Canadian Securities Discussion

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

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

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

445 thoughts on “Canadian Securities Discussion”

  1. An actual opportunity …. but only for the brave, who can understand the risks, and don’t cry when things blow up. Things can always blow up.

    So, BB-rated issuer, 8.15% stripped yield (means nothing), BOC + 306 bps, no minimum rate, rate resets based on the BOC rate 9 days hence. The short time to reset is key.

    If the issue resets at today’s BOC of 1.281% your SY after the reset would be 7.45%. If the BOC went to zero (not gonna happen on this reset but who knows about the future) your SY would be 5.25%.

    The premium over the same issuer’s min rate issues is about 150 bps. This is your “reward” for taking on some interest rate risk.

    ALA.PR.G, and, as of tomorrow, trading as ATGAF, per FINRA.

    If you have any interest in trading the issue look up the CA$ price on the TSE (14.80 today’s last) and multiply by the exchange rate (about 0.75) to get a US$ price. DON’T put in a US$ bid at the CA$ price, unless you like losing 25% instantly.

    If this works out to be a screaming success for you, you have another poster here to thank for procuring the US ticker.

    If it blows up on you, blame the guy in the mirror. Figuring out the risks and determining if the reward is sufficient is the most essential skill in investment management. “Risk” is not a dirty word. “Uncompensated risk” or “under compensated risk”, those are dirty words … I mean phrases.

    la chance soit avec les braves.

    1. Bob, I always reserve the right to cry…That can totally be separated from “blame”. Two different concepts, lol… If you were getting a penny a look per person, then I could blame you, ha. I looked earlier talking with Amy. I never did see the end Aug reset calculation. Since it officially resets end of next month it makes perfect sense. Enbridge did it that way. But I never found it. Admittedly I didnt fine tooth comb it though.
      I like your logic and essentially outside of negative reset yield in 5 years a credible floor is baked into price. For me personally it still boils down to proper allocation size. So I will most likely pass outside of a further price drop simply because I feel I have enough of the Series I fixed floor. Not really interested in selling, and I have to be mindful of allocation risk. This company isnt on my highest trust list so I have to keep the size in its proper proportion.
      A good food for thought post though!

      1. Just so the point is made, the key date with resets is not the reset date but the reset CALCULATION date, which is usually 30 days earlier.

        1. Bob, I am assuming you aren’t certain of calc date since you said “usually”? I never found it per se on Alta info.

          1. “Tis always in the prospectus. In the case of AlA.PR.G the calc date is 30 days prior to the reset date. 10:00 AM, Toronto time, to be precise.

            A reset that is so close in time behaves (or should) like an option, in that the option premium will decay to zero on the reset date. Put another way, the price of the issue should be going up even if the BOC doesn’t.

            BOC 5-year up nicely last 2 days.

            1. Thanks, Bob, I figured you knew, but the usually word through me off in that I didnt know if you were specifically citing this one or in general. I knew the Enbridge one was set up that way. I didnt find it in Alta, but wasnt reading with precision like I usually do. I assume my focus was commiserate with my interest in adding more money to this company.
              Probably would make a good switch out of my I to this one since this issue has tanked hard the past 5 days. While I series is basically unchanged in same time frame.

    2. Yep, Bob, if it does well I’ll take the credit for procuring the ticker. If it doesn’t do well, we’ll blame you. :>)

      Grid – I love your first sentence below. I will always reserve the right to cry in my beer, even though I don’t drink beer, but I will never blame. Nobody holds a gun to my head to make me buy anything. I’m very good at making stupid mistakes all on my own.

      In all seriousness, I like to encourage everyone to make personal recommendations to buy/sell without ever worrying that somebody’s going to blame them for their suggestions. I don’t want people to feel handcuffed and not feel free to express their buy/sell opinions.

      1. Amy, well you asked…And you wont be surprised, ha… PPX..couldnt resist and sold off part of my money market account at 25.76. These were bought in 25.30s just last week. Scalped the next interest payment 2.5 months early, lol, on some. Tried to buy me a decent allotment of AATRL. Only got 149 shares at $46.90. Ask backed up over a buck to $48.75 so I cancelled rest of order so figured seller was gone. It is a quirky trading little Baa1 trust debt convertible issue (Inspbudget told me about it). I saw my PPX “money market” stock had already dropped back to 25.59, so I bought them right back.

        1. I need to stop being so greedy. I had PPX set to but at $25.25 and it never triggered. Still learning…..

          1. Amy, I certainly get it. I have been fortunate to flip this so often (real often) with gains this year it gives me the mental math freedom to not fight for the best offer. For example today flipping out at 25.76. If I hadnt locked down easy gains, already, I wouldnt have been so excited to reenter right back at 25.59. But if I hadnt sold them I obviously would have still had them at the lower price anyways, so buying that allotment back wasn’t much mental anguish.

  2. Some stunning figures ….

    I am following a universe of 113 naked Canadian resets, “naked” meaning no minimum rates.

    The average issue price of the cohort was (surprise) $25.00.

    Average current stripped price (an apples-to-apples comparison) is 16.52.

    The average 52-week low is 16.48. Compare that to 16.52.

    The average 10-year low close is 15.43.

    The average stripped yield is 6.47% and the average issue has zero call risk. The cohort ranges from BB to A-, with the average being investment grade. This is not junk.

    If I thought no further I would say this is the greatest buying opportunity of the decade.

    But consider that the BOC 5-year is, today, at 1.195% and the 2016 low came in at 0.048%. Rates have further to fall, and so do prices. I believe that patience here will be rewarded.

    But if you are tempted to buy now, do so carefully. Calculate what the yield on any issue would be if it reset to .48% + spread, and also 0% plus spread. Many of them hold up very well. Many do not.

    Within the issues of any one issuer, there is a wide range of reset yields, and the one that often appears “best” based on current yields isn’t the best at all. Within TRP, TRP.PR.E appears to be best based on its 7.87% yield. But viewed through reset eyes, TRP.PR.G, with a 6.01% yield, is actually the best of the TRP brood.

    Today was a big down day for the naked resets, with only a very small decrease in the 5-year rate. Imagine what will happen when the rate drops to 2016 levels. At the risk of sounding like a Chinese fortune cookie, good things are on their way. The opportunity to pick up world class companies at 8-9-10% yields is a distinct possibility.

    1. That is true, Bob. One issue is investment grade and at todays prices if 5 yr ever climbed back to 3% from 2010 you would have an 11% QDI IG preferred…Instead one could be looking at easily sub 4% at reset, lol….The power of low number discount to par…If……..

      1. And for that 11% reason Grid, it seems a possibility redemptions occur at reset as issuers will be able to negotiate generationally favorable terms. Issuers might offer a bonus such as – the index will not be counted as less than zero, then drop the margin by 1%.

        If we’re personally running any of these corps and have the opportunity to float a new issue with much lower margins then currently outstanding – we’re doing it.

        For that reason, there is the possiblity of windfalls on some of these “way” below par issues. Of course, I never fully understood the reason a corp would not just buy back their own issues from the open market.

        1. Alpha, this one TCANF, the company would not be paying out 11%. This has a lowly 1.54% kicker. A 3%, 5 yr would in general equate to a 6-7% QDI IG perpetual. This at reset would only cost them 4.54% off par. So it is still dirt cheap to them. They wouldnt redeem I suspect. Buying way below par is what makes the theoretical yield high in this scenario. Unfortunately with low kickers it works nasty the opposite way price wise when yields go down.

