Canadian Chat

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.

342 thoughts on “Canadian Chat”

    1. RE: ALA.PR.I

      Readers may recall my raising the possibility if not the probability of companies calling the min rate resets notwithstanding that they were trading below redemption amount, in some cases much less.

      This issue has a 52-week low of 12.00 and was trading at 23 and change before the announcement. Even so, it’s gone.

      The min rate resets have the best structural character, from an investors perspective, of any preferreds I know of. Wish U.S. companies would adopt the structure but fat chance of that.

    2. another one of mine bites the dust – now where to put the proceeds is the question. May look and see if any prefs may get sold during tax loss season presenting a buying op

  1. Just received a HSE proxy vote (regarding prefs) by email that says it will be voted with management’s recommendation IF there is one. There had been discussion here about allowing CVE to re-name the prefs and drop HSE special holding pool.
    Has anyone perused the 408 page document to see if management has made a recommendation?
    The voting deadline is 12-11-2020.
    I do not want to take for granted that they will vote for me to go to CVE symbol. nor do I want to take for granted that the YES vote counts for conversion into CVE prefs.
    I am in a very poor location to research right now or would try to post the answer myself. The Control-F pulled up over 1,800 finds for “preferred”.
    Searching the mind trust.

    1. RE: HSE

      It’s not just a change of ticker, it’s about reissuing as a CVE issue. Big difference.

      You do not want to end up in a special holding pool. I got the same proxy and will vote for the reissue.

  2. For those interested in Canadian preferred I posted something in Broker/Brokerage section about my experience at IBKR.

  3. Re: Canadian preferred issues
    It would be helpful to me ( and probably others ) if anyone would offer guidance to a site that lists the the Canadian preferred symbols conversion to the U.S. / OTC 5 character symbol. Many of the comments leave this information out.
    Thanks, Howard

  4. BAM is doing a very interesting thing. They are in essence cloning themselves and dividending out the cloned stock to existing shareholders of BAM. Although not announced I’m relatively sure the cloned entity will be a Bermudian partnership. BAM is a Canadian corporation.

    The new issue will be economically equivalent to BAM, have the same payout, will be exchangeable into and out of with BAM and will be listed on both the TSX and NYSE.

    This move is all about the shareholders, both existing and would-be. Depending on what country you live in, your personal tax situation, and the kind of account in which it’s held, you may be better off holding either the Canadian corporation or the Bermudian partnership. And Brookfield will give you the choice. If you opt for the partnership, yes you will get a K-1 and no, it won’t generate UBTI in any meaningful quantity.

    A registration statement will be filed with the SEC when the details are worked out.

    1. Bob to me BAM is one of the most innovative companies in Canada for financial engineering – own the common of parent and some subsidiaries along with some PREFs .

    2. Canuck & Bob, My Brookfield saga continues, First off I consider the original Bip I bought almost 10 years ago, one of my best moves in my Roth ira. Along the way I sold some and got my original money out.. I tried to buy some back this year and Edward Jones no longer allowed purchase in a Roth? Brookfield website specifically say it ok for us investors. At about the same time they gave a special dividend of 15 shares of the new BIP-C, this has always traded at a premium to the partnership. I bought a little BAM as a “compromise” now this cloning? Don’t get me wrong all this is positive, but my wife, my advisor, and certainly Edward Jones, doesn’t have a clue whats going on, “probably 4 different ticker”, any ideas guys? thanks mike

      1. Move the account out of Edward Jones. Seriously. No reason a broker should not allow SEC registered, US exchange listed issues.

        For a Roth, the corporate entities should be fine. There should be no withholding tax because of the US-Canada Tax Treaty.

        1. thanks bob , not the first time I’ve got that advice. I straighten Jones out on the with withholding issues long ago, now their hangup has become UBTI and K1’s, I even got shot down when I tried to buy the “new preferred”recently. This new development will really get their a** in the air. thanks Mike

          1. Mike – I know there are brokerages that balk at UBTI because they (not the beneficial owner) are responsible for filing the return and paying the tax (using your money) but most will do it. Moving brokerages is a very easy process unless you hold a bunch of weird stuff.

            Is your brother in law the account exec or something? 🙂

            1. Bob-in-DE , the advisor is not my brother in law, I’d force him to go to bat for me. this guy has to no avail. Jones no longer sends me copies of the k-1’s. I now pay close attention to the $1000 limit by visiting MLP websites tax information. I haven’t come close to $1m since I unloaded another MLP several years ago. I think I know the rules better than Jones’ and it pi* *es them off. thanks again Mike

              1. it’s interesting the quirks in cross border trading. As a CDN I have purchased some of the recommendations from Tim and others on this board in my “registered” accounts (self directed accounts thru CIBC) where the bulk of our $$ is only to be told by my bank investment rep a few days later they don’t qualify to be held by a CDN investor and they have to be sold off. Luckily they have all been up as opposed to down when sold.

                1. U.S. domiciles run into the same issue. When it’s happened to me I have refused to consent to a sale and in most cases the brokerages backed off.

                  Check out an account at IBKR Canada. Unless what you’re talking about are U.S. OTC issues you may be able to buy them there.

      2. MIKE — I found an article (Globe & Mail) from back in April which covered some questions about BIP.un and BIPC transaction. Hope this helps with some of your questions.

        Digging deeper into the Brookfield Infrastructure unit split
        JOHN HEINZL
        SPECIAL TO THE GLOBE AND MAIL
        PUBLISHED APRIL 17, 2020
        UPDATED APRIL 17, 2020
        PUBLISHED APRIL 17, 2020
        This article was published more than 6 months ago. Some information in it may no longer be current.

        BOOKMARK
        1) I read your column last week about Brookfield Infrastructure Partners LP’s BIP-UN-T unit split to create Brookfield Infrastructure Corp. (BIPC). Can you explain the tax consequences?

        First, a quick recap: Effective March 31, BIP.UN unitholders received one share of BIPC for every nine units of BIP.UN held. BIP.UN investors – who will continue to own the same number of BIP.UN units as before, in addition to the new BIPC shares – will also receive a small amount of cash in lieu of any fractional BIPC shares to which they are entitled.

        The unit split, or special distribution, is not taxable. However, for BIP.UN investors who hold their units in a non-registered account, the adjusted cost base (ACB) of their BIP.UN units should be reduced by an amount equivalent to the fair market value of the new BIPC shares and any cash received. The ACB must be reduced in order to properly calculate the capital gain for tax purposes when the units are sold. Investors who hold BIP.UN in a registered account will not face capital gains tax, so their ACB is irrelevant.

        2) I hold my BIP.UN units and BIPC shares in a non-registered account. How do I figure out the fair market value of the new BIPC shares and, hence, the amount by which I need to reduce the ACB of my BIP.UN units?

        This is where the confusion starts. Different brokers are providing different numbers to their clients. I’ve seen “book value” or “average cost” figures for the new BIPC shares as low as $44.71 and as high as $51.77, based on e-mails from readers.

        According to Melissa Low, senior vice-president of investor relations with Brookfield Infrastructure Partners, investors can use the “volume-weighted average price” (VWAP) for BIPC over its first five trading days on the Toronto Stock Exchange through April 6. The VWAP – which is the total dollar value traded divided by the total number of shares traded – works out to $50.12 per share for BIPC over this period, Ms. Low said in an e-mail.

        So, if you owned, say, 100 BIP.UN units and received 11 shares of BIPC in the unit split, you would reduce the ACB of your BIP.UN units by $551.32 (11 times $50.12) and the cash received in lieu of a partial share. The company is using the same five-day VWAP formula to calculate the cash portion.

        One other thing to note: The ACB per share of your new BIPC shares would also be $50.12. You would use this number to calculate your capital gain – or capital loss – when you eventually sell your BIPC shares or exchange them for BIP.UN units.

        3) I don’t want to exchange my BIPC shares for BIP.UN units. I would prefer to convert my BIP.UN units into shares of BIPC. How can I do that?

        For now, you can only exchange shares of BIPC for units of BIP.UN – not the other way around (the company is looking into whether it could facilitate such exchanges but has offered no details). If you would prefer to own only BIPC, you would need to sell your BIP.UN units and purchase BIPC shares. This would entail two trading commissions and, if you’re investing in a non-registered account, could trigger capital gains tax on the sale of your BIP.UN units.

        That said, BIPC does have certain advantages over BIP.UN in a non-registered account. BIPC will pay dividends that qualify for the dividend tax credit (DTC), and the dividends will not be subject to U.S. withholding tax. BIP.UN’s distributions, on the other hand, do not qualify for the DTC and may be subject to withholding tax. But the amount subject to withholding tax is typically small – in the first quarter it was just 2 US cents.

        “While we don’t expect there to be significant U.S. withholding tax, it can vary quarter-by-quarter and has the potential to be higher with the recent acquisitions of some new U.S. businesses,” Ms. Low said. Under the Canada-U.S. tax treaty, you can avoid withholding tax by holding BIP.UN in a registered retirement account. However, withholding tax still applies in a tax-free savings account, she said.

        4) I’m wary of holding BIPC because the new corporation only owns a small subset of the partnership’s global infrastructure assets. Is this a concern?

        It’s true that BIPC directly owns only natural gas transmission assets in Brazil and regulated utility operations in the United Kingdom. However, the fact that BIPC shares are exchangeable into BIP.UN units and both will pay the same dividend/distribution means BIPC investors are getting access, albeit indirectly, to the complete global portfolio of infrastructure assets including railways, ports, toll roads, pipelines, communications towers and data centres. It also means that BIP.UN units and BIPC shares should track each other closely in price, which has been the case so far.

        “In order to effectuate the stock split, we were required to transfer assets to BIPC since it’s a separate reporting issuer/listed entity,” Ms. Low said.

        “The assets we chose to transfer (being the gas transmission system in Brazil and regulated distribution operations in the U.K.) were selected as they were relatively easy to transfer considering regulatory, legal, financial and tax implications,” she said.

        “So while BIP LP and BIPC do hold different assets, investors should be indifferent as BIP LP and BIPC should be considered one entity, which collectively share the same assets, returns and management.”

        Full disclosure: The author owns BIP.UN and BIPC personally and in his model Yield Hog Dividend Growth Portfolio. View it online at tgam.ca/dividendportfolio.

        1. Bob & Buck, Thanks for all the info, now I don’t feel like “the lone ranger”. Where else but here, could I get this kind of feed back. thanks again, and also Tim, for providing this forum. Mike

  5. Looks like the site: https://canadianpreferredshares.ca/ went into a limited data for free mode. The more robust info is now premium and reasonable for $48 annually. There were elements that had me spoiled like the blended rate if reset at different GOC 5 year rates in the future. Still great resource.

  6. I know this thread is about prefs, but since a lot of guys from Canada come here, I’ll ask a question here. What do you think about the Acadian Timber (ADN)? I like their balance sheet and of course their juicy divies. Confused by the fact that Brookfield came out of there last year, maybe there are some pitfalls? I would be grateful for any thoughts about this company.

    1. Only Canadian timber company I track is WFT.TO (West Fraser Timber).

      For Acadian Timber top line sales to be less q-ov-q and y-ov-y makes me wonder given random length lumber has nearly doubled. WFT is reporting doubling of Adjusted EBITDA margin.

      Once you figure this out then I would invest.

      1. In the last report, they explain this by the fact that the demand for hardwood pulpwood has fallen sharply, although this explanation also seemed strange to me. The difference between them and WFT is that WFT is a large full-cycle company, starting from logging and ending with the production of final products such as building materials, LVL, MDF, plywood, pulp, newsprint, etc.
        And ADN just cuts trees )))

        1. Another company more comparable Rayonier Inc. (RYN) top line revenue up 42.5 from same period last year.

          1. Exactly, I see the ADN like a very undervalued RYN:
            RYN P/E 78, P/B 2.5, divi 4.1%;
            ADN P/E 15, P/B 0.9 (sic!), divi 8%.

            P.S. I have to disclose as I am long ADN (very small, about 1/3 of my full position) and now I think about if it makes sense to increase it. So my opinion here may be biased.

            1. RYN is a REIT so you need to compare AFFO. PE can not be used.

              Would think beyond yield with ADN and see if any near term catalysts are coming as I can not believe top line is not moving with lumber price rocketing.

              1. Apparently you have a point, it looks like a not good idea increase this position. Thanks for the thoughts.

  7. A couple of notable resets recently ……………

    CU.PR.I (CDUTF) will become the first min rate issue to survive its first call and will continue at a 4.50% coupon to yield 4.51%. BBB+.

    PPL.PR.I will reset to 4.302% to yield 6.79%. BB.

    TRP.PR.G will reset to 3.351% to yield 5.83%. BBB-.

    Yield are stripped based on present price and coupons will remain unchanged for the next five years.

    1. Thanks for the update, Bob. I own CDUTF and had assumed it would be called. Good news as far as I am concerned.

      1. Buck, I looked at ENB results also, Not bad at all. Whats your opinion on the election results for ENB an a dampened possibility of a green new deal at least for awhile? I’ve been debating adding to my position with this nice yield. Thanks for anybodies input

        1. Enbridge is the class of the midstream opportunities: best assets, best management, best financials. Plus, they only build pipelines where they have permits. If you’re a “low risk” midstream investor this is the place to be.

          Price, at least on preferred issues, are very rich. The common yields better than the preferred and has upside (and downside). I would probably favor common over prefs but personally I am not adding to an already considerable exposure. They are on my buy list for the next crash.

          1. Bob, thanks so much, confirms my thoughts, have 170 shares of common plus some exposure in a qualified dividend etf EMLP, the question as always, how much is enough? maybe I’ll save some room, if a real opportunity happens. thanks again Mike

            1. Mike – I can’t say how much is enough but I think like a banker and manage my risks accordingly, by industry, by issuer, by country, etc.

              My total exposure to a single issuer is about 5% of total portfolio. ENB total across all issues is about 2%. I place bets but I like diversification.

              1. Bob , based on “your” formula I’ve got some room left to pull the trigger. To all that commented on this topic, it was a very interesting and informative. thanks to all. Mike

        2. Mike, if Biden is elected, I am HIGHLY skeptical he’d be able to put through anything resembling a Green New Deal, with continued R Senate and R’s picking up several seats in the House. I respect ENB’s management and the latest permit ruling went their way. I’m holding.

          1. Bur , Thanks for your thoughts, I have avoided oil,gas,&fracking, just the usual around the edges, pipelines utes etc, hedged where I can with some exposure to renewable s. Thanks again Mike

          2. From what I understand Biden has indicated he would cancel the Keystone pipeline project which would be negative for TC Energy but should favour Enbridge with their existing pipelines. So to me another reason to keep the faith with ENB

            1. Canada has switched most of its oil production over to low decline assets (oil sands) which do not require high maintenance capital like conventional drilling / fracking techniques.

              Refineries processes are setup to receive a specific blend of light and heavy oil products for the various items produced creating a long term need for heavy canadian or saudi crudes. Majority of oil produced within America is of lighter grades.

