and my favorite symbol: bombf

    1. Joel, just to clarify, your first one listed ERRAF is from utility Emera. Its the Series C with 2.65% Kicker plus CAD 5 yr TBill. Resets summer of 2023.
      Blues just wont stay down and keep fighting back dont they. Huge road win last night.

    2. Joel L
      That is a very useful piece of information !
      Unless one contacts Gridbird with the
      question as to which OTC symbol is which
      Canadian series preferred ( and he is
      usually out golfing ), one is left to figure it
      out on one’s own. It is easy to mix them up.
      Thanks.

  12. Here is an example where OTC ticker is bypassed for trade…The example is me…I had a little bit of extra cash in my new TD account waiting to consolidate accounts. Anyhow, I put a 100 share bid for ERRAF at 14.57 and a few minutes later it transacted at $14.5642. This was the first trade of the day in issue. It did not show up under ERRAF but under its TSX ticker. 100 shares at $19.64, CAD.
    https://web.tmxmoney.com/quote.php?qm_symbol=EMA.PR.C
    I have found this issue to be tradeable for me, though the trading has been done in HSA. This was bought in new taxable account. At this price we are back to that 6% threshold again, I personally like to buy at.

    1. I just picked up ERRAF at 14.49. I like the yield. Not too crazy about the parent companies subsidiaries as “island business” is always dicey.

      1. Fortunately its a very small segment of its business, TNTowanda. My personal preference is the Canadian Utilities LTD preferred as they and parent ATCO are in better financial standing. But, admittedly I own a bit more Emera than CA, for the longer current fixed duration prior to next reset and higher current yield.

  13. Joel A.
    Thanks for showing IPPLF. An interesting company. Building a petrochemical complex in a province of cheaper oil and lower cost electricity makes a lot of sense. But you should be cautious that the true yield may not really be 8.49% (reference your post of 5/24, 2:31 PM on Reader Initiated alerts). Although the company has declared a current rate of 14.25 Canadian cents/share/month, i.e. Canadian $1.71/share/year, there is also an offsetting creeping material equity dilution of approximately 87.5 Canadian cents/year from the stockholder dividend reinvestment plan used to help fund the equity portion of capital improvements including 3.5 Billion estimated total cost for the Heartland Petrochemical complex. As more shares are issued the FFO/share proportionately decreases and therefore each share in the company correspondingly is worth a little less each quarter. So $1.71/year cash payout less Canadian withholding less equity dilution = approximately 2.9% net yield based on todays close of $21.02/share Canadian.
    Theoretically there would be an 8.49% yield if the amount of shares remained the same, i.e. equity was not diluted. The Heartland complex will not be finished for several years.
    So the yield depends upon the assumptions used to calculate it.
    I welcome all thoughts and comments.

    1. Cha-ching, spot on and currrency conversion. Consider their div increase history too, of course no guarantees to continue. I hold in an IRA and have not had CN withholding of 15% with TD.

  14. Mr Tim, I think this will dev into the go to site for this info. So much has already been exposed here. I recently went on a search binge and have gotten a Watch List on TD with about 55 CN F symbols. I have done no sorting into category, but the Ray J resource is adequate.
    Today, I have great luck observing prices on Barchart for current CN pricing/vol and then selling AT MARKET orders quickly and accurately. I have had no luck with Limit Sells placed on TDs Snap ticket system. I have been wanting to relo CN prefs into IRA vehicles as I had previously relo-ed QDI into taxable accounts over the last few months, so I will now see how the buying goes. It seems the 15% CN withholding tax + taxable account rate, even if qualified, demands this for the CNs.
    Also, have been pruning off past call issues of many sorts as higher call risk will be present if rates go down (refis) and with it their premiums (some suddenly if called). The simple question from DE asked me to rationalize my YTC and it made sense for me. Thanks for that. If rates go up then I think their premiums will also have to compete with cheaper priced or new issues.
    Thanks for all your efforts! J

    1. Joel, I have had no problem at all selling these. I have traded in and out a few times. But you wont want to do what I did…You put sell offer in 25 cents below last trade or whatever. And you let it fly. The trade for me has always transacted at appropriate price. It just needs to be “woke up” for some reason. Like I said I dont recomend it as it doesnt sound right but it has worked.

  15. Thanks Tim. This is a great idea. I trade some higher yielding “F” issues from time to time.

  16. I welcome the new “Canadian Discussion” page. I am a retired Canadian civil servant, and have been managing my own investments for the past three years. I am currently building up the income side of the family portfolio.

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