          1. Grid, yes of course – in terms of company expense I’m referring to the kicker. There are a few that are over 3%.

            The YTC on many issues today is already passing south through 4.54%. If indexes continue south, it’s reasonable to expect yields to continue to fall. If this occurs and we approach the zero-bound, corp boards can be expected I think to attempt to secure better terms on debt or equity obligations.

            EBGEF’s margin for example is 2.82%. Even if a full 1% was shaved off the margin via a redeem/reissue, it’d still be higher than the TCANF margin of 1.54%.

            None of this is to suggest it will happen. Though it does appear the min rate resets and higher margin issues could be exposed to redemption in an ultra-low rate environment. This would provide lower costs to the issuers and windfalls to holders.

            Related but separate, if we do approach the zero-bound, it’s difficult to envision a near-term scenario where rates climb meaningfully. Even if a liquidity event, the CBs have evidenced their willingness to push the QE button at will. e.g. Italy and Greece ten year bonds recently less than US – good grief.

            1. Could there also come a time when these companies might consider taking a longer term view and want to lock historically low rates with refinancings with fixed rates to replace these resets or do you think the reset every 5 years aspect will always be long enough term thinking for them to forever ignore locking in a rate such as 2.82% for EBGEF if Treas were at zero 3/1/24?

              1. 2WR, good question…I dunno…But remember the origination of resets to begin with was low long term rates. The market up north has almost completely went away from the fixed yield model.

                1. What ‘chu talkin’ ’bout, Grid, not knowing? I thought for sure by my merely posing the question you would Carnac the divine answer we’re all looking for on these Canadian resets……. 🙂

                  1. I give free opinions, 2WR. Worth roughly what cha pay ‘fer. Now if ya want that high quality fancy expert opinions….Ya gotta pay up and subscribe to Rida Moron’s and Pendynuts paid site. Them there give ya the good stuff…Ya know…Like CBL at $8 and WPG at $9, etc.

                    1. You don’t pay for just “the good stuff” Grid, you pay for early and special access to “the good stuff”. Ha! What a steal! Oops, I meant ‘deal’…

                    2. A4I, you cant make this stuff up. Pendynut said his mall reits were doing exactly what he wanted and was very satisfied. So I buy their WPG reco at $9 and I am supposed to be satisfied its at $3.31? And people pay for that expertise…ugh….

              2. 2wr, Yes that’s what I’m driving at. In a historically ultra-low rate environment, one would expect corporations to lock in those lower rates. Lower margins or lower fixed rates as you indicate appear an inevitability if the rate trend continues.

                The potential for this outcome appears high as the breadth of the current rate nadirs being reached is not in an index or two, but literally across the planet.

    2. Bob, thanks for these interesting stats.

      There is no doubt that these issues will fall further. As you noted, today was an ugly day for the Canadian resets. But, as I was saying to Grid, I find the magnitude of this reaction a bit surprising for 2 reasons:

      1) investors are said to very “yield starved”…and

      2) human nature is to worry more about what they can get NOW…vs what might happen 3-5 years down the road.

      CY is being ignored….and the years of call protection are being ignored.

    3. I sold off 2,000 shares of Ebbnf and Ebgef today. I could use the tax losses to offset some things. However, things I’ve heard from a couple of extremely smart HF gurus this week is giving me serious pause.

      1. MrInprophet….Who knows… In one week it may look like a mistake and in 2 months you may be thankful you sold. Interesting despite the great consumer economic news, the 2/10 yield curve briefly inverted again today.
        You may get a crack at lower prices if you reconsider in 31 days.
        Basically that is what I did with EBBNF. I got a small cap loss as an offset, but have bigger cap gains still from earlier flips on this particular issue. EBGEF, I took my $1 or so cap loss like a man, and never looked back. I bought EBBNF back this week about a buck cheaper, so psychologically anyways I feel better. I really want to have some skin in this game, though largely it went to fixed floor resets a while back.
        I still want a crack at the Emera Series C again and buy it back. But Im guessing it still can be bought quite a bit cheaper down the road, so I will wait.

  3. Ok, throw me in jail. I just bought 500 of EBBNF at 16.70. Even at 0% 5 yr the yield is still 4.71%. Basically replacing some of the shares I sold off higher a few weeks ago.

    1. Well, you’d have gotten there quicker if you’d just bought Inspy’s uncallable FIISO @ 180. 🙂

      1. Im an eternal optimist Camroc. Im thinking sometime before I die the 5 yr will hit 2% and I may even squeeze out a cap gain before I die…Or before pipelines having cigarette cancer warning labels on them and the stock goes to zero, lol.

    2. Hmmmmmmmmmm, I had heard on the Street where the Royal Mounted Police were looking for you, Grid, but I didn’t know why…. Now I know…. Mentally, I have had a “I’ll think about adding” tag on 16.80 (8% current) for EBGEF should it get there, but it ain’t happened yet…. no matter what, trading in and out has saved you some coins that my inflexible sticking to my guns strategy has not done for me……

      1. 2WR, I would credit it more to satisfying my “trading fix” than any sound tactical strategy, lol. A while back when I wanted to get a serious load of LXP-C and NYCB-U something had to go. So most of them got the boot to make way. Fortunately those two have appreciated nicely. 6 months ago they would have got the boot already. But nothing to buy so they are staying in the 5 man starting rotation.
        More EBBNF? Hmm, no, I will pass. PPX? Belch….Im belly stuffed with it, and would love to find a deal to lighten that load. But it isnt out there…Well, Brad Thomas has recommended SKT today for the 500th time since he first recommended it at a price almost 50% higher than today. I guess I could buy that, ha.

        1. I think some prozac is in order.

          If the SKT chart were a ski hill it would be a double black. Ugh.

          1. Bob, his ego is just to big to let go of this SKT love affair. Sometimes people lose objectivity. He seriously recommends it once a week and will not give any respect to the capital lost on this downhill trade. His article today was “Get Schooled” with…and SKT was one. He isnt quite as witty as he thinks he is. As the title actually refers to real truth, ala the 50% beat down on price since reco. Get schooled is slang for getting your butt kicked. This one has certainly done that.

      2. 2wr, I’m usually stubborn about figuring things out for myself but I need your help with this bond. You know bonds better than me. It’s not Canadian, it’s US TIPs. Could you post in sandbox about why you think price action over last year is what it is? TIA

        1. P – Though I’m flattered to be asked, I’m also not going to be much help on TIPS… I’ve not spent much time on them but I do remember studying what they are supposed to do and how they’re supposed to do it and ending up not being able to figure out how a holder was supposed to get from Pt A to Pt. B without holding the bond all the way to maturity… I also know that as a workaround to attempt to accomplish the same thing as TIPS are suppose to accomplish, I at one time invested in WIA and WIW, two Western Asset Mgnt Inflation Linked funds… What I discovered was that those 2 funds did nothing more than track what normal, non TIPS interest rates were doing, so they were not good TIPS alternatives… So sorry I’m not much help, but maybe Tim will send this over to the Sandbox and maybe we can both get an education from others..