              In my view. Governments should increase regulations on the energy industry. Cause consolidation, Industry Responsibility, and Shareholder value restoration due to prohibition. Prohibition taught us the market will find a way to use any commodity making the industry more sustainable with lower change of boom and bust cycles.

    1. Hi Joel – I read the DBRS write ups and my sense is they got it wrong. Perhaps right in the credit rating agency world but wrong from an investor perspective.

      This is a true merger, not a leveraged buyout. No new debt. The exchange ratio actually favours Husky even though that wasn’t the intent. Financial economies of scale are significant and not airy fairy. This ends up a much stronger company.

      The market read as to the Husky preferred was correct, up +10% on the announcement.

      1. I got that too, I think that from a rating agency perspective, they are taking the price and ‘Rona-nomics’ (my own proud contribution to economics!) value of oil like the perspective of interest rates that will stay lower for longer and a long term cloudy perception based on the last year. World demand down ONLY 10%? America’s No Energy Policy? Alot of stranded asset allocation needing rescue (new funding) and going off line? I just saw three states with oil strippers standing still and gasoline at $1.75. Not a good time to make money…but there may be a more disciplined snap back too.
        These two businesses are already lean and wringing out more.
        As a fact of math: Energy is at a 2% weighting in the SP whereas the average over decades is 9+%. Buying the best in a depressed sector is what John Templeton would do as Buffet has done already. I am already weighted as I need to be. My wife is a bit ticked off that I got her to buy a small amount PREKF royalties (with no debt) in Roth recently with only a 3% div. Tick, tick, tick.

  8. Textbook example of trading Canadian preferred on the OTC …..

    Some enterprising fellow has been securing new OTC tickers including two just yesterday. Both were Husky Energy resets, HSE.PR.E and HSE.PR.G. The corresponding OTC tickers are HUSPF and HSEPF.

    HUSPF traded 2,200 shares on the first day of listing, all at essentially the same time, all through the same U.S.-based broker, so presumably were traded by one person. Price on the OTC was US$9.64 per share, which corresponds to CA$12.82 per share, which was exactly were the issue was trading on the TSX at the time. All trades, even though executed through the OTC, were immediately reported on the TSX website.

    So, you had good execution, at the correct price, correctly reported. I doesn’t always happen this way but it did for this buyer on this trade.

    HSE is of interest because of an impending merger with Cenovus Energy. This is an economy of scale merger that will produce sizable savings for the combined company. And a lot of unemployment in Calgary. HSE has 5 preferred issues outstanding, including 4 resets and 1 floater spawned from one of the resets. If approved by HSE preferred owners, the HSE will be reissued as Cenovus preferred.

    The issue that I would be going for would be HSE.PR.E, HUSPF. Current (stripped) yield is 9.10% and the reset yield is 7.79%, with 4.42 years to run on the reset clock. I was a heavy buyer of HSE earlier in the year but have a full position and won’t add now.

    Generally, there aren’t a lot of deals among resets. I would be waiting for the next market panic.

    As always, don’t buy Canadian preferred if you can’t live with volatility, think the US$ is the only currency in the world, and don’t know how to find prices on the TSX and convert from CA$ to US$ before entering your order on the OTC.

    From the It Can’t Get Much More Corrupt State of Delaware

    1. A reader of this thread sent me a PM through SA questioning my use of the word “fellow”. Point taken; it may have been a “fellow” of the female kind. Loose language perhaps.

    2. I am also an HSE (C) holder and would like to ask your opinion on the best way to vote: stay in the HSE or move to CVE?
      Thanks at advance.

      1. From what I understand it will be the same contract backed by the combined company, just a different symbol if accepted by 2/3s of HSE pref holders. If not it will stay HSE symbol. Should be the same treatment with a relatively better credit rating regardless of the symbol after the merger is complete.
        Any other views out there?
        See the Prefblog description of the merger.

        1. Joel – if new CVE preferred issue they will be the same TERMS as the old HSE issues. The merged company, which will trade as CVE, will be financially stronger than an the special purpose sub that would hold the HSE preferred if they don’t convert. The financial benefits of the merger are going to be felt in the merged company, meaning CVE.

          Some have expressed the opinion that because HSE has a better credit rating than CVE that you are better off holding HSE paper. They miss the point.

      2. I will be voting to exchange into CVE. I wouldn’t want to be stuck in a sub that exists only to hold the preferred.

        Same situation as when ALA acquired KMI (canada) a couple years ago.

          1. I have not gotten to that point yet, but I am glad that you guys brought it up. I am actually back in an OFFICE where I can work and be organized to reconsider many things. It makes sense to go with CVE. The conversation here helps!
            I have shown that I am obviously a bull on the long term prospects for fossil fuel with coal being phased out quickly now; not out of stubborn persistence or familiarity, rather an on-balance Ben Franklin style choice of many factors moving forward when a very large ship is being turned on a very small planet. Here is a good article that I just stumbled over on SA that is a good ‘Franklin’ type checklist of factors that involve a long term view of Oil, especially Big Oil. It makes more sense to present the facts…but retain confidence that we CAN make the moves necessary…especially with a concerted and perhaps progressive global policies.
            https://seekingalpha.com/article/4382875-clean-energy-vs-oil-gas-biggest-lie-of-2020

          2. likewise will be going with the exchange. More importantly waiting for results of Tuesday’s election. Contested election could result in a lot of short term volatility and opportunities if panic selling.

  9. Husky/Cenovus merger?? Apparently will need a HSE preferred holders vote of 2/3s. (???, not clear to me yet)
    https://www.wsj.com/articles/cenovus-and-husky-to-merge-in-18-billion-deal-11603632994
    Cenovus re-rated over a year ago to positive and BBB.
    Husky IG.
    Both pay common divys.
    BIG resources, Big synergies, Big know-how. WOW! Hope this is the kind of thing that marks a nadir. Alberta dumped max-production quotas last month too. Apparently HSE prefs will become CVE’s next year if green lighted.
    Lots of detail with a Google-search.
    (Snowed in in Red River NM…end to the fire season!! )

    1. HSE prefs were insanely cheap. I had a good size position in HSE.PR.C that I sold out a month ago for the cap loss. I put it all back in HSE.PR.G, so I’m happy with this deal.

      But sad, too. HSE has been around for about as long as Standard Oil.

      I recall Red River from my ski bum days. There isn’t a lot of town as I recall. Does the altitude get to you?

      1. Lived out West alot, had a good long spell to adjust this time. Six feet of snow plowed down center of six blocks of main street.
        Have not been able to find any mandatory, or voluntary, redemption language in the prospectus, but am limited to a small Chromebook today. Looks like the preferred shareholder can not scrub the deal, but have some sort of say with 2/3s vote on some-thing? (See PrefBlog recent comment with no reference to source). Some conversion to common or? Have not seen any huge premiums hit any pref issues and do see that this will be an all equity deal. Of course, would love a redeem at par.
        I have no common, except some SU Nov $12 puts sold, so may end up with some at a very cheap price. Remember when very cheap prices of a good company was a good patient play? May be again! Happy Considerations, JA

    2. HSE preferred holders don’t get a vote on the merger. They do get to vote on either keeping their HSE preferred or exchanging for new preferred issued by the combined company.

  10. My current take on Canadian preferred ……………

    Mins, resets and fixed were very strong earlier in 2020 before plunging into the 3rd basement in March/April. With some exceptions, most issues have fully recovered and many gone on to new 52-week highs.

    Mins are starting to come up to first call, with 13 issues becoming callable in the next 12 months. Those trading above call or even a dollar or two below may well be called. My sense is that companies want these off their books and in any event can issue debt much cheaper.

    The first one in line is a CU issue, which becomes callable December 1. Next Friday (Oct 30) is the last day the company can give notice; otherwise, it’s good for another 5 years. It’s an interesting, albeit short term spec play. It’s very pinned to par (because of the possible call) but if it isn’t called will probably pop in price for a buck or so. Ticker is CU.PR.I or CDUTF. Do not pay above 25.28 CA$, that being $25 stripped.

    The best buys among mins – and I do call them spec buys – are the 4 BPO issues and 2 PPL issues. At present prices, the BPO issues are floored at around 8% yield and PPL at about 6%. Only US ticker is PMMBF.

    As always, don’t invest in Canada if you can’t live with volatility or think the US$ is the only currency in the world.

    Resets and fixed later in the week.

    1. thanks Bob – really enjoy your analysis! I share your thoughts on long suffering ENB – it eventually will have its day in the sun and meantime great yield

  11. Buying Canadian preferred on IBKR ………… how to do it right.

    If your interest in Canadian preferred is limited to the handful of US$-denominated issues, you don’t need an IBKR account. If you want to stray into the weeds a bit and buy CA$ denominated issues, but just a few issues, I would say the same: you don’t need an IBKR account. Buy the issues of interest on the US OTC and stick to the better known issuers and the most liquid issues.

    If you’re still with me, you have 2 methods to buy CA$-denominated issues at IBKR, one of which is much better than the other:

    The wrong method. Transfer US$ to IBKR (I assume you are a U.S. resident) and start buying Canadian preferred under their TSX tickers (you can’t buy them under their OTC tickers and I assume you are not buying US$-denominated issues).

    What is happening is you are buying CA$ assets in CA$ and on each buy IBKR is making you a loan of CA$. You know this because you look at the Market Value page on the IBKR platform and you see no change in your US$ balance but a negative figure on your CA$ balance. That negative balance is a loan, and you are paying interest on it.

    You are also being paid interest on your US$ balance but the rate is lower, so the net interest is against you.

    Don’t do it this way.

    The right method: After you have opened your IBKR account and transferred US$ to the account your first transaction will be to sell US$ and buy CA$. This you do on the IBKR platform, at institutional rates if you do at least US$25,000. Go to the trading section, enter “USD.CAD” as the ticker and make sure you are SELLING, not buying. You then have actual, real CA$ in your account and can buy CA$ assets with them, with NO LOANS and, of course, no interest.

    For example, today I sold US$100,000 at a rate of 1.31349 to get me CA$131,349, with which I can now buy that amount of CA$ securities without a loan and without interest charges. If I want to buy more, I have to convert more US$ to CA$.

    If you are inclined to give IBKR a go I strongly recommend you open a paper trading account first. It’s monopoly money and nothing is at stake. Figure out how to do it right before putting in real money. I use only the Webtrader platform at IBKR, which is the basic platform. Trader Workstation is the advanced platform but I have no need of it or the complexity of it. Same at TDA; I use the basic platform.

    1. Re IBKR account: I agree and learned that under a careful scrutiny of details over time. Making the transaction are very easy. When I have called and insisted on instructions I have seen that it is very easy and that world of operation gels more and more. When I have no open orders I have played a bit of FX exchange rate between the CND:UDS which has been significant lately. Keeping $25,000 minimums in CN dollar to cover trades and open orders IS the way to go as Bob directs.
      The brokerage is in biz to make money and will not question your maneuvers. These posts are the greatest value of sites like Tim’s here as we make our own independent decisions. Thanks Bob!

  12. I’m a fan of certain Canadian preferred issues but for a variety of reasons I’m not a fan of Interactive Brokers and their trading platform. Recently I’ve discovered a non-trivial monthly interest charge that appears to be related to having a cash balance in my account. What am I missing here? I’m not being lazy but I’ve found that unlike Schwab the process of talking to one of IB’s reps involves long waits and unsatisfactory results.

    1. I found their trading platform very difficult to understand. As with anything, practice would have made it accessible, but visiting their website was like walking into a party and realizing that I really didn’t belong there, followed by a slow, backwards walk to the door.

    2. See above comments. IBKR has by far the best online help but the call center is not a strength. If I can’t find the answer to a question with the online resources I write an email enquiry. The answers are sufficiently prompt and accurate for me.

      IBKR doesn’t do hand holding. Vanguard will hold my hand all day. It’s a matter of what your need is.

  13. I have not paid attention, but what happened to the love for EBGEF and EBBNF last year when trading around 20? SInce both are now under 16, was the 20% loss due to company specific issues, exchange rates, resets, or a combination?

    I owned EBGEF for a short while but decided to exit all non U.S. related companies. In hindsight it was a good move, but wondering what current thinking is on them.

    1. there was a recent article in Globe & Mail (Canada’s lead business newspaper) which proposed a recovery in CDN prefs over next 12 months as banks are moving to “Limited Recourse Capital Notes” to raise capital. Writer indicated the banks will be moving to redeem a number of their prefs in favour of LRCN which in term will lead to a shortage of prefs in the CDN market. ETF’s and MF’s which are primarily pref funds will need to buy the remaining prefs to replace bank redeemed ones. Which in theory will lead to higher prices (the old law of supply and demand). For the sake of my long suffering CDN prefs I’m hoping he’s correct!

      1. CB – I agree with G&M. LRCNs are a game changer. The last banking preferred issued was several years ago. There will be a lot of calls, even of issues that are selling below redemption. Anything in the 23-24 range is a candidate to be redeemed. Anything close to 25 is a near certainty.

        The only positive on the LRCNs is that there is a limit to how much the banks can sell.

        1. Will the price closeness to par really matter?
          Banks pay out based on par and call at par, but I do not see them trying to absorb free float issues at market before a potential call. I do not know if Canadian rules allow for this without open announcement?
          LRCNs are a real admission of expectation of systemic risk; serious passing of risk to the lower tranche holders for suspension or wipe out. There is a serious indication that the regulators, by their actions, are implying that real risk is rising and they are worried about banks ability to keep the capital heart beating, so they are installing pacemakers, drug-protocols (rules) and stints. The real problem is with the diet that the banks keep pushing into the system. It really is a classic obsessive-complusive aspect of our generation’s general behavior.

          1. Canadian issuers are allowed to buy their own stock or bonds with notice. You can find the notice in press releases and SEDAR filings. Many preferred issuers have so-called “normal course issuer bids” in place right now.

    2. The two Enbridge issues you reference got hit by a combination of investors hating on petroleum companies and the drop in the 5-year Canada rate. Both of these are reset issues. Current yields are fine at 8-9% but will reset to 5.5-6% in time unless the 5-year rate goes up.

      I would not put new money into these two issues but would rather wait for the next market panic. Enbridge issues show a lot of price volatility so timing is important.

      If I was buying now I would be buying the common with its 8.5% yield. The company has the best assets in the business and is rock solid financially. But either view as a long term hold or wait for a better entry point.

      I rarely cite SA as a reference by my view essentially is the same as this:

      https://seekingalpha.com/article/4379080-enbridge-is-best-high-yielding-dividend-stock-on-market

      I own a lot of ENB and I have for years.

      1. @Bob-in-DE, I own a chunk of ENB as well, and it seems to have held up fairly well (=smaller decline than pipeline common in my portfolio ;-).

        What’s your thought on prospects for the Line 3 Replacement and the effect of that project on ENB’s fortunes? Morningstar opined as follows last week: “Line 3 does face opposition from pending litigation, but a negative outcome is more likely to delay construction than cancel the project altogether. Accordingly, we assign an 80% probability that Line 3 will be replaced. Fortunately for Enbridge, safeguards are in place if the project is not built that allow the company to recoup expenses and earn a return on the capital that has already been spent.”

        I haven’t spent any time researching the issue, looking for any musings…

        1. Bur – I did take note of this announcement:

          https://www.startribune.com/administrative-law-judge-upholds-minnesota-pca-decisions-on-enbridge-pipeline/572771591/

          The Line 3 replacement makes great sense. ENB has the savvy, the money and the track record to get it done. If this gets shot down then I would think you can’t get a pipeline built anywhere in this country. So, in addition to running out of electricity at some point, we can run out of heat, too.

          ENB has the best assets, best balance sheet, and best management in midstream. If one is to be invested in midstream this is the place to do it.

    3. furcal,
      EVERYone BELIEVES that rates are going to be held down forever by private banking interests with implicit public govt consent…the Fed. History shows this is not an accurate assumption. Interest rates are as volitile as common stocks and will revert to this behavior. These resets are factually a hedge against rising interest rates. The mindsets do not match. hence the discomfort.
      My proposal to myself is to use a percentage allocation method to collect decent divies on way below par bonds (preferred attributes) and HOLD as a weighted ballast. Ultimately, interest rates are the very first knee jerk reaction to any financial change. Change is persistent. The two issues you have mentioned above continue to pay real cash as a long term put option premium on the five year note. Sooner or later the preferred mechanisms will react with potential price improvements or let’s dream: with a call? We ALWAYS want to be right and see action move our way soon when we are into an investment. Inflation is the pillar of capitalism and we will see it exerted.
      As a side comment: I am more concerned with the TDAM and Schwab merger and misrepresentation of CN divs. I have a few more CN OTC issues at TD like these F issues to migrate over to IBKR. I am going to have to do a dive into Fidelity as an alternative to TDAM and encourage anyone here who has inputs regarding their experiences there to post as it was VERY helpful to me to make a good decision on migrating my CNs to IBKR.
      Thanks, JA

  14. It all started two years ago. I put an eye on the CN market in a larger scale for all of it’s varied characteristics and I may say unique charms. Wading into the swamp after the beasts that may be there in the muskeg would have been near impossible without the help of the group efforts of the individuals at this site.
    This is the power of many-minds and a positive model for the hopeful redeeming characteristics of the Internet, a tool used properly, that can be employed in other areas in our lives.
    The resources that have been discovered and shared by readers and posters here have been a real blessing to me.
    Thanks to All Contributors.
    PS: Husky creeping into a nice portfolio spice zone. Just finished a project CN$100 MM under budget that is now cash flowing and projected to add CN$1.1 billion in free cash over the next ten years. No maturity calls until 2022 and a fairly low percentage. Very disciplined management capital readjustments and IG focused.
    Outlier (Chili Pepper Spice!) ?: The floating E series, under CN$6, are over 7.5% currently is a real lever on the 3 month going out over years if someone is looking for an rising interest rate hedge. Just sayin…do your own math/homework. I own a full position of resets in the CN reset ladder I have put together at IBKR.
    Again, thanks to all the positive assistance. JA

      1. Other than CNQ/ENB never bought any of the common shares of energy producers.

        Look at EPD bonds trading like grim reaper is coming.

        EPD Corp 5.375 Feb15’78

        Suncor volumes reduced at major production facility. Refining margins have been slow to recover. Recent credit rating drop. Expecting bonds to reprice as risks are rising. Suncor best assets next to Imperial oil in Canada meaning long term will do just fine.

        SUNEVC Corp 6.0 Apr01’42

        1. Mia – I, too, have generally avoided the common of energy issues but I am rethinking that. Few get rich betting on favorites (or favourites) but betting on what’s hated can work out very well. I’m even thinking on SLB.

    1. Just announced in Globe & Mail this morning Cenovus is taking over Husky Energy in a share swap. Combined entity vaults Cenovus into third largest CDN energy producer. Picked up some HSE prefs a few weeks ago be interesting to see what happens to them on Monday.

      1. Good news for both companies and combined they will restore dividend on the common.

        A-lot of retirees got a surprise when Census suspended earlier this year.

        1. Here’s what I found about the preferred shares:

          “If Husky preferred shareholder approval is obtained, each Husky preferred share will be exchanged for one Cenovus preferred share with substantially the same commercial terms and conditions as the Husky preferred shares. The transaction is not conditional on Husky preferred shareholder approval and, if not obtained, the Husky preferred shares will remain outstanding in a subsidiary of the combined company.”

          https://huskyenergy.com/news/release.asp?release_id=2113977&utm_source=HP2&utm_medium=HuskyCenovus&utm_campaign=INV

          1. not bad for a crappy day in the markets my HSE prefs (B & E) were both up over 10% no doubt due to less credit risk now

      2. I also own some Husky, HSE.PR.E. Do we know yet what is going to happen with these? Do they get redeemed or continue in force? Thanks.

  15. Folks, could you point me to a web page where I can follow incoming Canadian IPOs? Or check historical IPOs?

    Thank you,
    MB

    1. No overall IPO site that I am aware of, I use a major CDN bank’s discount brokerage service and they show IPO’s that they are involved with but minimal details about the issues.

    2. If wanting to keep abreast of Canadian financial news one should subscribe to the (Toronto) Globe & Mail and/or the Financial Post.

      I don’t know of any site that just tracks IPOs.

      1. Bob, big thanks for your work on the Canadian minimums and specifically for pointing out the desirability of BEP.PR.G. Might not have to wait for a sub-par call.

  16. CU issued 30-year notes at 2.6% and BAM did the same at 3.5%. Won’t see any new pref issues when debt is available at these rates.

  17. A really bad strategy ………..

    This is a Canadian story but could be replicated in the U.S.

    From the Globe & Mail (Toronto but national in coverage), lawsuits have been filed against brokerage units of BMO (Bank of Montreal) because an advisor implemented the following strategy for a number of his widow & orphan clients: short Canadas (treasuries) and other high grade bonds, and use the proceeds to buy reset rate preferred. And then add margin. And have the March crash send prices on the resets down 20-30-40-50%. Then have your account liquidated for margin calls. And then have BMO tell you to pound sand.

    Sad part is, had the accounts not been liquidated, or sold out, the strategy would have worked.

  18. Explanation of LRCNs …………

    Limited Recourse Capital Notes are a new breed of security recently approved by Canadian banking regulators for issuance by the big banks. They are deeply subordinated, long term notes that magically (when the bank gets into trouble) turn into newly issued but preauthorized preferred shares.

    Great for banks as they can issue what are de facto preferred shares at bond rates and get to deduct the interest payments. Not so good for investors, as you are effectively getting bond yields on preferred shares and paying tax on interest.

    I have no doubt all of the banks are going to issue these up to the maximum allowed. Most have already put out a first issuance. It was my understanding that, initially, LRCNs could be bought only by institutional investors but I see Joel is indicating that they are going to be available as an exchange traded product.

    So, don’t look for any new banking preferred issues. Hang on to what you have because there aren’t going to be any new ones. You may even see some banking issues redeemed even though trading below redemption price.

    1. Bob, Appreciate the content here. This is an accurate modeling of the privatized privileged relationship that the private money institutions and regulators enjoy at the Pal Club over drinks. Public be damned. The mountain of “crammed debt” IS the problem. This is the endemic mindset of the weekly paycheck trusted, Humpty-Dumpty regulators who are busy congratulating each other on Bay Street. Who polices the police (regulators)? A classic question of secular philosophy. I will say in public that this is irresponsible and BAD POLICY. Another tranche-robber is heinous regulatory action. Did I expect anything else? Party on Dwayne!
      The real diligence is accurate risk assessment. The Paper Markets are a factual mine field, but the Myth of Smartest Financial Innovation persists.
      From Smoky Colorado. JA

      1. Joel – I have family in both Colorado and the SF bay area, so I’ve seen the pics of the smoke. But for COVID my wife and I would almost certainly be spending the month of September in California. Saved by COVID.

  19. I own RY-PW the RBC Perpetual which is being called Oct.1. I’m looking to add to one of my existing common stock positions with either T(Telus), BCE, RY, NA or TD. Dividend and Capital Preservation are my investing themes. Not being in Canada makes it a bit more challenging to assess who is going to be where over the next year or two.
    Any thoughts?

      1. With a history of 12 years of almost zero percent interest rates and the probability of another 3-5 years to come its almost impossible to find any yield in the Fixed Income universe. In the US as you may know, Money Markets and CDs are paying under 1%. Corporate Bonds are either so expensive or offering so little yield there’s literally no reward for any level of risk. Fixed income ETFs and Dividend plays are the only places left. As much as I like US high quality Preferreds or Canadian Rate Resets at some point, for me, about 20% of my total portfolio, I have to draw a line and cap my total investment in that area. Thus I’m forced to trade one uncertainty for another. I have far more confidence in a Telus or BCE then an AT&T. And would buy any of the Canadian Banks at least as far down as National Bank before buying common stock in a comparable US bank. Though I must say, I wish Trudeau was a bit more business friendly and more balanced in his view of the transition to a Green Energy Economy and the needs of the Canadian Energy Sector which makes up 11% of Canada’s GDP

        1. Richard, thanks for answer, I’m always interested in other people’s thinking.

          I agree as far as bank equities go. The Canadian banks are really financial utilities. If you were going to look at US banks I would stick to STT, NTRS, BK or FRC. They all make their money from fee based sources rather than lending.

          I would buy T over BEC. I don’t follow Canadian bank common enough to have a worthwhile opinion.

          I do think, however, there are still pockets of good value in fixed income in both the US and Canada. In Canada, I look at the min rate pref and the reset preferred at least weekly. I have a large position already and I’m accumulating C$ for the next crash. I know it will come. I placed big bets back in March that some of the min rate preferred would be called, no matter that they were selling at 20-21-22 at the time.

          In the US past call issues that are no more than 1 coupon above redemption price offers some nice yields, albeit with some call risk and a good bit of work. I had a huge position in STT-E before it got called. My replacement has been BK-C. Just don’t overpay relative to stripped par. VER-F is another.

    1. Richard speaking as a Cdn there is somewhat of a “dog of the Dow” theory when it comes to Cdn banks – ie. each year pick the worst performing bank as they will be working on a restructuring which will improve its performance over the coming year. Statistically it works just a matter if you want to be trading bank stocks annually. With regards to telecoms Telus is about $30B market cap vs BCE at $50B – my preference is for Telus as tends to be more nimble and has committed to raising their dividend on annual basis. Another good sector in Canada is the pipelines (Enbridge, Pempina , Keyera, Interpipe) as no matter price of oil or gas it has to flow thru pipelines. All have good yields

      1. Actually I own several Enbridge and TransCanada Rate Resets and I own Enbridge common shares on the NYSE. Though with all the resistance to pipelines both in the US and Canada and all the Kafkaesque Environmental and Judicial absurdities I’m reluctant to commit any more resources there.
        I own both BCE and Telus stock and bonds. I’ve never understood BCE’s Rate Resets. I tend to like Telus also. I’ve seen many Telecom companies spend billions on their dream of being something between Disney, the old real AT&T and Comcast rolled into one. It seems BCE has been at least moderately successful at pulling that off, whereas AT&T’s debt load is testament to a totally different outcome….. Telus seems mostly a pure Telecom play with a company that knows what it does well.

    2. Richard,
      If you’re looking for boring (and not much price appreciation), then BCE is your man. I’ve owned this thing for a couple years and to me, it’s not really different than owning a fixed income security. Used to own TU (much better IMO), as well as RY and TD. All seemed like good earners but I moved on to other items. You might want to throw RCI into your mix. They are the largest of Canada’s 3 national carriers.

  20. LRCNs are apparentlyt going to be available on Canadian Exchange and from what I can see perhaps (hopefully) at new offering. This would be good news to ordinary investors as a CD proxy (still a structured, long term bond).
    I am out in the sticks and can not do research from this pad, but an account at IBRK should be able to facilitate this?
    Honestly, I am baiting a couple of the excellent and diligent CN sources here to look into this so when I return home I can just copy their homework! Full disclosure of motive.
    I hope to see the public being able to fully participate as much of the institutional market seems to be conveniently reserved for the Lords of Finance.
    Also a comment on resets and interest rates: As a long term trend the universal, huge expansion of debt continues to show a deflationary trend toward consumption and maintenance of status quo and not reinvestment into productive, future demand on resources or labor demand as we go forward several years. A time of conundrum for the self directed investor. Seems at some point we will witness a long wave of negative real adjusted rates across the board as the hole gets deeper. I’m holding my good resets as about 15% of portfolio as a paying hedge for the next “planetary crisis”.

    1. Hi Joel….I’ve noticed a major drop off in new Rate Resets from the Big 4 Banks plus National Bank in 2020 and was wondering if this first RBC, LRCN in July was going to permanently kill the market. Evidently the LRCNs offer tax benefits that ordinary Rate Resets don’t.
      Any idea other than Prefblog.com and canadianpreferredshares.ca if there are any resources to track new offerings especially in the LRCN space?

    2. Joel attached below is article from Globe & Mail d/d July 22 when RBC announced the issue of first LRCN – very new to me but reading article not sure if anyway for retail investor to pick up any?

      Royal Bank of Canada bolstered its balance sheet this week by selling $1.75-billion of a new, tax-efficient security, opening the door to what’s expected to be a wave of similar offerings from rival Canadian banks.

      The country’s largest bank sold what is known as a “limited recourse capital note,” or LRCN, that is seen as debt by institutional investors but will be treated similar to equity by federal regulators for the purpose of calculating RBC’s all-important capital requirements.

      RBC’s launch of LRCNs is shaking up the domestic preferred share market, with some investors expecting the new notes to take the place of new preferred share offerings.

      In practice, LRCNs are a combination of two securities. RBC will issue 60-year non-callable debt securities to investors. Alongside this, the bank will issue preferred shares that will be held in a kind of escrow account. In the unlikely event that RBC defaults on its debt payments, investors will be handed the preferred shares.

      “You can think about the preferred shares as collateral for the notes,” said Timothy Hughes, a partner with the law firm Osler, Hoskin & Harcourt LLP, who worked with RBC to develop the structure. “They only become activated if they get handed over.”

      Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, approved the innovative structure last week. RBC spent years developing the securities and wasted little time launching a deal, working with J.P. Morgan Securities Canada Inc. The LRCN offering was snapped up by 105 institutional investors, with demand more than twice the supply of notes.

      RBC’s LRCNs pay 4.5-per-cent interest for the next five years, then the payout resets every five years at a set premium above the interest rate on Government of Canada debt. Each RBC note has a face value of $1,000 and matures in 60 years. The product can only be sold to institutional investors.

      From RBC’s point of view, the LRCN is far more tax efficient than preferred shares, as the interest payments on the note can be deducted from the bank’s income for tax purposes, while dividends on preferred shares are not tax deductible. RBC paid $3-billion of tax last year, when it earned $12.9-billion in income.