          1. 2wr, thanks for reply. The price relationship between yield expectations and inflation expectations is what puzzles me. I did figure out it’s best to hold to maturity that part. I’ll keep digging around more if nobody else adds insight.

      1. Bob, its paying 7.4%? I didnt notice. :). Actually when it sold off Friday, its floor yield on a reset of zero would be “tolerable” in that environment. I am more of a negative person, so it wasnt much of what I will get now, but how much lower is it likely to go and I could tolerate.
        Im certainly not pulling a Rida “table pounder” here. In fact I am still skeptical in general. Maybe near $15, I would make another small purchase. Im done with naked resets most likely until ERRAF can get to around its 2016 lows.

        1. Grid, Wrap an equal-weighted fixed non-callable around it and you’ll have a low volatility, less interest rate sensitive pairing with a high yield. That’s what I’ve done with EBGEF. The pairing is up in cap value (including EBGEFs slide since February), is IG, partially QDI and weighted average yields near 7%.

          1. Hey Alpha. I actually have way more of those than I do resets. I got LXP-C, SLMNP, RPT-D, and CTGSP that I know of. CNIGO is term dated non callable. Then I have IPWLO and PFX that might as well be labeled as such. Cant really make heads or tails out of NYCB-U, but if they would redeem its below par. The rest are call protected. My only past call exposure is CNTHO and PPX.
            Your advise is sound, but I still will curl up and cry like a baby if it drops another buck. But at a $2 loss, the sniffles will dry up and I would then buy some more. 🙂

            1. hahahaha…Grid, if it drops another two bucks I’ll bring the Kleenex and we’ll both buy more.

              Our strategically viable options appear to be dwindling. HCXY, LXP-C, AGM-D, CHSCN, CNUTF, HFRO-A and NCZ-A are my only remaining 5%-handle YTC pfds as the other 20-something have dropped below 5% YTC.

              You might be able to flip ERRAF on a post-sell off bounce. I’m holding two remaining flips though am increasingly distracted by the risk of flipped funds being stranded in the 2% penalty bin for a long time. Averaged-up on a few on last week’s dip though that’s now in the rear view mirror.

              1. Alpha, IG and fixed plus 6% YTC is scarce as hens teeth. I havent been thorough but the list cant be long. NYCB-U is the only one that I have now since LXP-C went below 6% now.

                1. Grid, admittedly this may be an apples-to-oranges comparison but if NYCB-A has Moddy’s/S&P ratings of Ba1/B+ why would NYCB-U be considered IG? Help me understand what I’m not getting here.

                  1. Mikeo, that issue you are referencing is a preferred stock.NYCB-U is actually subordinated debt so it sits higher in the cap stack and thus higher rated.

                  2. Mike,
                    I was discussing this with Grid yesterday. NYCB’s website shows the following rating on the preferred trust shares (NYCB-U) : Moody’s: Baa3 S&P: BB-

                    The regular preferred shares (NYCB-A) have the following ratings: BB- (from Fitch)… they show no rating at all from Moody’s and S&P

                    I didn’t look these up on Moody’s or S&P… Just relaying what NYCB has on their website

                  3. Mikeo, As you noticed the lower cap stack preferred from NYCB trades considerably higher than “safer” NYCB-U. I strongly suspect the reason is the way the issue set up. They declared the trust debt heavily discounted to part of the par and included the stock conversion as part of the issuance. So you get 6% off $50. But in reality based on what I read you owe a phantom tax. Because its original yield was like 11% off the “actual” debt part. This is amortized over life of the preferred until maturity. So I THINK you owe more taxes on this if its held outside of a tax free account.

  4. What Canadians should you be buying now? Depends on your view of interest rates and risk appetite. (I assume here you are willing to get into CA$ denominated issues.)

    If you see rates continuing to fall, resets with minimums and fixed rate issues are what you should be looking at. These will have “backbone” in that environment. They may fall further in price but the rate structure will provide considerable buoyancy (and a good capital gain at some point). These are the low risk play presently, especially the min rate issues.

    If you think rates have bottomed out and we are now looking at flat to rising rates, then “naked” resets (i.e. no minimum rate) are for you. But make sure you can stand big losses without getting ill.

    Go to https://www.tmxmoney.com/en/index.html and type in a ticker (must be a TSX ticker) and look at the 10 year chart. Try “TRP.PR.G” You will see what I’m saying. And that, folks, is an investment grade issue, one of the backbones of the Canadian economy.

    I personally would not touch naked resets (or floaters) right now. When the 5-year gets below 1%, and preferably closer to 0.5%, depending on the rate outlook at the time, I would be looking to make a big move into naked resets.

    If you like mins and fixed rates, but are confined to using US tickers, look at TGAPF, CDUTF, PMMBF, BXDIF, CNUTF, RYYLF, SLFYF, WGRGF.

    If you have access to the TSX you have many more to consider.

    1. Yes, the 10-year chart is scary. I am not sure, it is quite the same comparison to just look at the share price. Perhaps, we need to look at equivalent yields. Let me know your thoughts. Just an idea I have that may or may not hold water.

      When it hit $14.05 in 2014 what was the actual yield being paid? If I understand this correctly, it was a dividend of $1.10 per share ( i will look in more detail later). That is 7.8%.

      Given the increase in dividend in 2019, it is currently paying 7.4%

      So, on a yield basis, would you consider $17 a share which would yield a return of 7.8% to be the equivalent bottom to the $14 per share in 2014?
      Or am I trying to rationalize in your opinion? A drop to $14 would be a 9.5% yield. Just trying to understand how others view this also

      1. Steve, Bob and I have been pretty much on the same page here. The length of protection has little bearing on the weight of lower yields. Logical or not it is what it. Of course predicting the bottom can be problematic, I know. I got a few numbers in my head and if they hit, I will grit my teeth and buy. Some are not that far away. One can be totally negative and assume a zero reset to get you a yield you could live with. But of course that price may not come.
        It does appear that pipelines are starting to get a “tobacco” company rep. It just seemed like this has creeped in over past few years. I dont know if this will effect longer term this area of the preferred world or not. The whole concept strikes me as odd, but it sure feels that way to me.

        1. Given these reset again in 2024, I consider this very far away. I am going to hold EBGEF for now. We shall see what happens when the current interest rate environment stabilizes. My assumption is the $17 per share matches their historic low on a yield basis. If it breaks that, maybe I will reconsider

          1. Steve A

            Added to my position in EBBNF today (@ $17.06). Like you, I think 2024 is a lifetime away and the coupon is safe.

        2. Grid, Steve and Bob, Viewed as a stand-alone purchase the naked resets are not performing as hoped over the last few quarters. However, the current yield remains compelling. We’re all concerned with the risk of course.

          I purchased EBGEF simultaneously with a $$ equivalent of similar-rated fixed non-callables, for a combined holding of +/- $50K. All securities yield over 6.5%. The weighted average date of the acquisitions was the first week in March. At the time, there was still plenty of sentiment rates were going to rise (that’s just 5 months ago).

          EBGEF has been in an unacceptably heavy yield-related downdraft resulting in unrealized cap losses. However, the fixed non-callables have benefited significantly, and experienced a heavy updraft resulting in unrealized cap gains. Checking this morning, the combined holding, despite EBGEF’s slide is UP exactly $168.71, not including dividends. The current combined weighted yield is 6.825%, is IG and some of it is QDI.