      “These terms make LRCNs very attractive funding instruments for financial issuers,” said Toronto-based Brompton Group in a report. The fund manager said these securities are “the holy grail for financial issuers: tax-deductible equity financing.”

      Other OSFI-regulated banks and insurance companies are expected to issue LRCNs. In a report, National Bank Financial said the Big Six banks alone could issue $16.7-billion of LRCNs.

      STORY CONTINUES BELOW ADVERTISEMENT

      The treasury departments at other Canadian banks are closely following the RBC deal, said Sean St. John, head of fixed income at National Bank Financial Markets. The structure is attractive for several reasons. RBC managed to price the deal around 75 basis points, or 0.75 per cent, below where similar preferred shares are trading. It also managed to attract a huge amount of interest from institutional investors.

      The preferred share market would be hard-pressed to “digest” a $1.75-billion offering, Mr. St. John said, “whereas the institutional debt market has the capacity to do that and can actually accommodate all this size.”

      “I think people are moving fairly quickly to get lined up and see what capacity they have to issue [these notes], and are looking keenly at the market right now,” he said.

      OSFI’s approval of LRCNs and RBC’s subsequent offering appear to have reverberated through Canadian preferred share markets. Starting last week, investors bid up the price of preferred shares, apparently in the expectation that banks will use the proceeds from LRCN issuance to redeem outstanding preferred shares.

      Investors, however, may be “overly hopeful” on this front, according to the report from Brompton Group. “Preferred share issuance may be on pause for now as financial issuers focus on issuing LRCNs to institutional and accredited investors with lower market-based demand for income than retail preferred share investors, but this event should not represent the end for Canadian preferred shares or preferred share issuance,” the note said.

      Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

    3. RE: trading of LCRNs.

      I haven’t seen anything to the effect that these are moving to the exchange but I’ll take it as true. Originally, these were issued as the Cdn equiv of 144 issues, meaning institutional only.

      Until and unless they get US OTC tickers I would think an IBKR account would be the way to buy these. But why not buy a real preferred and get higher and qualified dividends? The recent BMO issue of LRCNs came in at 4.3%.

  21. Canadian min rates …..

    If you loaded up on min rates (or resets or fixed) during the March sell-off, you were either very lucky or very smart. The average min rate is presently priced 54% up from the March low and some nearly doubled. There is still some up side to them but also a lot of down side. For the most part I see them as being of interest to long term holders who don’t fuss over the occasional 10-20-30% drop in price.

    That said, there is an interesting short term play coming up. Because of the favorable pricing structure (rates can reset higher but not lower) companies that issued these don’t like them. They sold them because it was the only way they could sell preferred at the time. None of them has ever come up for reset/redemption but that is about to change.

    13 of the 36 issues that I follow will either reset or be called for redemption in the next 12 month A couple of these are selling a tad above call but the rest are all below, but not far below. Some of these may get called even though trading below call price. Some nice cap gains available if they are.

    If they aren’t then you have a nice rate for the next 5 years. Just make sure you can live with price volatility and CAD$ risk. (Risk is aka as “diversification”).

    On the table, focus on Columns AD (years to call), X (strip price), Y (strip yield) and AA (yield if called).

    I personally own a significant amount of BEP.PR.G (bought as BRENF) in a Roth and after browbeating Vanguard long and hard finally got them to stop withholding 15%. It will get me close to a 9% after tax return on cost on an IG rated issue.

    If the following link does not open for you please let me know.

    https://docs.google.com/spreadsheets/d/1wy08_dQCkLDRHh_FFtzcfV6v_JmGWZw_elB_z0iF5gE/edit?usp=sharing

    1. Thanks very much, Bob. I have a fair amount of CDUTF in my IRA at about a dollar under par. I am reluctant to add more Canadian preferreds since Schwab continues to withhold the 15% for the 5 issues I have in my IRA. I will look at some of these for my taxable account.

      1. Alan – welcome. Think about moving on from Schwab. 15% is too much to give up in my mind. Domestically, I do business with Vanguard, TDA, and IBKR, as well as Schwab, and every brokerage got it right except Schwab.

        This includes both the treatment of preferred dividends as qualified and withholding of dividends paid into IRAs and similar accounts.

        I believe the reason that Schwab won’t give on the issue is liability for past mistreatment of Canadian dividends. I imagine it could be in the hundreds of millions of $. It reminds me of a tax case involving the state of Michigan. The state’s main argument against a Michigan Supreme Court ruling was that the state couldn’t afford to refund taxes illegally taken from citizens if it lost the case.

        1. Bob, Running to TD may not prove beneficial going forward. One of our members here who has unsuccessfully fought Schwab on QDI treatment asked what are all the TD customers going to say when they suddenly arent able to get QDI after Schwab takes them over… She was told “Good question” and implied we were going to have to suck up the QDI tax loss when that time comes. If that comes to pass this will limit my desire to hold them. Maybe some in tax free account provided the 15% withholding is not being screwed up either.

          1. Grid – I will be watching happenings at TDA closely. TDA will do many things that other brokerages won’t do or you have to arm wrestle them to get done.
            If TDA follows Schwab, I will move on from TDA.

            If Schwab is smart they will leave TDA alone.

            PS – anyone out there who wants to do a FINRA arb on Schwab’s QDI position on Canadian preferred treatment I will talk support and risk sharing. My own position at Schwab is too small for me to do it on my own.

            1. Bob, in my interactions with Schwab earlier this year I was told that they have two companies (I believe they called them holding companies) that handle Canadian securities for them. One withholds the 15% on deferred accounts and one does not. All of the Canadian preferreds that I have in my IRA are with the one that withholds the 15%. Seems pretty strange that Schwab would allow different treatments, but that is what they told me.

              1. Alan – Schwab lied to you, like they lied to me and many others. There is actually a very long string of posts on this site (Canada and Sandbox and Brokers sections) on which folks laid out all their communications with Schwab. Schwab has at times given half a dozen differing explanations for not giving Canadian preferred QDI treatment. It’s an interesting read if you have the time.

                Turns out the truth is that Schwab relies on a 3rd party for its QDI determinations and the 3rd party relies upon a proposed treasury regulation going back something like 20 years that was never implemented. The proposed regulation is not binding and never was. I researched this issue quite carefully.

                As I said earlier, the only reason I can come up with for Schwab’s position is liability. I would love to see someone take them on in a public forum, like a courtroom. I believe one can “break” the arbitration requirement by going for a declaratory judgement (i.e. a case in Equity, not Law) and Delaware Chancery Court would be the perfect forum.

                Schwab was to be a major part of my brokerage picture. Instead, I have moved every single position I had out of Schwab to other brokerages, save for 3 issues that other brokers would not take.

                I use TDA primarily for one issuer but it’s a big position and other brokers won’t let me buy it. I’ve told my TDA rep that if TDA adopts Schwab’s business methods that I would be gone. He said so would he.

                In comparison I find Vanguard honest but at times frustrating. Given the evidence they will correct errors in tax treatment, as they did on BRENF. They even called me a few weeks back to apologize for not allowing some trades that should have been allowed under their rules.

                IBKR, never had a problem.

                1. I have been a happy TDA customer for decades but their support of Canadian Preferred shares drives me nuts. I have a position in BRENF and have looked to add to it on dips. Seems their internal system which populates valid share references (i.e., BRENF) has to be loaded daily and typically does NOT include Canadian Preferred shares and kicks out limit orders (and new daily orders). As it is not updated, the price is not updated as well.

                  Very frustrating and amazing when you consider they are a Canadian Bank (TD = Toronto Dominion),

                  1. Greg – I hear many good things about TDA. Yes, it has a Canadian connection but they are separate entities and the integration between US and Canada is minimal. Same on the brokerage side.

                    Buying Canadian issues off the OTC is quirky. The execution can be poor, sometimes want foreign transaction fees, and at times valid symbols are rejected. But proper tax treatment is key to me and Vanguard gets it right, albeit at times only after I have made known their errors to them.

                    If you want true execution off the TSX the only way for most Americans to do it is IBKR. IBKR Canada is fully integrated into the US platform. It’s seamless.

            2. I am in a similar position; I didn’t build out my Cd portfolio substantially until 1Q20 – 2Q20 so haven’t suffered much of a loss yet; didn’t wake up on the issue until I couldn’t get the 1099s corrected! It looked to me like Schwab’s tax department was seizing on pretexts to justify a bad position on the issue vs. making a logical decision based on principle. Knowing entrenched bureaucracies from my insurance background, it’s hard to see them folding easily unless the TD folks have taken over the tax department.

              I moved my preferreds all over to Fidelity at the end of the second quarter.

              If it would help to have another party formally complaining about the issue I would consider it, but it hasn’t cost me much at this point in time & it wouldn’t make sense for me to invest in an arbitration proceeding.

              My only regrets are not piling more heavily than I did into Cd preferreds back in March-May, appreciation has been significant and yields on investment are much higher for equivalent credit ratings over US issues. Feels nice even though these are long-term holds.

    2. In the context of a preferred stock, rather than a bond, can you help me by clarifying the meaning of “strip price” and “strip yield?” I gather it is a measure of the present value of the future flow of dividends, only, and the value of the stripped equity, valued independently. Since there is no maturity date on a stock like there is on a bond, though, I’m not catching the intrinsic value of the latter unless you posit a call, and these issues have tended to get rolled over more than they have been redeemed. Would you coach me a bit on what the meaning and practical utility of these factors is when comparing issues? Thank you, professor!

      1. Tim – 1st thing to appreciate is that most exchange traded fixed income (bond or preferred) trade “dirty”, while institutional issues (the ones most of us have to buy off the bond desk) trade “clean”. The difference goes to how accrued dividends or accrued interest are treated in the pricing.

        With dirty issues, the price you see, the price you pay, includes accrued dividends. You don’t pay extra for the accrued dividend, it’s part of the package.

        With clean issues, the price you see is without accrued dividends. If you see a bond priced at (say) $102.50 (which is actually $1,025.00), the price you will actually pay is $1,025.00 PLUS whatever the accrued dividend happens to be. On your brokerage confirmation the two will always be split out, so you can see how much you laid out for the accrued dividend.

        Figuring yield on issues that trade clean is simple – just the amount of the dividend divided by the price (without considering what you paid for the accrued dividend).

        On a dirty issue, to calculate yield, you have to calculate and back out the amount of the accrued dividend from the price you paid to get the “stripped” or clean price. (In effect, making the dirty price a clean price.)

  22. RE: TSX/OTC list

    I am going to leave this up through Friday.

    https://docs.google.com/spreadsheets/d/1gzdZjt4LmLjF_wNBgRkaIMrikBpbyM04qGhf2g-7sUo/edit?usp=sharing

    Beside the persons who saw the link here I got about 3 dozen requests through google sheets and hopefully some of them will become regulars here.

    For market commentary, prices on can pref, especially mins and resets, have gone rather high since the March crash. I would be careful and selective about buying in this environment.

    Since the March lows, mins have increased an average 55% in price and the resets by 58%.

  23. I was surprised that Canadian Utilities Preferred Series EE, CUTLF, was not called since the call price increased from $25C to $26C on Sept 1. It is currently paying a little over 5% and seems unlikely to be called now.

    1. Alan, I think you have read it backwards, as the longer its outstanding, the lower the redemption price until reaching $25 CAD. Agree with you that redemption is not likely. Since this one has dribbled over par now, I think there are only 3 “true” ute preferreds with a 5% fixed yield and presently under their issue “par” price (not counting suspended PCG).
      On or after September 1, 2020, the Corporation may, at its option on not less than 30 nor more than 60 days prior notice, redeem for cash the Series EE Preferred Shares, in whole at any time or in part from time to time, at $26.00 per share if redeemed during the 12 months commencing September 1, 2020, at $25.75 per share if redeemed during the 12 months commencing September 1, 2021, at $25.50 per share if redeemed during the 12 months commencing September 1, 2022, at $25.25 per share if redeemed during the 12 months commencing September 1, 2023, and at $25.00 per share if redeemed on and after September 1, 2024, in each case together with all accrued and unpaid dividends to but excluding the date of redemption.

    2. Alan RE can Utilities

      You have the redemption scheme backwards. It starts out at 26 when it first becomes redeemable (which it did yesterday) and drops 50 cents per year until it hits and stays at 25.

        1. Ya, but I needed you Bob…I guess I thought I was in 2021, so I needed your post to correct mine, ha.

      1. Thanks for the clarification, Grid and Bob. My mistake. I was thinking it was already callable. Still, it seems unlikely that it will be redeemed this year with a call price of $26C. Appreciate the quick correction.

        1. FYI most Canadian fixed rate preferred follow a similar redemption price schedule, i.e. they start high and fall to 25 over a 2-5-year period.

  24. I posted this link elsewhere on III but am posting it here, too. It is a list of all of the Canadian preferred with US OTC tickers that I follow.

    I am posting here for the benefit of the several dozen who asked for access to the list through the google sheets system. The intent is that they will become regulars of the site and contribute thinking and analysis of their own, not just “free” information.

    https://docs.google.com/spreadsheets/d/1gzdZjt4LmLjF_wNBgRkaIMrikBpbyM04qGhf2g-7sUo/edit?usp=sharing

      1. The link I provided opens for me. If it doesn’t open for you try another browser. maybe you do need a google account to open google sheets.

  25. Re: Canadian Preferred issues
    Can anyone provide a site that displays each U.S./ OTC symbol which
    corresponds with the equivalent Canadian TSX symbol., where available. I find it a difficult hit or miss adventure. I would be far more interested in Canadian preferred issues if the crossover to a U.S. symbol wasn’t such a difficult and time consuming adventure to determine (for me ). Thanks.

    1. Trading under the OTC symbols is pretty hit and miss in my experience, exceedingly low volumes on many issues. Since these are long-term holds for me I buy them on the TSX using Fidelity’s International desk.

      1. Tim, for me the volume on OTC is irrelevant. But you have to pay posted ask price correctly CAD converted. It literally hits in seconds on TD. Not great flipping methods so typically longer holds. But shares are there through TSX flow through.

        1. For whatever reason, I’ve posted buy orders with the OTC symbol offering a good margin over the ask, (the systems usually do such a good job of scarfing up lower cost lots) and seen them remain open all day long without being filled, hence my comment. That said, I was successful selling an EBGEF position today as I was going to be in and out and didn’t have time to camp on the phone waiting for a Fidelity rep to place a TSX order.

    2. Hi Howard,

      US/OTC is for the common shares only. There is a small subset of Canadian Preferreds U.S. $ based that trade in us exchanges.

      The majority > 95% you can only purchase on the TSX. These preferreds have the additional advantage of the Dividend Tax Credit for Canadians.

      1. Alex and Howard, the funny thing is an astute broker can get an OTC ticker expedited and assigned for trading for you through FINRA. An online friend got EBGEF and FORFF assigned for me to trade from a Schwab broker she had an account with. She had to buy shares first then it became a tradeable ticker symbol a day or two later.