          Adding EBGEF provided access to above market yield in an under par security. Pairing the fixed non-callables provided ballast to the position and turned them into a combined low-volatility and rate “in”-sensitive holding.

          Going forward, if EBGEF obtains a 15-handle, I’ll be increasing the position on both sides. If EBGEF experiences manic selling, I’ll be comfortable adding as a new stand-alone position.

          1. Alpha8 – Great post – very helpful….. as I sit here and mull over my options with my Enbridge preferreds…..and my FTRSF (ouch) and ERRAF (double ouch).

      2. If we are discussing TRP.PG.G, this was issued at $25 in Feb 2015 at an initial coupon of 3.80%, where it still is. If you had bought the issue when issued, counting all dividends received since then, you are still about $5 under water given the present share price of $16.25.

        Point being that these resets are very sensitive to rates (much more so than F2F issues that go to LIBOR) and that entry point is (almost) everything.

        The BOC 5-year is at 1.20% now and bottomed out in 2016 at 0.48%. And we aren’t even in a recession. The BOC not only has to watch what the Fed does but the ECB, too. If the Canadian 5-year drops back to 2016 levels, or goes to zero, these naked preferred still have a lot of room to fall.

        Many of them have very nice yields at present prices but the downside risk on price is there. Overall, naked resets yield about 75 bps above same issuer min rates and 100 bps above same issuer fixed. You are getting a better nominal yield but you are taking on substantially more risk.

  5. Is there a treaty with Canada that exempts Canadian taxes from being withheld in an American owned IRA? Etrade is withholding 15% and I have not been able to get it exempted yet. Any help would be appreciated. I’m sorry if this has been previously discussed but I was unable to find it. Thanks

    1. Yes, it was discussed early, but not much of the wonderful content here is easily found. It just rolls off into oblivion on this platform.

      JMO

      1. camroc–I am working (slowly) on getting some sort of resolution to the issue you mention–I will find a way to alleviate that situation.

        1. It would really help if we could search on a contributor’s name and find all those posts, no matter when or what about. Or all posts on a ticker or keyword. Silicon Investor and Investor Village do these kinds of searches very well.

          It would help me tremendously because I follow folks like Gridbird around the net like some kind of lapdog. In fact, it’s all his fault I own so much AILLL. lol

          JMO

          1. Hi camroc–I just sent a note to Chad to find us some options. I can find some out there, but of course when it comes to the tech side of things I have no idea how well they would dovetail with wordpress.

    2. Yes, there is a treaty but that doesn’t mean it gets honored. In at least 50% cases, I have seen on the board, it is not honored. I have stopped holding Canadian issues in IRA’s because of the uncertainty. You will not get a TAX CREDIT for the taxes paid out of your IRA. You will get the tax credit from your taxable account.

    3. Pete, as I recall the discussion it seemed to depend on the retail broker and more importantly, the clearing house the your broker uses. Of the two clearing houses mentioned one did not withhold Canadian taxea if your account was US tax-exempt, and the other one did withhold the taxes no matter what type account it was. This last clearing house is apparently the one used by Schwab for many Canadian securities because the tax is being withheld in my wife’s IRA at Schwab.

      1. Yes, Schwab says DTC (Depository Trust)) has the infrastructure to honor the treaty and Citibank doesn’t. I am not sure who Etrade uses.

        For that matter, I am not sure how accurate Schwab is with this information.

        To me, if you cannot honor a treaty you should be disqualified as a clearinghouse for those securities. But, then I am a nutjob who thinks you should be held accountable for your actions or lack of actions.

        1. I’m diving deeper. Etrade did not hold taxes on ENB but they are on EBGEF. Thanks for your replies. I’ll report back when I get some answers.

  6. North of the border, the Canadian resets are responding to a worldwide drop in rates (as expected). Quality companies.
    Fortis 6.3% (FTRSF)
    Enbridge 7.2%(EBGEF)
    Bell Canada 6.6%(BECEF)
    Emera 6.6% (ERRAF).

    All are at or near 52-week lows with 10%+ capital gains potential if they recover. Worth checking out for those with a risk appetite or long term horizon

    1. Steve & others – I would think carefully about buying these issues, at this time. 3 of 4 are 5-year resets with no minimum, the fourth a floater. If interest rates move down from where we are today these issues have a substantial downside risk.

      Rather than look at these on a 52-week basis extend your time horizon back to 2016, when the 5-year BOC rate (on which the resets reset) bottomed out at under half a percent. If you make that comparison, the 3 resets have another 20-25% to the downside.

      Look at this chart of ENB.PF.V (EBGEF) to illustrate:

      https://web.tmxmoney.com/charting.php?qm_symbol=ENB.PF.V

      So, I respectfully suggest you consider your view of interest rates in deciding on these issues. If you think we have bottomed out, you should be a buyer or resets and floater.

      But, if you believe, as I do, that we have further to fall you would be better to look at the resets with minimums or straight fixed rate issues. These issues will stand up much better in a falling rate environment and may actually go up in price.

      1. Bob-in-DE or others.
        Help me understand EBGEF. For example if the 5 year is zero on the next reset date which I believe is March 1, 2024 than the yield will reset to 2.82% for the next 5 years. Am I understanding that correctly? On my fidelity spreadsheet its showing a dividend of .336. Will that remain intact until the next reset date?

        1. Jakester – Being as stubborn as I tend to be, I’ve stuck with EBGEF even though it’s been a big loser so far, but yes, you’re correct on both points – the dividend is .336 per quarter and if 5 YR Treas is zero in 4 1/2 years, this will reset at 2.82% based on $25 par… but in the meantime, you collect a 7.36% current yield between now and 3/1/24 based on current price of 18.25 and if prices decline as they most likely would if Treas goes to zero. you get a multiplier effect on the price of the shares at the time of conversion. So, for example, if EBGEF were to fall to 12.50 on date of reset, your current yield would be 5.64% on that price…. this on a preferred from a Baa2 rated company. In a zero interest rate environment, I would suspect 5.64% current might be pretty tasty… Heck today a 5.64% current on a new issue IG preferred is pretty tasty! Unquestionably I’ve been wrong to hold on to this, but all in all it seems kind of crazy to give up today’s current in anticipation of what interest rates will be 4 1/2 years from now… Heck it was only 8 months ago when everyone was trying to figure just how high interest rates were going to go….

          1. 2wr, I am also a stubborn holder of EBGEF for exactly the reasons you outline – most notably, 4 1/2 years is a long way out and a lot can happen between now and then. If EBGEF is 12.50 at reset, we’ll still have lost capital, though it would be a terrific time (if not before) to average down.

            Could easily be wrong, though my thought is that baring any manic selling, the nadir for EBGEF will be in the 15s because if the “planet” (and not just the resets subject to a 5yr index) is at 0% or less, then the 4.5%-5.0% effective yield in the 15s will be highly supportive of the price.

            If I’m wrong I’ll have to come out and help you mow the ten acres. But you have to get a larger mower.