      2. There about 90 OTC tickers out of perhaps 450 preferred issues. I don’t include split corps in my figures.

  26. Any September resets priced yet? Would like to pick up some Intact Financial, Fairfax and Northland Power since the banks have had such an amazing run-up. Not sure which of these has something repricing in September, but think it’s the first two.

    1. So far, data are known only for those issues that are reset in August:
      BMO.PR.Y -> 3.054%
      EMA.PR.A -> 2.182%
      Two more issues (ENB.PF.G, NPI.PR.C) should be reset in September, but no press releases on the results have been released yet

      1. Yuriy – worth noting that the reprice date (the date that really matters) comes (typically) 30 days before the reset date (the date the rate actually changes). ENB has already repriced (with effect from 9-1) and on NPI I believe it’s the A issue that is repricing soon.

    2. Hi Tim,

      You can find a list of upcoming Canadian preferred shares and their reset date at https://canadianpreferredshares.ca/preferreds-resetting-within-180-days/. The table can be sorted by reset date and it brings in anything resetting with the next 6 months.

      The yield of these reset is set by the issuer 30 days before the reset date. This website updates to the new yield once every 2 weeks so it picks up the new yield at the latest 2 weeks before the reset.

  27. Name two things that have not happened in a very long time? Yes it’s a gag line as we can all think of many such things having nothing to do with investing. Such as a full, grammatically correct sentence from Joe Biden (I am from Delaware, after all).

    But the two I’m thinking of are these:

    1) Except for split corps, there has not been a Canadian preferred issued in several years. (Sorry, no time for the split corp rant; search for it if inclined), and

    2) Until a couple days ago, there had not been a Canadian preferred redeemed in many years.

    The Canadian pref market used to be like the U.S. market, with a steady stream of issuances and redemptions. But the spread between what Canadian investors demand in yield on preferred and what companies can issue straight debt at has grown to the point no deals in preferred are going to get done.

    This may change, however, as the min rate resets come up for reset/redemption over the next 2 years. Structurally, these issues are great for investors – rates can reset higher but not lower – but many are now trading close to or above redemption price and in any event companies are very eager to get these off their books.

    If rates start to tick up companies are going to call these issues even if trading below redemption, or so I believe. I have personally placed some sizable bets that this will happen.

    1. As always, meaningful and interesting analysis. Thank you, Bob.
      P.S. It’s a pity that you rarely comment on the Canadian market lately.

  28. Rally at ALA today: PR.A is 7.5% up, PR.G 6.3%, PR.U 6%.
    The only question is “to sell or not sell” ))))

    1. By my own ratings ALA is IG. Seems others are doing some homework instead of just looking at a rating that may have lack of timeliness or analyst prejudice?
      Hey, I’m holding and do so if you bot it right!! Or try a sell stop? I just had my last SR-A taken at $28 on a sell order that I had forgotten about. Thin vol can be a help at times.

      1. I’m still long at U which is a USD issue. The rests had gone with a good (at that time) profit, but apparently too early…

  29. Big ramp at BBD-B. I don’t know the reason of this, but I’m happy to finally get rid of this trash, lol

    1. This week first call (redemption) I have seen of a reset: EFN.pr.g (verify). Nice 10%premium + the div.
      Waiting with cash, but getting antsy to be topped up. Have open orders in place to stop out some chickens. Somebody give me some fear in the market!
      HSE is IG and has a debt swell refi overhang over the next few years. Should routinely be an easy refi, but the prices are still indicating refi-doubt. Some beat down prices here and elsewhere.

      1. Thanks for the tip Joel, I will need to remember to remove it from the spreadsheets at the end of the month.

      2. This is the first Canadian preferred issue to be called in a very long time.

        A bunch of Royal Bank issues will be called soon. So, too, will some other bank issue. This is a Basel III issue that is effectively forcing these calls by early 2022. Otherwise, this would not be happening. This issue has been known for about a decade.

    2. BBD exists only because both the Fed and the PQ governments support into this endless money pit. It’s a big employer in manufacturing in a province that has very few.

      An investment in Bombardier is an investment in continued government support.

      1. Sadly Bob you are 100% correct in that BBD exists only due to Govt support from provincial and federal govt. Reality is for either the Liberals (traditionally strongly supported in Quebec) or Conservatives to get a majority govt they need to get seats in Quebec. Thus regardless of the govt in power BBD will always get govt support. They are downsizing (just closed another plant in Ontario of course) which is their only small hope to stay in business. For a lark I took a small position in the D prefs back in June for a 12% yield and am currently up about 10%. Figure this is a way to get my tax $$’s back from supporting BBD. Definitely just play money though.

  30. Fidelity Investments – treatment of Canadian Preferred Dividends – these are showing up on my account as non-qualified dividends rather than qualified dividends. Do they change these over at a later date? Minimum holding period? I moved securities over from Schwab on advice here that Fidelity classified them correctly. Appreciate any insights.

    1. You are welcome )
      Although now Canadian prefs are not so attractive due to the expensive CAD, the sheets are updated regularly at the beginning of each month.
      For July there were resets of CM.PR.Q and TD.PF.D.

      1. Yuriy, these things are unpredictable of course, but charts so over past 20 years its right in the middle exchange wise, and still up near upper high end for past 10 years. US Dollar is weakening overall not just CAD.

        1. Yes, the USD now is weak and a weak USD for me is a reason to buy more USD against other currencies (I also operate with CAD, AUD and JPY denominated assets). Therefore, I do not raise my exposure in other currencies, preferring the USD. Just see no reason to buy expensive assets since my base currency is USD.
          But I proudly hold my CAD prefs which I bought during the last crash and collect its fat divies, lol

          1. I would suggest it has weakened, but not weak historically speaking to CAD. Its still high, only slightly less high, chart wise, but I understand… Actually CAD has been higher earlier this year than even now.
            I have actually recently bought Fortis 4.9% fixed at $17.81 so I am, undeterred, ha.

            1. I thought about it too. Yes, it is quite possible that it will go even lower.
              I am focusing on the average price over the past 5 years, at which the USD was worth 1.32 CAD. So my guess is that if the price is close to this figure, then the buy is unlikely to be a great deal.
              But the 10-year average is already much lower (1.19 CAD), so if my assumptions are not confirmed and the fall does not stop at the 5-year average, I will lose.
              I will most likely return to the CAD market when there is confidence that the USD will remain below 1.3 over the long term. But so far in this situation there are too many incomprehensible things for me.

              1. For what it’s worth most CDN economic depts are forecasting the CDN$ to stay relatively flat against the US$ and if anything actually weaken against the US$ over next 1 – 2 yr timeframe. Our consumers are very heavily indebted (worse than 2008/9) which leaves little capacity for economic expansion. Our Liberal govt has no appetite to develop our oil & gas sector which is a key export. As a CDN I am looking more to US & Intl stocks for better growth prospects.

                1. Buck, but on a positive note Canadian govt debt as percentage of GDP is half of what the US is. 🙂

                  1. depends how you measure Gridbird – when you add in all the provincial debt and corporate debt (which is a truer picture than just looking at Federal debt only) as David Rosenberg (Canada’s version of Dr Doom) did in a recent article Canada is at 350% of GDP vs US @ 330% . He’s looking at CDN $ going down to low 60 cent range vs US$ (which seems too extreme for me) . So good for me holding US$ stocks but bad for you US citizens holding CDN$ stocks.

                    1. I definitely can see the value for some in currency diversity as a hedge. But predicting any such currency movements by any expert I would say is no more reliable than you or I throwing darts seeking the answer. I dont really have enough CAD to really concern me. The fixed ones I own North are just better quality and have no YTC issues, so I own for those reasons. The currency movements are just a minor irratent to me. Over time it largely corrects.

              2. Yuriy here is an interesting little factoid — TOTAL market capitalization for our Canadian TSX is $3.3 Trillion (rounding from a Google inquiry) vs Apple at $1.9 Trillion . Used to advise investment clients that the Canadian market was less than 3% of world equity markets and thus the rationale for Canadian investors to look beyond our borders.

          2. Mr Y, Don’t overlook the availability to use a simple FX transaction on cash holdings to other currencies if you are using IBKR. The cost is $2 each way. It can be managed right off of the Account Management page or by creating a pairing on a watchlist. Accounting will show as cash in currency on your portfolio page. Don’t forget that the first one named in the currency pairing is the one you are buying or selling.

            I have had to retrain my eyes (also to using your sheets) as well as using IBRK’s tool-power.

            I have held my wad of cash there in CAD, since CN is all I hold over there, and now can move back to USD when it has appreciated. I know it becomes a currency ‘flip’ and this is speculation. Gotta know the nature of the beast.

            There is also the ability to add an auto-transaction with currency; ie: use my USD to buy CAD instrument; on the trade ticket by using the ‘advanced’ drop down at the end of the order placement.

            I think knowing all the tools in the toolbox is a good idea for just when you may need it and is a good use of Tim’s forum here. You are probably a lot more sophisticated than I am since I am close to a reformed Luddite, but there may be someone here who can use the info. Forgive me since I used to talk people through electronic brokerage sites in a previous life. The intimidation barriers are dropping on global access.

            PS: I am ready for IBRK’s promise of direct purchase of sov bonds to come through, but may not until ALL global rates at at zero! It’s a protected market still.
            Hope this is an open share with after all the diligence you have contributed! JA

  31. Don’t own any Canadian preferred, but still get the RBC global weekly insight newsletter which included this little snippet of news near end of its Canadian section..

    ” Preferred shares rallied more than 5% this week following a ruling from the bank regulator that will permit the issuance of a new product representing an alternative to exchange traded, $25-par-value preferred shares. Based on initial pricing guidance, it appears this new structure will be a lower-cost funding vehicle than $25 preferred shares. Accordingly, we expect to see less preferred share issuance going forward as well as increased redemptions, which we view as a technical tailwind for preferreds.”

    1. There is an article on PrefBlog in the last day or two as well with a decent description. looks like is as more extremely long term, NVCC qualified, financing for banks, stacked ahead of prefs. I forget the name of the instruments. Of course ultimately it can be magically transformed into common stock with no recourse. THAT sounds fair! Of course banks will hand US their risk!
      The Money Men are WAY out of control. We are DEEP into casino territory with our supposed free market myth nonsense. They are given enough rope to hang US. NO ONE represents discipline, policing, enforcement and small investor’s rights. It’s NOT that difficult, but we are NOT represented in a self-policing, smartest guys in the room environment of wild west show markets.
      I really do not trust OR have CONFIDENCE anything anymore. I know it sounds like a downer.
      Good Luck.

  32. Some spectacular gapping. Almost all IG and near IG NRs. My open buy orders are looking pretty distant at this moment. A commentary on interest rates, or fear, in the face of CN central banks just announced no rate changes and ‘on stand by to add QE’?
    Hey, was that an elephant that just walked by?

    1. The mysterious thing, but judging by the dynamics in different types of stocks, it may be related to the BoC rate policy.

      1. Wholesale buying. Looks like good volume based on ZPR and CPD last two days too.
        This is exactly the kind of slosh that central bank intervention into doublespeak-free markets is continuing to propagate. Everywhere you go it’s another frat party. Party on, eh?
        Good skill in your endeavors! JA

  33. WTH? I have never seen such a crazy buying up of everything! Any inside about rate hike by the BoC?
    IFC.PR.G Insurance 14.65%
    SLF.PR.H Insurance 12.98%
    HSE.PR.C Energy 12.07%
    PWF.PR.P Insurance 11.87%
    TD.PF.D Banks 10.52%
    HSE.PR.E Energy 9.50%
    RY.PR.M Banks 9.14%
    MFC.PR.R Insurance 8.96%
    RY.PR.J Banks 8.68%
    TD.PF.A Banks 8.64%
    BMO.PR.W Banks 8.18%
    TD.PF.E Banks 8.14%
    MFC.PR.L Insurance 7.90%
    MFC.PR.G Insurance 7.84%
    TD.PF.J Banks 7.59%
    MFC.PR.N Insurance 7.58%
    TD.PF.I Banks 7.45%
    TRP.PR.G Energy 7.41%
    HSE.PR.G Energy 7.32%
    TD.PF.K Banks 7.27%

    BCE.PR.O Telecom 9.48%
    ENB.PR.B Energy 9.44%
    ENB.PR.C Energy 7.62%
    PPL.PR.S Energy 7.61%
    FFH.PR.K Insurance 7.43%
    FFH.PR.M Insurance 7.41%
    ENB.PR.J Energy 7.08%
    EMA.PR.C Utilities 7.05%
    FN.PR.B Finance 6.82%
    BCE.PR.M Telecom 6.66%
    BCE.PR.Q Telecom 6.45%
    FFH.PR.I Insurance 6.39%
    PPL.PF.E Energy 6.34%
    BEP.PR.M Utilities 6.33%
    ENB.PF.E Energy 5.87%
    ALA.PR.I Utilities 5.84%
    ENB.PR.T Energy 5.72%
    PPL.PF.C Energy 5.65%
    BPO.PR.P Real Estate 5.55%
    ENB.PR.Y Energy 5.52%
    Total Market Cap. Change Today, CAD
    1,879,950,335.93
    Total Volume Today, Shares
    1,880,682.00

      1. TCANF – Do I have this right? TCANF is showing an offered side of 6.59 right now yet the last trades on TSX.COM as TRP.PR.C were at 9.53 CDN yesterday which translates to 7.02 US. TRP.PR.C traded no less than the equivalent of 6.72US all afternoon yesterday…. What am I missing or where am I screwing up? Isn’t this a Flip City candidate?

    1. Yuriy – new BOC gov yesterday indicated no change in CDN interest rates until inflation reaches BOC goal of 2%. This is taken to mean likely no increase in rates until around 2023. So I will quite happily take the pop in my under performing Cdn prefs.

  34. Folks, I just wanted to say that I did not abandon the spreadsheets for Canadian prefs and the reset dates are kept up to date. This month, TRP, SLF, PPL, HSE, BAM and BIP rates was reseted and actual rates are listed in the spreadsheet: https://docs.google.com/spreadsheets/d/1UB3TVsCo_bPDD4tkYu88tQxEO1KrybbY429PoObEYS0/edit?usp=sharing
    You can also download searchable spreadsheet, it is updated too: https://docs.google.com/spreadsheets/d/1b0JLqAUoV1bRDWLMwqzD32ERNCHTS9DvdyvNzv–Rsk/edit?usp=sharing

  35. I want to buy TD Bank preferred’s. I am seeing them listed on the Toronto exchange. Can you suggest which series is a good one at current prices? Also, where can I find more details on the different series (interest rate, when can they be called, ex-div date etc)

    Is there something listed on OTC in US?

      1. Thanks Grid. Not sure I found it in the prospectus (it may be embedded somewhere), which Gov of Canada Yield rate is used for adjusting the rate 5yr, or 10yr ?

        Also, if you can make it a bit easier for me, if you were you were to buy today which series would you at.

        1. Sorry Jay, just saw your post. It resets of 5 yr Canadian. Sorry, but I havent looked at any of these preferreds to give you any actionable info.

          1. Thanks Grid. I will try and research more on this. In principle I like the idea of safe canadian banks.

            If anyone knows some additional websites to research Canadian Bank preferreds please do guide me

            1. The spreadsheets above, together with company websites with their current financials, and S&P/Moody’s websites for ratings (free if you register) have given me what I’m looking for to pick my Cd preferred investments. Currency exchange rate variations and movements in secular Canadian 5-year interest rates will impact the market values of anything you buy, at any given point in time. I feel the higher yields for stronger credits offsets the exchange rate uncertainties but only time will tell if I’m right.

  36. Today is the XD date for many Canadian issues. If inclined I’d be looking for some isolated sell offs.

    This includes most of BAM and related entities, FFH, PPL, EFN, IFC, GW, AQN, SJR.

    1. Have been a reader for about 6 months and find this site a wealth of knowledge. As a Canadian investor been using it for US$ fixed income investments as have appx 35% of my investments in US$. Wondering what others who are buying CDN$ preferred think of a couple prefs issued by Aimia Inc. (AIM on TSX and GAPFF on OTC) There is a very interesting history to this company which was primarily a company that handled air miles rewards until appx 6 months ago when the Mittleman brothers managed to take control and it has now morphed into an investment company. There are two preferred issues trading on TSX as AIM.PR.a (8.89%) and AIM.PR.c (8.99%) . I’m thinking the security of the company is much stronger now with the new focus and may not be recognized yet by the general market. Be interested to hear from other investors with their take.

      1. Canuck, you got some solid outfits up North, but I keep a rather limited scope of interest in preferreds up north in a few solid utes and a couple financials.

        1. thank you to all for the replies. Much appreciated! Although retired have a pension so am not adverse to taking on some risk if there appears to be a rationale for mispricing which I’m thinking may apply to Aimia. The Cdn preferred market is so small compared to US I find liquidity to be a real issue. Stay safe and good luck with your investing!

          1. Canuck, I notice the specific issue offerings may pale to the US market, but the ones that do issue, seem to serve out big portion issuance sizes though. The Utes and banks issues generally are decent sized floats that come to market up there and have decent volume.

            1. agree Grid for the larger issuers they do have liquidity. However in lot of cases I’m already holding common shares in those same companies and trying not to get overweighted by owning a lot of their prefs too.

  37. Grid and Bob, may I ask your thoughts on EMA?
    I own a olt of their prefs (most of them I bought in April, so today I can sell them with good profit but I think about a long time hold), and I noticed that none of you mention this company as an investment object. What is wrong with them in your opinion?

    1. Yuriy, I would love to own a plus 5% fixed Emera QDI preferred. I really like the company. In fact ERRAF was my first Canadian preferred bought several years ago. Made good money on it…Thought I was smart and bought again and found out predictive interest rate movements were not my speciality, ha. And found out the hard way 3-4 years of interest rate protection means zip to CA reset preferreds as they trade like they will reset today.
      So, anyways, being I can only buy on OTC, there are no fixed Emera preferreds. So its nothing against Emera its they dont offer any issues I can buy that fit what I want. Fortis is largely US and mostly T&D which I like so it works just as well. I would flip trade between the two if I had access of fixed preferreds between both companies.

    2. Nothing to fault Emera on except the relatively low yield. But it’s stil 50-75 bps above a comparable US ute.

      The H issue has a 4.90% min coupon on it.

  38. I have not posted here in a while – too little time and not enough to say – but I plan a few short posts over the next couple of weeks.

    To update on the big picture, all the Canadian prefs I follow fell like an anvil in March. (Almost?) every one of the roughly 400 issues that I follow blew past it’s 10-year low, some by 10-20 percentage points. It was astonishing to see issues from world-class companies drop 10-20% in a DAY.

    The recovery was equally astonishing in most cases, with many issues now 30-40% above their March lows. Many issues have fully recovered from COVID, but some sectors still lag. Anything petroleum related is still down, just as it is in the U.S.

    But not a dividend was cut or suspended, and the Canadian dollar has strengthened relative to the U.S. dollar by 6-7% in the last few month. So, if you bought in March and continue to hold, you are smart, lucky or both.

    If you are a buy and hold type, and are inclined to put new money into Canadian pref, I would point you toward min rate issues (average stripped yield +6%, with downside protection on rates), or at resets that have reset recently, so that you have a 5-year rate runway in front of you.

    To name some names from the latter group: BAM.PF.G, BIP.PR.A, BRF.PR.A, ENB.PF.E, FFH.PR.E (or M), FTS.PR.H, HSE.PR.G, MF.PR.N, PPL.PR.G, RY.PR.J, TRP.PR.B.

    For an American, living his life in U.S. dollars, none of these is a widow and orphan stock. They require a strong stomach at times and if rates go and stay low forever the resets, in time, will follow rates down.

    If COVID-19 turns into COVID-20, I expect these will tank again. But I expect the same of U.S. issues, too.

    But, for now, they pump out divis like there is no tomorrow.

    1. Bob,

      Welcome Back!

      Your earlier spreadsheets have been very helpful and I am interested in the minimum interest rate issues you’re mentioning.

      Is there a reliable register of OTC symbols for use with Canadian preferred shares? I’m using TD Ameritrade for my and they will (un-reliably) process OTC symbols.

      Thanks in advance.

      1. Greg – one has to build a data base. otcmarkets.com will give you the names of Canadian preferred trading OTC if you do a sort with the correct parameters.

        There are 6 minimum rate issues with OTC tickers: TGAPF, BRENF, BROOF, BINFF, CDUTF, PMMBF. The 3 Brookfield issues are actually Bermudian partnerships. U.S. residents will get a K-1 but they are perfect for IRAs. Except that most brokerages will get the taxes wrong.

        I own all the issuers although not these issues in all cases.

        1. Thanks.

          Have a small position in BRENF and trying to add a position in TGAPF.
          (Your earlier spreadsheets have been very helpful in my due diligence.)

    2. Thank you! Can I ask where you are getting the information on the newly resetting issues? I still have a few ’22s and ’23s that I’m looking to roll out. Are you aware of any Intact Financial issues that reset in ’24 or ’25?

      1. Tim – the longest reset of the three IFC reset issues goes out to June, 2023.

        The dates are from a prop data base but one can chase them down on the companies’ websites.

        If you like non-bank financials, you have half a dozen good companies to look at.

        1. I have been entering Canadian issues, albeit only at the fixed level, ute only. Started yesterday a little and bought even more today. Canadian Utilities and Fortis only. This is about as far as I will venture anymore. I made good money the last time I was in CU preferreds, so its time again for a meeting behind the woodshed, lol. I cant get 5.5% IG in US issues below par, so here I go again…

          1. So where were you in March when the CU and EMA mins were trading 30% below current level?

            Probably wasting your time with PCG.

            🙂

            1. Bob, I was in full flipping mode back then. Down 30% in March? I made 60% in 2 hours with SR-A in March. Of course I lost money to make money, ha. No, it was all hands on deck back in March. Too hard to do that blindly through OTC as the friction costs are too much. Definitely did better staying home side. And yes, PCG, (all of the series’s at one time or another were being flipped) too, though now everybody has jumped in on arbitrage so that is done, and the prices are full in my mind. But Im still keeping the full allotment Series A helping.
              Im done with fixed minimums and resets in CA unless they collapse. I can trade the fixed issues better or hold for higher current income. I consistently make money on CA fixed issues over time. And the others? Well I consistently gave back any money I made with them. For now, I will leave them with more astute investors. A man gotta know his limitations, and I found mine from beating my head against the wall with them, ha.

              1. 60% in two hours, but can you keep it up?

                The Canadian pref make good short term traders but you have to pay them very close attention. More time than I have right now. 5% price swings in a day are quite common.

                1. It was that crazy day in March. Bought at 16.30 sold at over 25 2 hours later. The was a crazy trading day.

    1. I did not find their profiles in the sedar database, nor Purpose Investments Inc. nor Big Banc Split Corp.
      Theoretically, this may be interesting, but I do not know whether the same rules exist in Canada regarding the level of mandatory coverage of issued prefs (assume that the issuer is CEF).

      1. Purpose Investments has a big site with lots of funds. I assume the other entity is something that was formed as a CEF.

        If you own shares in any of the big Canadian banks like I do then you received a notice that you could participate in buying the A shares or preferreds if you are a Canadian citizen. Today was the last day to opt in so I guess it will show up soon when it starts trading. I am not really familiar with how the Canadians do it, but this sounds very interesting to me.

    2. Easy enough to buy preferred shares in these big banks directly via TSX, I think I’d avoid the frictional costs of a fund.

      1. The fund is issuing the preferreds. It just invests in the banks. As mentioned above, not sure what coverage ratio, if any, Canada requires on these.

        1. True, but the structure still adds a layer of costs to the investor; it’s taking a haircut off the dividends paid to them by the banks.

    3. I will keep this simple. Buying shares in a split corp is not the same as buying what the split corp owns.

      Splitcorps, with one exception, are an unmitigated disaster.

      I would not recommend a split cop to my worst enemy.

  39. Mr Yuriy,
    On your Resets Sheet there is ALSO a ENB.PR.C, as well as the PF.C issue which you have there.
    I have noticed this on IBRK too: When I opened up an ex-div column on the Watchlist and then hover, it shows (pop-up) four projected upcomiong divs. This ‘pop-up sheet’ seems to incorporate the potential near term reset and adjusts the ‘projections’ in some manner. Just FYI, but DO THE MATH and use your own projection.
    Still believing in a buffer from application of Resets! Thanks for facilitating the assist research! JA

    1. Dhope, I see PR.C over there on the Float Sheet with 3 month rate on Reset.
      Some knives are sharper than others!
      Kudos! JA

      1. Hi. Yes, the PR.C is floating and PF.C is the 5y-reset.
        Theoretically, it can be done so that for reset issues the amount of the annual dividend is calculated taking into account the reset, but this will be a preliminary figure in any case (since no one knows what the rate will be on the day of the reset). And it may happen that there will be even more distortion.

  40. v the $US, $CN up over 5% in 30 days, or close to 9% in last 2 months or so, turbo-charging the price recovery of CN issues.

  41. The table of ex-dividend dates is ready. It shows issues that go on ex-dividend within 30 days from the current (today) date.
    I collected data on ex-dates either on the websites of issuers or on the TMX website. Most issuers come out on an ex-dividend date regularly, but there are some issuers (such as Manulife) in which they hang out in significant amounts. Therefore, be sure to check the dates on the TMX website (a link to dividend data is attached to all issues).
    If the standard ex-dividend date falls on a weekend, the displayed date goes one (if Saturday) or two (if Sunday) days ago. Holidays are not counted, keep in mind. Only standard weekends.
    Another bug that I could not defeat and which is related to how Google perceives the date format – at selection, the next month for some reason is always placed higher than the current. That is, for example, in the middle of June at the top of the table there will be rows containing July, and after them, the rest of June.
    https://docs.google.com/spreadsheets/d/1xssa5BCQjhged5IanF3XO3EyIQgasVSP6VOwJt1Lr-0/edit?usp=sharing

    1. Yuriy – one cannot write a foolproof algo for XD dates. You can guess them right 90% of the time but the XD dates are not prescribed by prospectus or otherwise. The payment date usually is but not the XD date. Sometimes they are early, sometimes late.

      I pick them up from TSX.

  42. Yuriy,
    I have been away for a time and just revisited your spreadsheet. Now I see that I could have had just as good a time just studying your spreadsheets! It is THAT good! A ‘tour de force’.
    I extend my thanks for sharing your diligent and very competent work. Your generosity to all of us at this site is obvious! Thanks! JA

    1. Thanks for the feedback, Joel. Just due to the quarantine, I had a lot of free time, which had to be used somehow.
      Really I am very glad that these spreadsheets were useful for the community members.
      I am currently working on another spreadsheet, which will display ex-dividend dates as well as payment dates.
      There is a small problem in order to skip non-working days, but I think that soon I will post it here.
      Thanks again for yours feedback!

      1. Yuriy, I’m sure there are many others like Joel A and me who have admired the work and are grateful for the effort. It’s hard to find people/comments here to track subjects.

  43. Morgan Stanley – anyone have experience with them re: Canadian preferreds, trading, tax treatment, etc.? I have an image of them as expensive, advisor oriented, not a good place for a self-trader. Don’t know if that is right.

    They bought E-Trade – reasonable trading platform? I am getting set to move my preferreds away from Schwab and the IBKR trading screens look like a nightmare to navigate. I have a friend at MS but don’t want to approach her unless I scope out things ahead of times. Thanks for your information.

    1. Tim W. : Like I said about six weeks ago, on IBRK they have a paper trading with full capabilities that is worth the break in. I use only the Workstation Basic (Stable?). Really, once you get the few solid basic moves that are needed to use over and over, it’s not that difficult.
      If you do go there, open with SMALL real Cash, not a transfer in of positions, then you will be forced to learn the basics. Balancing the currency accounts was confusing but right there to see once your eye is trained.
      Re-read the note I sent you a few weeks ago with attention to doing the currency automatic transactions that go along with each trade. Call their broker and keep drilling them to teach you their tricks…it took me about ten calls to get a working sense of their methods.
      If you can understand the CNs and do your own research elsewhere, you can do this. Good Skills! JA

  44. Granted, we are in crazy times with having to balance perceptions with decision.
    Sometimes the “ward” we are consigned to or the one we volunteer to serve in ( our conditioned behavior) dictates the extension of hope in the Musical Chairs Crazy Dance.
    Right now, the Canadian pref markets, based on PRICE, PAYOUT, ABILITY to pay, and RATINGS = better VALUE than US.
    For me, this is an easy choice. Price and price alone; then Value trump (not the proper noun) Drama and Hope.

  45. Looks like the USDCAD is returning to the pre-crisis level. 5 days in a row, it was trading below the 50D MA and now it is clearly striving for a 200D MA (1.345).
    We’ll see, for now I really like this chart (and my gains too, lol)

  46. I have a small position (all at a loss) in the following (US tickers and prices):
    ALTGF AltaGas Ltd Preference Shrs Ser C 14.74 , cost 18.98
    ERRAF Emera Inc Cum Pfd 5yr rate reset Ser C 10.60, cost 14.54
    FXFLF Fairfax Fin’l Holding Pref Shrs Cum Ser C 9.90, cost 13.59
    EBGEF Enbridge Ser 5. 14.25, cost 19.90

    Would you continue to hold, sell some or all or add to any? Appreciate your advice.

    1. As far as their reports can be trusted (I see no reason to mistrust), all these companies are in a good financial condition and their dividends are safe.
      So I don’t understand why sell them at a loss? Although if you see something so interesting on the horizon that it can cover losses from closing positions and bring in more profit, then it may make sense to sell.