            1. Alpha, I caved a while back moving resets into CAD fixed and floor resets a while back. Presently I just have my EBBNF. I made a couple bucks a share flip a few times with it last winterish, so my feelings are fine with it as it has been a good play longer term. I had the Fortis one and flipped for a buck and divi long ago when it spiked and I never got back in. EBGEF I got around 19.70 I remember and tossed in the towel with about a buck loss recently, not counting the divi I received. ERRAF has been the pain trade of the bunch. I bet I lost $1.50 not counting the 2 divis I got. It has dropped quite a bit more since I sold.
              Ironically it is the one I prefer the most of the naked resets financially wise. A couple more bucks south and I will get back in and hold my nose.
              I am not betting on negative rates, but I was still put off by the fact it appears if they did it would be subtracted from the kicker…I dont like that concept at all no matter how small the odds are. Plus the entire thesis changed since my foray…Rates were going up at that time. So the plan was to ride the wave from an already low price. Instead bond yield collapsed and low reset prices, became lower.

              1. Grid, Agree, yes the ENB 5yr resets purchase criteria pulled a 180 and your change of direction is understandable. Thanks to you, Amy and Bob’s spreadsheet was able navigate into CNUTF to hold through the storm.

                For me EBGEF was purchased with the intent to hold through potential multi-resets and balanced with long-duration fixed perpetuals, creating a low-volatility pairing. Both are IG securities yielding over 6 1/2% and the capital losses in one are being offset by the capital gains in the other.

                Viewed as a stand-alone holding, EBGEF’s the 6 1/2% for the next 4 1/2 years is appealing, albeit there is a potential loss of capital. But – though currently improbable, the possibility exists that rates turn north again before next reset, in which case EBGEF would experience significant cap gains. Alternatively, if rates stay truly zero-bound, ENB may have the opportunity to refinance outstanding pfds at unimaginably low rates or lower margins resulting in cap gain windfalls to pfd holders. With $17T around the globe sitting in negative yields, and UST30 touching all-time lows, less probable (crazy and unbelievable) outcomes are occurring. Going to be an interesting few years ahead for us.

            2. Alpha – If we’re really wrong, I’ll be selling my mower on the street corner and getting some goats. As someone on here pointed out, it is odd that investors in NI-B which will convert within 15 days of EBGEF and converts off the same 5 yr Treas but with an 81 additional premium to EBGEF’s 2.82, have shown no fear of what will happen in 2024 while EBGEF’s holders are panicking. It does make me wonder whether or not there’s any additional company related issues involved with the drop what with the political attacks on ENB in Michigan and MN and the carbon based energy generation base for ENB… For those involved in other CDN resets is there any evidence of this being ENB specific?

              1. 2WR, take comfort in knowing they all are trading in relative tandem. ERRAF just set yearly low this week too. Just go to TSX and you will find comfort in many reset casualties. There really is no ,in relative speaking, any investing secret sauce here. They all follow in lock step pretty closely over a small period of time.
                Just track them on TSX under the real tickers.

              2. 2wr, Not just MI and MN, a number of CA municipalities have legislation in place or pending that outright bans natural gas from new construction. Plastics is another hot button with a number of Northern European nations legislating significant reductions. Here in CA straws are now paper and much of the local packaging is no longer plastic. Certainly worth considering these changes.

              3. 2WR – the energy issues are somewhat more rate sensitive than non-energy but ALL the naked resets show the same price volatility. Even the utility-like bank issues,

        2. EBGEF is aka ENB.PF.V on the TSX. It’s a 5-year reset next resetting on March 1, 2024, that being in 4.5 years.

          The spread is 2.82% (5-year U.S. treasury +2.82%). If, on the reset date, the 5-year is zero, you have a 2.82% coupon for the next 5 years, yes. If the 5-year is negative, you have something less. If the 5-year goes below -2.82% you mail Enbridge a cheque.

          This issue last reset in early 2019, and has a current dividend of .33596 for a annual coupon of 5.38%. At present price it’s yielding considerably more.

          Anyone wanting to look at this issue (to buy, sell, or hold) would be well advised to look at the 10-year chart:

          https://web.tmxmoney.com/charting.php?qm_symbol=ENB.PF.V

          Understand how sensitive these “naked” resets are to interest rates. 2016 is the key year to look at to see how far they can fall. And look at 2017 to see how quickly they can go up.

      2. Bob – I absolutely agree with you. There is a risk here. But a couple of points to also consider.

        Will the strong dollar hold up, if we don’t fix out fiscal deficits? I don’t know but my opinion is no. We cannot afford 1T dollar annual deficits. Right now, we are only getting 75% of the dividend due to the exchange rate. That has the potential to change. Could we see the exchange rate widen and go the other way? Of course, it is just something to think about and potentially factor into your thinking.

        If interest rates, fall further, it likely means that many of the current preferreds in the US will be called. Are you willing to pay a 10% premium and take that risk? When you factor in the yield to call is maybe 5%. You lose 2% dividend each year to an issue like EBGEF, which is 8% over the next 4 years. So, you may be looking at an 18% delta factoring in the lost opportunity of accepting lower dividends.

        Finally, if we get a recession where are the areas of the market which are the historical safe havens? Typically Utilities and Telecomm.

        I am still accumulating BECEF and FTRSF, so my losses are trivial. ERRAF and EBGEF, I have taken on the chin.

        Yes, I would not touch these if my investing horizon was short term. Way too much risk. I intend on holding and potentially averaging down. But, not yet, we may have more room to fall.

        1. “Will the strong dollar hold up, if we don’t fix out fiscal deficits?”

          How can it not stay strong if there’s, as someone just posted, $17T getting negative interest around the world? I thought it was only ~$15T but, hey, what’s a couple trillion here or there? lol

          So…as long as US rates stay positive, our securities are a strong lure. Whether we’re a Venus Fly Trap is subject to debate, of course.

          The Fed (& other CBs), after learning back in ’09 that there are apparently no real (current) problems with printing money, has now got a tiger by the tail and can’t let go or the whole economic house of cards implodes.

          People hate hydrocarbons, yet the world runs on it. Green new dealers are kidding themselves. Bill Gates knows it. And now Michael Moore does, too, according to his latest, ‘Planet of the Humans.’

          So…I keep adding opportunistically to EPD & MMP, the best of the MLPs, with growing, well-covered, tax-deferred 6+% distributions. Those and more noncallable IG preferreds–if they don’t just go ahead and leave for the moon. Ha!

          All the 5-6% callables are prolly gonna disappear just like the MTBs will at the end of this month.

          Bitter medicine for a lot of savers.

          JMO

        2. I agree with comments about the US markets. Personally, I am way over exposed to call risk. That is by choice and I have made out like a bandit with callable and soon-to-be-callabale issues in the last year. But, as you say, it’s coming to an end.

          Look at the Canadian min rate and fixed rate issues is all I suggest. Good yields, no call risk (in most cases), on good credits, with much less downside risk that the naked resets right now. If you go ahead with new money in resets, at least buy nothing that doesn’t have 3+ years on the clock.

          I love naked resets, just not right now.

        3. Many good points, Steve.

          I am firm believe that there are just 2 sets of laws that can’t be repealed: the laws of physics and the laws of economics. No matter what the MMT bunch would have us believe the world can’t stand unending deficit spending. Things will blow up. And to think we came 1 (Democrat) vote from sending a balanced budget amendment to the States for consideration. I have no doubt it would have passed and would have saved us from the awful mess.

          If interest rates in the U.S. fall further we will see a flood of redemptions. My sense is that issuers have paused to see where rates are headed next but in any event the calls are coming! I have a huge call exposure, which is one of the reasons for my interest in Canadian min resets and fixed – most have no call risk. At this point I won’t paying anything above stripped par for any U.S. with call risk.

          Currency risk, yes. But I will take it. Some currency diversification is a good thing, and I have a long time horizon.

    2. Only way to play these issues is near the reset date or try to time the bottom of interest rates (high risk). To protect your capital from severe drop by purchasing high spread resets is desirable.

      RYMTF 4.80% + GOC 5Yr
      TNTOF 4.66% + GOC 5Yr
      TORDF 4.12% + GOC 5Yr
      ALTGF 3.58% + GOC 5Yr
      FRFFF 3.51% + GOC 5Yr

      If you want to see a few ugly charts.

      TSE:TRP-B
      TSE:TA-D

      1. micahc, TA-D initially appears to have appeal at this level as it’s sporting a current yield north of 6%, and even assuming GCAN5YR at 0% in 2021, it would yield a 5%+ at $10. In a zero GCAN5YR world, appears the 5%+ would be attractive and therefore price-supportive.

        What halts the read for me though is the slowly declining credit rating of the company, currently at BB+ per June 2019 review.

        Then there’s that pesky question of how the rate calculation will be affected if GCAN5YR is <0% at reset. Same thing for the UST floats/resets.

      2. Micah, You may want to look at TGAPF (Altagas) for your spreadsheet. It has a 4.17% spread and a 5.25% par minimum reset. It is up some since I bought, and is now trading $22.40 CAD.

        1. Will need to wait for a pull back it’s had too much of a run. Only one meeting my rules to investigate further.

          ALTGF TSE:ALA-U

          PREFERRED RULES
          Strip Yield: Minimum 6.5%
          Yield to Call: Minimum 6.0%
          Call Date: 2 Year Call Protection
          Cumulative: Not Required

          1. Sorry, I wasnt clear, I meant to watch not to buy. I didnt know if your list represented a buy list or a watch list. So I wasnt for sure if you were aware of that one. There would appear to be plenty of them now that would fit your specific criteria. TGAPF is not though.
            I just need more price drop to get interested again to compensate for reset risk. I got some since I sold, but I need more.

        2. Like TGAPG a lot and own it. I will like it a lot more, and buy a lot more, when it has its next hiccup into the C$20 range.

          1. Bob, I think its going to need a loud belch, not hiccup to hit the 20 spot. I probably own enough since it is a highly indebted not pure play utility. But I may buy a couple hundred more if I can get the 6% fixed handle floor and the divi.
            I tried to get another CU issue and was unsuccessful. I sold off a slice of my PPX “money market” account at 25.40 this morning…So at end of day, when it was apparent the trade was hopeless, I bought the money market shares back at 25.32, lol…

    3. I bought EBGEF in an IRA at TD on 5/24/19 at $19.90. The stock has done nothing but sink. I will get a dividend, however. Should I sell now and reinvest or hold in hopes of a reversal. I don’t want to end up losing too much. Thanks.

  7. Just curious….does anyone know of an ETF that holds high yielding Canadian dividend stocks but is traded in US dollars? I see some that are traded on the TSX but to purchase them on IB requires some currency exchanges as they are denominated in CAD. Thanks!

    1. IBK makes currency exchange simple and you pay institutional rates. You can buy an issue without exchanging currency but I don’t recommend doing so. Your currency exposure, no matter how you do it, will be CA$.

    1. Bob, Thank you this excellent summary. I agree many of the US issues don’t hold a stick to the CNs, variously either in terms or pricing. Seems many of the new US issues resemble the old CN issues. NI-B comes to mind.

      1. I bought about 2000 shares of the Altagas Series I TGAPF when its true purchased yield was over 6%……I should have bought more…But they dont have the prettiest of balance sheets and need to deleverage more. But they are on point still. So its easy to talk in retrospect, which means I really bought as much as I should have.

        1. Yeah, I shoulda bought a LOT more WFC-L @ 1206, too. I like this hindsight stuff. Makes things real easy. 🙂

          1. Ok, you like hindsight so much, which ones do you wish you had bought LESS of when you bought, lol.

            1. Somebody gave me a guaranteed market tip a long time ago:

              Only buy stocks that go up. And if they don’t go up, don’t buy ’em.

              lol

          2. and I shoulda brought a Penske moving truck instead of the SUV on NCZ-A at 22.79. Oh self-loathing…

      2. Welcome, Jerry. Aside from having nice numbers the Canadian issues provide investment opportunity you don’t have in the U.S. There is no U.S. equivalent of George Weston Ltd, or Brookfield, or Enbridge, or Transcanada pipe, or Power Financial. Certainly not in preferred. Or the big 5 banks. They may be banks but they are legislatively protected and are more like financial utilities than what we think of as banks here in the States.

  8. I kinda waved the white flag on naked resets about a month ago. Just have a very small skin in game on some to keep me awake. I rolled most of that money into the fixed floors and fixed rate perpetual CAD utes. They have done nicely…. I am hoping for a trading zig zag in coming months. My long perpetuals to increase some more while the resets totally wash out and hit those Jan 2016 lows. Then sell of the appreciated fixed and roll into the blown out resets. That is the working plan anyways.

    1. Same plan. Buying min rate and fixed rate, based on assumptions rates are more likely to go down than up. Also, will act as good counterweight to all the calls that are coming from lower rates.

      To put new money into naked resets or floaters I would want the BOC under 1% and 0.5% would be better. A repeat of 2016.

    2. REDRUM!…I took three smalls and went out to 2022 and 23, trying to give the Japanese Model of Global Monetary Leaders an opp. to prove that secure, IG and competently placed capital will be rewarded. So much for homegrown leadership. Just WHO is getting SAVED?! If it is in the name of the largest sweep of society (my defintion of socialism: stirring together the good, the bad and the ugly) then indeed we are socialist…with torture to the Good. Actually, it is Ambition that is getting strangled. The Drama isn’t even that damn good.

  9. Initiated a very small (almost tiny position) in BECEF. Paying 6.6% monthly, floating off Canadian Prime rate which is currently 3.95%. I like monthly dividend payers and floating off the prime rate is attractive since that rate tends to be higher than government bonds and less volatile.

    Will Canada cut their prime rate shortly? Perhaps but still attractive and I will willing to buy quite a bit more on weakness.

    On the whole, I cannot believe the bond markets in the US and Canada. I was a HUGE critic of Powell for taking rates above inflation. But now, we are very close to inflation. GDP and employment strong. Perhaps our dollar is too high. Another reason to buy the Canadian preferreds.

    1. Hello all BECEF holders. I want to make sure that I understand this issue correctly. From the prospectus:

      http://www.bce.ca/investors/preferred-shares/2017-conversion-notice-z-series.pdf

      …on 12/1/22 we have the choice of sticking with our Y series or switching to the Z series. It looks like from paragraph 6 that every 5 years the Zs reset to the CAD 5 year x 231%. So, if the 5 year is 1%, we end up with a coupon of 2.31% for the next 5 years.

      I think I have that correct…..