    2. I also hold all of the above. I am doing nothing with FXFLF and EBGEF, but am selling ALTGF & rolling funds forward to the Series G issue, and selling ERRAF & rolling forward to their Series F issue. Harvesting losses and getting later reset dates.

    3. David P, Depending on the size of the position relative to your allocation targets and your confidence in the issues, you may want to add shares to average-down your basis.

    4. DavidP – All are solid holds. Altagas has the most warts but with recent common dividend cut the payout is on relative solid footing. Would consider dollar cost averaging down on the remaining.

      1. Altagas Series I with a minimum looks attractive to me here. The OTC is TGAPF and yields are ~6.3%.

  47. Am I correct in recalling that Canadian preferreds are rated one click lower than the parent company common? Parent at R-2mid = preferred, R-2 low, etc parent at R-3 = preferred at R-4?

    The Cd utilities and big banks look pretty interesting at current prices.

    1. Tim, I think you misspoke on comparison vehicles. Rated preffereds will be slotted off the senior unsecured debt, not the commons. As a general rule preferreds will be slotted 2 pegs lower than the senior unsecured.
      As an example, I will walk through one…Canadian Utilities…Their senior unsecured is rated (Im using S&P) BBB+…. Their preferred is rated P-2. This needs to be translated back into American terminology… So a flat P-2 is in between P-2 High and P-2 low. P-2 Hi is BBB+/BBB, while P-2 low is BBB-… So there really isnt a true translation, but you have to assume around BBB/BBB-.
      In America when you have BBB+ senior unsecured its almost invariably going to be slotted BBB-….The small individual ticks shouldnt be over analyzed as the ratings are part art and science anyways.

      1. Thanks, Gridbird, this is a helpful clarification – I’d seen a stray comment or two here or there, and since I’ve been ramping up Cd purchases due to the relative yield and favorable exchange rate, need to improve my understanding on credit strength. The link to debt rather than equity clearly key and makes sense to me.

        1. Alpha, your data is correct, but I was going by S&P which rates them differently. DBRS also has the senior secured rated higher which in effect pulls the preferred rating up also. I was going by Canadian Utilities own website of debt and preferred info…If you look at below link you will notice both DBRS and S&P there.
          https://www.canadianutilities.com/en-ca/investors/credit-ratings.html
          CU has always had great credit ratings but they have a relative arse load of debt and D/E if memory serves doesnt inspire me as much as American utes. So there must be a lot of built in protection assumptions that makes them feel comfortable with the high quality ratings.

          1. Grid, Have to confess to being surprised S&P is reflecting the lower rating as I’ve always perceived DBRS as being more rigorous rater. Might have chalked it up to timing though S&P is dated July 2019 and DBRS August 2019.

            Might add here that based on risk/return, an issue like CNUTF appears far superior to its US equivalents – and I have an over-sized position. Similar discussion regarding SLFSF and holding another full sled of that one.

            Not recalling with 100% confidence, though I think it’s Steve A we have to thank for the SLFSF ticker. Anyone interested in these just watch your fx conversions.

            For example, last price on CNUTF: https://web.tmxmoney.com/quote.php?qm_symbol=CU.PR.G

            and latest CANUSD conversion: https://finance.yahoo.com/quote/cadusd=X/

            Meaning CNUTF would trade around US$14.65.

            1. I gotta confess too, Alpha. I saw the DBRS stuff but was too lazy to type all that stuff in too, so I kept it easy with just S&P, ha.
              If memory serves it is just as respected as a rating agency as S&P is.

                  1. Sorry alpha8 – you ended up in pending – I approved. I think it was the number of links that held it.

                    1. Thank you Tim. When posted there was a banner indicating it needed to be reviewed. Good security to keep your site safe.

                  2. Thanks, this was great. I’d tried searching in the past but came upon dead ends. Appreciate the help.

                    1. Absolutely Tim. For me, the rating (also as a proxy for the balance sheet and inherent risks) is a cornerstone and starting point for each investment.

  48. Does anyone know what happened to Pembina? Their prefs are literally crushed at the late hours.
    I’ve never seen something like this before, 6 out of 10 of today’s fall “leaders” is the same company – Pembina:
    PPL.PF.E -10.33%
    BCE.PR.A -9.73%
    PPL.PR.E -9.17%
    PPL.PR.A -8.95%
    BBD.PR.B -8.46%
    BAM.PR.X -8.14%
    PPL.PF.C -8.07%
    BCE.PR.L -7.81%
    PPL.PR.G -7.14%
    PPL.PF.A -7.02%

    1. Recently pembina purchased the remaining assets of KMI in Canada which leveraged up their balance sheet.

      At the same time producer volumes have dropped sharply due to producer shutting in production.

      Short term energy volumes will be down long term volumes will increase.

  49. Yuriy,
    Have had a bit of time to review your marvelous work.
    I do not see any of the six CPX (an Edmonton Utility) shown. There are six and all normal CN types with some conversion feature, three with minimums, etc. They are not on the original copies I made back about a year ago of Raymond James or CIBC stuff either. ???
    The corporate site has a page dedicated to these prefs and from what I can see debt is rated at BBB- .
    Just what you may want…more inputs?
    PS: looks like the data updates on a new log in? I don’t see it continuous or periodic delay.
    Thanks again. JA

    1. The data in the table is updated in real time. Sometimes it happens that the table may freeze in other browsers except Chrome, just update it forcibly through the refresh button.

    2. How does one access the Canadian preferred spreadsheet ? I did so from the link in the comment below but that will of course disappear in time. Thanks.

      1. Hey. There are 4 spreadsheets:
        1 spreadsheet-database that you need to save as a copy on your google drive (you need an account in google)
        https://docs.google.com/spreadsheets/d/1b0JLqAUoV1bRDWLMwqzD32ERNCHTS9DvdyvNzv–Rsk/edit?usp=sharing

        2,3,4 these are simple tables, they work online but their functionality is very limited
        https://docs.google.com/spreadsheets/d/1nJTjD1H3PKvqcuntO7hL3rwI2p5-7AIBa5bplxKky-U/edit?usp=sharing
        https://docs.google.com/spreadsheets/d/11vDz_swj2Z8-VQjl7nKgnlSRURz3k8Y8YLqCDMwC-II/edit?usp=sharing
        https://docs.google.com/spreadsheets/d/1UB3TVsCo_bPDD4tkYu88tQxEO1KrybbY429PoObEYS0/edit?usp=sharing

        The first table contains almost all currently preferred shares traded on the TSE; 2,3,4 each of them contains only shares of its type (fixed
        fixed coupon, floating and fixed reset).

        Access for all spreadsheets via the links is open and will be open constantly, for both copying or simple reading.

    1. Yuriy – Enjoyed your sheet. Took a copy. Inside MainDb table used empty AB column to extract reset spread rates.

      =(REGEXEXTRACT(Y2,”[0-9]*\.[0-9]+[0-9]+”))

      Modified By Yield Type table formula

      =QUERY(MainDB!A2:AF366,”SELECT C, N, D, Z, H, L, I, U, W, A, O, Q, X, AB WHERE N contains ‘”&C2&”‘ AND U >= “&O1&” ORDER BY “&O2&” “&A1&””, 0)

      After this modification I sort using “Reset Terms, 6, Reset” the first 12 rows return strange data. Everything past first 12 rows works perfectly.

      Also find reset by date table very useful.

      1. micahc, my 2 cents worth about 1 cent: because of the restrictive 2-dimensional ranking and blocking of data under sort, have also found it useful to use Conditional Formatting to identify a cell or cells identified as meeting a string of criteria. It’s like adding a third search axis through the data, ergo 3-D. As an example, in selected cells within sorted data use the AND function with any number of criteria. The cell illuminates if all criteria have been met. Provides an instant visual, eliminates need to parse data and for me guards against any tendency to equivocate on decisions that were made earlier without time constraints. With a market data feed; real-time data, and real time “pre-determined” decisions.

        1. Yes, initially I had an idea to make one sheet with a lot of criteria to set together. But after testing on unprepared users, I refused it, because users were confused in this set of hard-set criteria and the table looked overloaded.
          Probably I will nevertheless add such a sheet to the next version, for more sophisticated users who will not be scared by 5-6 additional cells with specified conditions. Thus they can delete the sheets they do not need and work in one table.

        2. alpha8 – have built an extremely ugly ranking system for my favourite issues based upon pre-determined criteria to bubble most interesting issues to the top.

          Wanted to see with Yuriy DB containing everything what would happen on a simple query.

          In my system I score securities based upon criteria to bubble them up in rank. The only problem is the system is static. For example buying more FEB yield I need to perform a manual sort of the whole table.

          (200 points max for strip yield)
          =IF((X3*24*100)=0,(X3*24*100),0)),200)
          (200 points max for YTC)
          =IF((Y3*7*100)=0,(Y3*7*100),0)),200)
          (140 points for credit score)
          =(vlookup(F3, TABLE!$F$27:$H$42, 3, FALSE))
          (120 points for reset score)
          =(IF(AND(AB3>=0,AB3=1,AB3=2,AB3=3,AB3=4,AB3<6), 60,))))))*2
          =Perfect score 600

      2. Yes, 7 issues with (N/A) undefined conditions (≥80% of 5YR GoC Yld) are displayed at the start (or at the end) of the general sort. We won’t do anything with it, it should be so.
        And the next 5 are Enbridge and Altagas issues nominated in USD. The idea is good that they are displayed separately, but why is this so is a mystery to me …
        With the exception of these non-standard issues, everything else in your modification works correctly.

      1. Thanks. The idea to create such a sheet came to my mind at the end of March, when the CAD fell to 1.44 and I was buying Canadian prefs on a massive scale. Then I realized that in a hurry and because of the large number of issues of the same company, I made several mistakes that would not have happened if I had a complete picture of the entire market. I hope this sheet will be useful during the next selloff, lol

  50. Anybody looking to RESEARCH a Canadian listing (actually located as a corp in Dedham, MA) AZP prefs deserve a deeper look. Rated NR currently, this utility is a wholesaler with long contracts. ( I had done work on Innergex also and bot a sliver there a while ago). Heavy green assets. I have followed them for awhile and have seen concerted and focused, tough board decisions over the last 4-5 years. It is working. Their disciplined approach to the next four to five years is built on that work, BUT they are ‘working their plan’. Gotten credit upgrades in the recent past.
    Three prefs, a common that is being repurchased (CA:ATP, no div) at a low price and debt that is being steadily paid down from cash flow to meet future maturity. Interesting and the kind of plodding approach made by conservative capital allocators. They are also selling chosen assets and decommissioning some other brown assets.
    Of course, continued expedition of any plan is modified along the future path, but I would rate the prefs a buy at these prices and do own.
    PS: one OTC: APRRF

    1. Took a look at recent investor presentation and it appears they have had a decent slog recently with the fire/incident rate. Its amazing they survived while adding $10M ebitda y-o-y.

      For NR 9.41% there is almost no point to dumpster dive when you have superior credits and almost equivalent yield. TSE:FTS-G 8.17%, TSE:ALA-G 8.66%, TSE:CPX-E 9.56%

      1. Micah, Got some of those. For me 1/4 of 1% of entire portfolio in each of those mentioned above, different govt jurisdiction and util diversification. You are correct an element of speculation with NR (my own judgement) and long term on reset. Thanks for the challenge. That is what I like best bout this site. JA

  51. Somebody go look on Bob’s desk and see if he left a note.
    Maybe he’s up in the Laurentians Spring cleaning the cabin.
    Haven’t seen him in a while…he’s up to something…

  52. TSX symbols – it seems that some preferred issues have a .pr between the symbol and the series, and others have a .pf there. Does the difference signify something?

    1. Tim W: Good catch! That had been brought up here before and is a distinction to be aware in Canadia (that’s what I call Canada).
      IT IS ONLY a SYMBOL and a DIFFERENT SECURITY. Each will trade that way and watchlist on IBRK for instance. No other differentiations. It is easy to buy the wrong one though.
      I pondered why, but was making something up that can probably not be discovered, eh?

  53. Folks, please help with Brookfield’s corporate structure.
    Is Brookfield Office Properties Inc. (BPO) an some kind of independent non-public entity (since their common shares do not seem to exist) or is it a subsidiary of someone else’s public company?

    1. Brookfield Office Properties Inc. (BPO) original name used.

      Current name Brookfield Property Partners. Common Stock tickers BPY-UN.TO (BPY/BPYU)

  54. Hi. As the people showed interest in my previous spreadsheets, I decided to continue work in this direction. The result is a spreadsheet that is more powerful than the previous ones. I will briefly describe its contents:
    firstly its main page; it contains a lot of summary data about the market, such as capitalization, results by sector and individual companies. It also has a search by ticker, which you can select from the menu or simply copy-paste from the cell you are interested in (you can also enter it just by hand but use only capital letters);
    then there are 4 sheets in which you can make a selection by sector, DBRS rating, month of payment and type of the yield (or just display all positions if you clear the search cell);
    and the last user sheet is just 4 goverment’ rates.

    The spreadsheet is made by the type of database, that is, it has 3 auxiliary sheets with data, from which data is output to user sheets using queries.

    To fully use it, you need to make your own copy (so you need a Google account): go to the “file” -> “create copy” and then open your personal copy at yours Google Drive and work with it. So, here we go:
    https://docs.google.com/spreadsheets/d/1JquBJYkvTITTZHEV3e9gqgwQBdc8RN9X_WvGNqof-V8/edit?usp=sharing

    P.S. If you find some error please let me know here in comments (including spelling, as my English is very basic).
    P.P.S. Tim, maybe you could add this link to the main post (or make your copy and add a link to it). It seems that it can be helpful, especially to beginners who first time coming to the site as a result of searches for canadian prefs. Not now but maybe later, when the spreadsheet will be tested by users.

  55. How about some thoughts on current opportunities in the Canadian space. I’ve got some cash that I could deploy.
    Thanks in advance.

    1. Issues to investigate in the reset space:

      TSE:MFC-K – Type: Reset – No OTC – Rating: P-1L 9/19/2023 Call – Strip Yield 8.12% – Payment Quarterly (Feb)

      TSE:RY-Z – Type: Reset – No OTC – Rating: P-1L 5/24/2024 Call – Strip Yield 6.85% – Payment Quarterly (Jan)

      TSE:FFH-E – Type: Reset – OTC FRFGF- Rating: P-3H 3/31/2025 Call – Strip Yield 8.35% – Payment Quarterly (Mar)

      TSE:TRP-D – Type: Reset – No OTC – Rating: P-2L 5/1/2024 Call – Strip Yield 7.57% – Payment Quarterly (Mar)

      Issues to investigate in the fixed space.

      TSE:SLF-D
      TSE:CCS-C

      Issues in the floating rate space.

      Widow and orphans monthly payer
      TSE:BCE-H OTC: BECEF Yield: 5.48%

      1. micah, Been waiting for more cash from other sources to reinvest /put to work and these delays in business are slowly seeing pricing in the markets slip higher. ARRRGGH! I only pray that the good angels are keeping me from rushing in when in retrospect I will understand. I have actually been trying NOT to look. You’re killin me over here with posts like this!