      1. My understanding is that the BECEF shares are the AH series or BCE.PR.H on the TSX. These are the shares that are currently floating monthly at Canadian Prime. On 5/1/21, they can be converted to the AG series at the holder’s option and subject to the automatic conversion provision. At that point in time the AG series will pay not less than 80% of the Canadian 5 year rate on a quarterly basis for the next 5 years. I’m fairly sure I have this right…

  10. Picked up starter position of 700 shares of CNUTF in taxable. Fixed rate, well under par and higher IG sporting a P-2 rating (BBB+ equivalent) with a stripped yield of 5.50%. Needed to call the TDAM trade desk but they have a direct link with TSX so it was quite easy to search between the bid and ask until it hit. Thank you Grid.

        1. Happy to now be there with you Grid. Should have jumped on it when you mentioned it earlier and saved myself a few margaritas, though the US issues going stratospheric has been a consolation prize. Rolled NRUC out of one of the tax-advantaged accounts today as I can’t talk myself into sitting on a 3.27% YTC with 5 years remaining on the calendar. Having bought near par, got my beauty out of that one.

          1. Alpha, the only thing annoying about the issue is it somewhat mirrors the reset issues in charting albeit without as much volitility. It seems maybe this time to be decoupling a bit finally. Maybe they figured out its not a reset issue. As it should trade in line with the fixed perpetuals that it is.

            1. Grid, Yes it does certainly seemed underpriced given the details in the prospectus. I’m in line to pick up more if there is any weakness, but prospectus to prospectus, credit rating to credit rating and yield to yield it’s stellar compared to the utes south of the 48th. And we’re under par.

      1. Bob, probably paid a few pennies too high inside the spread though I wasn’t willing to quibble around the margins given our current environment. I did reference your spreadsheet from a few weeks ago for a quick read on the stripped price so thank you again.

    1. alpha, Amy, Grid — sorry if I missed this in an earlier thread, but is it treated as QDI? couldn’t find it anywhere. thank you

  11. I have bought a number of the min rate resets. The link below will show you the issues I have been following. Prices were current as of market close on Aug 1. I am done buying for the moment, so feel free to drive the prices higher.

    The average stripped yield of what I bought is about 5.7-5.8%. Not exciting but the min rate feature is what does it for me. If rates drop these will actually go UP in price. The stripped yield is actually YTW since everything purchased was under par. The only risk, other than default risk, is call risk. But in all cases there would be a substantial cap gain if called.

    For me, these are a nice compliment to all the callable (and likely to be called) issues I hold and issues that will drop if rates drop.

    https://docs.google.com/spreadsheets/d/1yCdFdIw2PWnDs7EzMBNzT7P_Y71pWec3nFjbDDmbEgM/edit?usp=sharing

  12. Altagas released earnings today. Everything is fine. I am more mindful of them executing their debt reduction strategy as credit agencies are watching closely and holding their hand here. They knocked off $2 billion in asset sales and are looking for another billion. This needs to be done to maintain their investment grade bond rating. On plan to reach 5.5 debt/ebita at year end. Have a decent slug in TGAPF which has performed nicely since I bought last month. This isnt my “Linus blanket” issue, so I am keeping an eye on this company.

  13. I finally stuck my big toe in the water. 250 shares of KML.PR.A @C$23.25 per share bought directly off the TSX through IBK. This is a Kinder-Morgan Canada 5-year reset with a 5.25% minimum coupon. Stripped yield of 5.72%.

    This was above my natural entry point but I wanted to see how things worked with IBK. I’ve been sitting with unfilled orders for almost a month now.

    Rated equivalent of BB+ by S&P. So, unless the company goes bankrupt, I have a perpetual at no less than 5.72% yield with some cap gains upside. If the price goes to zero I’m still clipping coupons at 5.72% on cost. Unless they get suspended.

    I view this as a forever hold, unless a big cap gain becomes available.

    Commission was all of C$2.50 for the trade and they did the currency conversion for less than a basis point. Can’t complain.

    To emphasize, this is a C$ issue, so one has to consider exchange risk. My personal view is that the C$ is cycling between ~ 72-78 cents U.S., or about 8-9%. Presently, it’s at the top of the range, meaning there is a lot of downside exposure for people who live their lives in US$. I have chosen to hedge for now, having bought 1 future contract (nominal C$100,000). My intention is to abandon the hedge once the C$ gets to a cyclical low.

    This is an issue with no U.S. ticker. That may change but can’t say more for now.

    Off to Muskoka tomorrow!

    1. I like what I hear from you about IBK. I DO REALLY like have consolidated accounts at TD now esp the way I can manage views as a group and do everything with one logon. In the next few months after I complete frying the four fish (life completions) I have laid out right now, I think I will begin a pressure campaign on TD to at least compete with IBK because we all know they have the CN capacity! I’ll pay the $7. We should begin a concerted lobby to them this Fall.
      I remember going to Georgian Bay as a kid in mid summers and floating up and down on the six foot waves of Lake Huron on an innertube, slate cliffs , dunes and crystal waters. A very unknown and simple destination for Americans…like 1960s still. Good fish too! Back on the list again. Have fun!

      1. Georgian Bay is still wild, in most parts. If one wants the full experience drive to end of Bruce Peninsula and take the ferry from Tobermory to Manitoulin Island, drive the length of the island and cross over to the north shore.

        Few Americans get up that far.

  14. Grichter or Bob, just want to pick your brain as I am too lazy to read those BCE prospectus again as it has been a while. Should have bought when you first mentioned but needed to check out BCE and read prospectus which wasnt light reading…Anyhow, got my 350 small initial entry position to pay attention (since I forgot) in BCEFF…My question is what exactly is difference in it and the other apparently twin sister BECEF? I figured one of you could rattle this off without any effort, thanks.

    1. BECEF and BCEFF are for practical purposes identical. Although the float rate on both is nominally 80% or more of prime, the adjustment collar effectively forces both to 100% of prime, which is 3.95% now. That’s why they both have the same divi and the same stripped yield.

      Risk is they are pure floaters and prime can go lower. For that you get about 100 bps extra yield.

      I own BECEF but bought it the 2016 time frame. I would be a buyer at about C$12, but not at present levels.

      1. Thanks Gentlemen for reinforcing my memory. Yes, the $12 point was the Waterloo point. Things will have to head south further for that to hit. Prime has been a bit sticker going south potentially than Tbills. I already tracked the monthly dividend payments from 2016, so I what the yield is capable of heading towards. Just got a toe dip into it to establish a position. This will help me long term in tracking. Because for me if its not in my rotation list, I generally dont follow, track, or pay attention to it. 95% of the preferred world flies around me with no desire to research, buy or track.

    2. As far as I can tell they are identical other than call/conversion date.

      Canadian Prime Rate : 3.950%

      BECEF – BCE AH
      monthly floating adjustable cash dividends of 100% x Canadian Prime.
      Adjustment factor starts @ $24.50.
      Next Call/Conversion 4/30/2021 – $25.50 call price

      BCEFF – BCE Y
      monthly floating adjustable cash dividends of 100% x Canadian Prime.
      Adjustment factor starts @ $24.50.
      Next Call/Conversion 12/1/2022 – $25.50 call price

  15. People on TSX have been loving up on the Series I I see (TGAPF). It is up over 50 cents on TSX since I first bought late last week, I see. Probably should sell, lol. I think I am in this one for the long haul. At purchase price the barbell is just too good.