        1. Joel – Monday is another week anything can happen. You will discover if you track enough asset classes there is always the next deal.

          Don’t feel pressure to buy its best to be selective. Only if I could have got back half of the issues sold.

    2. Set up your personal parameters and use the sheets above to screen. This is a must.
      1) IBRK seems to be a mandatory tool/brokerage to really navigate. More details and work! This includes a bit of knowledge in the taxation/filing arena too.
      2) Must know basic function of three types of preferreds. I say three because I do not think ‘splits’ are a true preferred. I really do not even look at them.
      As an opp, I think the CN market has a lot MORE than the US, meaning good IG prefs in a bargain bin.
      Giver it time, read back postings here too. Lots of good stuff here.

  56. so BNS.PR.D, BNS.PR.Y got redeemed. no notice. My curiosity spiked due to the yield being abysmal.

    For Canadian banking Non-. Viable Contingent Capital (NVCC) non-compliant preferred after 2022-1-31 Office of the Superintendent of Financial Institutions (OSFI) deadline will no longer be counted as Tier 1 Capital.

    Remaining issues are BNS.PR.Z, BMO.PR.Q, RY.PR.A, RY.PR.C, RY.PR.E, RY.PR.F and RY.PR.G.

    As this is the first time I am hearing about this problem for Canadian Banks do you think more calls are coming?

    1. Notice was given on Mar 19 and redemption took place on Apr 26; that was proper notice.

      Certain bank issues, those which are non-NVCC, are (arguably) required to be redeemed fairly soon. It’s the same issue as Tier 1 capital in the U.S. By Basel agreement, they need to be retired.

      Check the name of the issue. If it has NVCC issue in the names it won’t be redeemed. Those that are subject to redemption will be priced very close to par. There aren’t many of them.

      BNS redeemed the two issues in question when the market went very wacky mid-March. They were trying to prevent an abusive market situation with “necessary” sellers getting screwed. It was a good call.

  57. Value of the Foreign Tax Credit (Form 1116) for Canadian preferred …

    The following applied to Canadian preferred held in a non-qualified account (e.g. non IRA or 401-k or similar). Assuming you are a U.S. resident for tax purposes, you will have 15% of dividends withheld. Period, no way around it. The operative question then becomes is that 15% “wasted”, meaning are you paying more in tax because those divis are Canadian?

    The answer depends on your individual tax situation, specifically your marginal tax rate on QDI dividends. If your marginal tax rate on such dividends is zero (lucky you), then the total withholding is effectively money out the window.

    However, if your marginal tax rate on the QDI divis is 15% (or higher), you will get most of the withholding back. This does not mean that you’re not paying tax on the Canadian preferred divis – you are – only that you are paying no more on the Canadian source divis than you would if they were U.S. source divis.

    Having just completed my tax return (Oh, joy!) I am “wasting” about 20% of the 15% withholding. In other words, my credit is only 80% of the amount withheld. Averaged over my portfolio this works out to a haircut of about 20 bps in yield.

    With tax software there are not too difficult calculations to make.

    1. Bob, Turbo tax was a few second breeze wasnt it. I got the full credit applied for my situation. But it wasnt good enough to avoid owing money and a very small penalty for late payment. Im just not doing that quarterly tax mail in stuff.

      1. Grid – turbotax (I use taxact actually) will pick up 100% of the “pure” foreign dividends with ease. In the case of a few funds I own an extra step was needed.

        If only a part of a fund’s income (and divis) are foreign, you have to split the income between foreign and domestic in order to complete Form 1116.

        iShares were easy as Blackrock provides that information for all of its funds on a single PDF. Just a simple, albeit manual, calculation required before entering the figures on the 1116.

        Vanguard, on the other hand, doesn’t provide the information and when asked about it said, in substance, go pound sand. I would have a better chance of getting the information by making my request through the IRS or SEC or FINRA.

        1. Bob, I pulled off the total Canadian dividends from Vanguards summary tax form. I directly imported to Turbo all the Vanguard forms and it read it correctly and applied it after I entered the accumulated dividend amount for the year. And of course Vanguard had all Canadian dividends as QDI, so it was a breeze. This will be the last year for Vanguard and Canadian issues as all of mine are at TD now, and Vanguard will not allow you to buy them anymore.
          I rant and rave about some of this stuff. But I am much happier trading for free and dealing with all of this garbage of brokerage ineptitude than having to deal with the by gone days of stock brokers with very little knowledge just trying to sell the mandated corporate handout sheet to pump to customers.
          BTW, what brokerage do you find more suitable for your needs?

          1. Grid – to put it in perspective, the first stock market buy I ever made cost me about 10% of the trade. That was 45 years ago. We are spoiled rotten today, even as we complain about the poor service and policies. Let’s not become the snowflakes of the investment world.

            Right now, I plan to keep U.S. 3 brokerages, those being IBK, TDA and Vanguard. IBK gives me access to Canadians and to certain U.S. fixed income that no other U.S. broker does. TDA has the best access to U.S. OTC issues, many of which which can’t be bought at IBK or Vanguard.

            Vanguard is mostly inertia, especially for accounts that I don’t own but have trading authority over. In spite of their failures Vanguard is still the most honest “broker” out there. It’s an anchor.

            Schwab has no place in the lineup and will be gone soon.

            1. From what I read about Schwab, gods help us if TD goes to Schwab without adopting their platforms and technology! There is still a lingering arrogance that ‘the American Market is good enough for you, so just keep your place…or use an ETF’.
              Maybe anti-trust can step in? Another drama.

  58. Hi, folks. For those are interested about canadian prefs, I just have finished my updated spreadsheets.
    You can see them here and if there is some error please let me know:

    Resets https://docs.google.com/spreadsheets/d/1UB3TVsCo_bPDD4tkYu88tQxEO1KrybbY429PoObEYS0/edit#gid=0
    Fixed https://docs.google.com/spreadsheets/d/1nJTjD1H3PKvqcuntO7hL3rwI2p5-7AIBa5bplxKky-U/edit#gid=0
    Floating https://docs.google.com/spreadsheets/d/11vDz_swj2Z8-VQjl7nKgnlSRURz3k8Y8YLqCDMwC-II/edit#gid=0

    1. Thanks! Will pour over them!
      There are good odds for an eventual forced inflation. This is seen now from the very top down all over the world. Supply is and will be “controlled”. by MANY forces and contracts.
      I am retaining my original allocations to resets and the small number of float / fix to float. I decided to constatly remind myself that I need to stick to my plan which is laid out for the next 30? years. These are good balancers to a pref portfolio, like heart, lungs and brain all working together. I don’t have to be right today, just over a trending timeline.
      There is fear that all businesses are going to hoard cash forever, cut all divys and shut down a third of all their business lines. Choosing the tough survivors is more of a study and diversification process for me than the day to day dramas. Canada is tough minded. That has been my experience.
      I lived and worked in Canada (and had an OHIP health ins card!) and lived right at the border for about five years. The Canucks are good steady, rational cousins to America, in some ways more ‘adult’ than our general tone of frat party (except when it comes to hockey).
      Hope to be up there this summer again!

      1. Indeed, when everyone on the market stands in one direction, sooner or later a reversal occurs.
        So it is now, when everyone expects zero or even negative rates in the future, I personally trying to hedge myself from raising them. And Canadian resets at today’s prices, in my opinion, are a one of the proper hedging tool. Sure I’m not ready to put all my eggs in one basket, but if where will be good drawdowns I will increase their share of the my portfolio.

        1. The Canadian dollar strengthening against the USD would also provide a pretty good addition return that you don’t see on US preferreds.

          1. I believe that the USDCAD will return to his mean rate at about 1.30 in the coming months as soon as oil prices normalize.

    2. Yuriy. Great work. I may have missed it but I could not find USD denominated Enbridge prefs (ENB.PF.U,ENB.PR.V,ENB.PR.U,ENB.PF.V) and four fixed splits from Brookfield Properties (BPS.PR.A,BPS.PR.U,BPS.PR.C,BPS.PR.B)
      Thanks again.

      1. Hi and thank you for thr feedback!
        USD issues of ENB and ALA are at the bottom of the table. I placed them under the separator because I plan to add three buttons (Non-cumulative, Cumulative and USD-denominated) to the header of the table, which will immediately lead to the desired section.
        It’s possible I have missed some Brookfield issues, will check it asap. Thanks for the heads-up!

    3. VERY nice job and looks like they update! You must have had experience in business with spreadsheets since this looks like beyond-a-hobby work.
      Also, I have restudied the companies up north and it looks like the management’s jaws are clenched for another commodity survival cycle. They were just beginning to get plans and hope to budget free cashflow to new projects and maintenance. Now slashing costs, rescinding this year’s schedules, pay cuts, some common divy reductions and expanding revolvers are all over. Not losing confidence since many were functioning out of free cash flow already. Now reductions to top line income is striping the middle of the balance sheets, commitment to retention of credit ratings and other short action orders.
      HSE, the one showing on the top of your Yuriy’s sheets today is a good site to go to to read up on the actions and responses being taken. I see a lot more transparency with CN companies. Too bad these folks aren’t attracted to government management!

  59. A new way to play the largest infrastructure company in the world …..

    Brookfield Infrastructure Partners (BIP) holds most of the infrastructure assets of Brookfield Asset Management (BAM). BAM is a Canadian corporation but BIP is a Bermudian partnership. BIP is listed on both the TSX and the NYSE and is registered both with the SEC and Canadian equivalent. This is no grey market issue.

    Recently, BIP did a spin-off of sorts, creating Brookfield Infrastructure Corporation. Like BIP, the new corporation will be listed on both the TSX and NYSE (ticker BIPC) and will be registered in both countries. BIPC is a Canadian corporation (not Bermudian and not a partnership). To confuse you further BIPC will keep its books and declare its dividends in US$.

    The two entities – BIP and BIPC – will be “economically identical”. That is key to the spin-off.

    So, if you like the company, and I do, you can pick your poison. BIP will get you a K-1 (no UBTI), but no withholding. Bermuda doesn’t withhold. As a U.S. taxpayer, taxes will be whatever they will be, just like any other partnership issuing a K-1.

    BIPC will get you a 1099, with 15% withholding if it’s in a non-qualified account or no withholding if your broker gets it right. The dividends are QDI, not that you can ever expect Schwab to figure that out.

    Logically, one would put BIP in a taxable account and BIPC in a qualified account.

    At the right price I am a big buyer.

    As an aside, BIP also has 6 preferred issues outstanding, 5 mins and one straight reset. All are issues of the Bermudian partnership and thus will come with a K-1 but no withholding. All BBB- by S&P.

    https://bip.brookfield.com/press-releases/2020/03-31-2020-120202244

  60. Arnold Palmer’s 1960 U.S. open aside, Canadian preferred staged one of the great comebacks of all time. Mins are up as a group 37% from their late March lows, fixed up 24% (they hadn’t dropped as far), and resets up 31%. All are well below their 52-week highs but they didn’t stay in the basement for very long.

    In relative terms the min rate issues are the best buy. Stripped yield of 6.53% and rates that can go up but not down.

    Where they go from here I can’t know. It’s an income play for me but I may put aside a few loonies for short term trades. Hey, I might become the Gridbird of Canadian preferred.

    Hope to have a surprise announcement early next week.

    1. Rip Van Winkle Investing. Wait a month or two, (or like Rip, 20 years). Buy good value at a good price and take a nap. That’s really all we can do. We really know when we are being foolhardy, so why play a weak game? Nod off under a tree for a while, sounds good to me.
      The Tao say,s the same thing “do your work, then step aside.”
      Damn that was easier than CNBC!

  61. Hugely disappointed by Schwab’s weasely response. I asked my advisor where this SEC repository of foreign issuers statements is to be found and if the results are online. I expect no response. Classic bureaucracy defending its mistakes instead of correcting them! Pathetic in the extreme.

    OK – IBKR – being able to buy & sell directly on the TSC sounds great, I don’t really care if I own them with an OTC symbol or not. What should I know before I set up accounts and move my Cd preferreds there?

    What is the best way to go about it? Any charge for trading? Is any research on the Cd issues accessible? It’s a real frustration with current tools.

    Can I transfer money back and forth with my bank account easily? Will IBKR account activities download into Quicken easily? What will I hate about them after I work with them awhile?

    The tax differential on the sums invested is too big to ignore. I hate the complication, though. So nice to have everything in one place.

    1. Tim W.: The large print giveth, the small print taketh away.
      I my opinion there is a bit to know before moving to IBRK, but luckily, none of it is rocket science. You have to know what you are doing and want to achieve with the CNs first. Mostly, the idiosyncrasies of their site AND SCREENS (views). Also, being able to do some basic mental flipping of ideas around which you may already be familiar if you have been a student of the three basic CN pref issue types.
      Here is a short list of things I wish I had known in advance that I have had to pull out of my experience there:
      – CN Prefs, no margin even if you have approval. They told me it would be determined and possibly changed on a minute to minute basis by their computer algorithm. I was NEVER allowed a scrap of margin. Would have been nice as a practical tool in this last down turn!
      – MOST OF ALL! IBRK DOES NOT ACCEPT YOUR OTC SYMBOLS, NOR DO THEY CONVERT THEM! At the onset a broker told me it was a five dollar charge for each one, but indeed they rejected the transfer. I retained my OTC symbols at TD and moved cash only then began an allocation process fresh.
      – Transfer of CND into USD and back, there is a way, automatically, to do this WHEN YOU MAKE THE TRADE into a CN issue, if you hold account cash in USD! (FX) You can flop money back and forth manually, and it shows up clearly on the screen, if you choose to and do a bit of currency playing. I do not as that is not the purpose of this account for me.
      – Subscriptions are needed for real time and accurate Bid/Ask or use TSX at same time, but have been ‘shistered’ and gotten lame-o excuses.
      – Getting ANY banking-out transfers has been a real obstacle and is still not set up. Moving money in is a SNAP!! I have heard EVERY lame-a** excuse and at this time am waiting until they will actually answer the phone, return a call (callback: which is part of their phone protocol, but not followed through even a day or two later) and/or the volume during this downturn allows for this to be addressed.

      These are a few things to consider. I would suggest opening up a ‘Paper Trading Account’ and getting very familiar. I did not spend enough time here and had…well a few frustrations and little help from the few good brokers. Generally, unless I pressed them to the mat and held them there it has been a challenge. My personal experience is that most of their brokers are really not really not too adept and do not extend themselves toward you at all. I hang up and just call back and try to get a different and experienced broker who knows their platform. My first question is, “How long have you been at Interactive?”
      This is my honest experience. Would I do it again? Yes, knowing this and what questions to ask. I am at the point now where I do NOT want to relearn, revisit and master more in this industry or another website. I do NOT need the excitement or another mountain to climb. Have I achieved my goals with IBRK?
      About 75%. JA

      1. Thanks for the additional information. Going to discuss with my accountant to get a feeling for what he would want to buck Schwab’s classifications.

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