  16. No reason to panic, or to even do anything as this is far from the definitive source an email reply from Investor Relations….But it does at least reinforce a theory of mine IF 5 yr Tbill would ever go negative that amount would clipped from the spread and not inserted as 0%…

    The wording in the prospectus is usually “… plus a spread of x.xx%”. I’m looking at the Series J for example and there are no clarifications for negative yields on the reference benchmark. So I’m inclined to agree that the negative yield would be subtracted from the spread.
    You can find the prospectus for all of our prefs here:
    https://www.enbridge.com/investment-center/stock-and-dividend-information/preferred-hybrid-shares
    Best
    Enbridge Investor Relations
    ENBRIDGE INC.
    TEL: 1-800-481-2804 | Investor.Relations@enbridge.com
    enbridge.com
    Integrity. Safety. Respect.

      1. Especially if we owed them quarterly, lol… BTW, Amy, Altagas just disposed of an asset today (remember the need to deleverage conversion we had the other day) for $720 million. Market liked it as Alta common jumped 5.75% today. It eased my still skittish concerns of issue so I bought a few hundred more of TGAPF. You know the one we own that wont go below zero and us having to write a check at divi time, lol.

  17. Just posted a Reader Alert re: a new BB&T issue. Very relevant to the topic of Canadian preferred. Have a look.

  18. For diversity have always been interested in BCE issues. Have not pulled the trigger based upon not knowing reset rate.

    The problem is the board of directors sets the first variable:
    >80% x GoC5 x par?

    It doesn’t make sense to just set it at the minimum possible or you would have mass swapping to the floating pair.

    Has anyone cracked the code?

    1. I emailed the company’s IR department a couple of weeks ago because I was having trouble understanding the terms myself. With respect to the 5 year reset issues (there are several), here is the response:

      “Reset rates
      Most series paying a fixed dividend rate will be reset based on the 5 Year Canada Bond (GOC) which cannot be lower than 80% of the GOC. At the time of a conversion, BCE will review the market conditions but will not reveal any of the factors considered when resetting the rates. In some cases, a selected percentage is announced (R, T, Z, AF) and will be found in the conversion notice sent to shareholders. No selected percentage is provided ahead of time for series AA, AC, AG, AI, the reset rates will be confirmed in the newspapers 2 to 3 weeks prior to the conversion date (no additional details provided – i.e., what are the factors BCE is considering when resetting a rate). ”

      I didn’t really like the part about them not revealing the factors (the code) used when resetting the rates so I decided to avoid the 5 year resets for now.

      I own the series AH (ticker BECEF or BCE.PR.H on the TSX), which currently is paying 100% of Canadian Prime or 3.95%. It resets on a monthly basis. I like that it is linked to the Prime rate and not a government rate. These monthly floaters pay a dividend rate between 50-100% of Prime depending on the trading price of the issue. If the price is below C$24.875, the dividend rate will adjust by 1-4% (there is a sliding scale) on a monthly basis until it reaches 100% of Prime. If the price is above C$25.125, the dividend rate will adjust down until it hits 50% of Prime. These floating issues have been paying 100% of Prime for several years.

      Hope this helps – good luck!

    2. The BCE issues have several different reset mechanisms. If we’re just talking about the ones with U.S. tickers:

      BCEFX is 5-year plus a spread.

      BECEF adjusts based on prime. At the present price it is effectively pinned at 100% of prime, that being 3.95%. Monthly floater.

      BCCF is e 3-month plus a spread.

      BCEFF is same as BECEF.

      1. The reset mechanism and rate is based upon a formula not published within the prospectus and at the discretion of the board. To avoid offence not simply reset at the minimum.

        Resets have a floater pair for conversion. My best guess as these are pairs an interest rate swap formula is applied. Nothing obvious has made a fit to predict the mechanism. Just wanted to see if anyone has cracked the code in predicting the reset.

        http://www.bce.ca/investors/bondholder-info/2002-short-form-prospectus-serie-aa.pdf (search:Details of the Offering)

        Section: Principal Characteristics of Series AA Preferred Shares (Dividends)
        For each succeeding Subsequent Fixed Rate Period, commencing on the day immediately following the end of the immediately preceding Subsequent Fixed Rate Period and ending on and including August 31 in the fifth year thereafter, the Series AA Preferred Shares will be entitled to fixed cumulative preferred cash dividends, as and when declared by the board of directors of BCE Inc. BCE Inc. shall determine on the 25th day prior to the first day of each Subsequent Fixed Rate Period the annual dividend rate for each Subsequent Fixed Rate Period and give notice thereof. Such annual dividend rate shall not be less than 80% of the five-year Government of Canada Yield determined on the 25th day prior to the first day of each Subsequent Fixed Rate Period.

        1. If you’re asking about BCE issues you need to be specific. Out of the 21 outstanding issues there are perhaps 10 different reset mechanisms.

          The Series AA, AKA BCE.PR.A, is reset at no less than 80% of prime. No other qualifier, so it is at the discretion of the board.

          That said, what the board is actually doing is resetting both the AA and its convert pair, the BB, at 100% of prime. The BB has a mechanism that effectively forces it to 100% of prime and the Board is just using the same rule for the AA.

          I trust you appreciate these issues have no U.S. ticker.

  19. An update ….

    I was a buyer of TGAPF today. I put one toe in. The price will need to drop a good bit before I go for more. That, generally, is my attitude to the min rate resets. I have 4 orders in at IBK on their Canadian tickers but they are well out of the money.

    The min rate resets make a good deal of sense if your view is that rates are headed lower. Of course, if rates go lower – and stay there forever – you may have capital losses, just as you would for a U.S. perp. But then the min rate feature, unlike most perps, is likely to get them redeemed at par.

    Altagas isn’t going to let a 5.25% min issue sit when they can reissue at less. You will be “pinned to par” or redeemed.

    FYI, we (hopefully) have some new U.S. tickers coming for some min rate resets. No further word until it’s a reality.

    Trying hard to avoid boredom trades. They feel good at the time but rarely end well.

    KEY-I at 28.94? Mon dieu.

    From Hot-as-Hell Delaware ….

    1. Bob, If TGAPF ever got pinned to par, that wouldnt upset me, since we are sitting a bit under 20% south of that presently. Its kind of a unique situation with that relatively high kicker of 4.15% ish. If Alta over time doesnt make more asset purchases and focuses on deleveraging this could ramp their credit quality up and increase the pressure towards par over time or a revisit to having a 4.15% ish kicker outstanding depending on where rates are. Being its first reset is 2020, I dont see the above thesis playing out by then. For me the 6% minimum floor at purchase price coupled with the 4.15% ish par kicker is a good barbell type issue. A shame it is not a high quality issue considering it is subordinated to all the WGL stuff. But your boy Pendragon would disagree. Since its rating is better than NSS he would label this issue as “very high quality”, lol…

  20. Somebody on the forum join the TGAPF club today? I seen 500 have traded today. Amy and I bought them all yesterday and I assume she has a full belly of them already and didnt buy.

    1. I saw that 500 but it wasn’t me…although I was tempted as I had a chunk of change end up in my account yesterday from the CPE-A redemption. I want to wait for a pullback before buying more.

      1. I hadnt talked to you today, Amy, but I thought you would be “behaving” today with the market since you just bought yesterday. 🙂

        1. I did have to put handcuffs on…you know how much I hate my cash sitting idle. But, I am trying to channel my inner Tim and be patient.

    2. I started with a small position today of 300 shares. I have been watching this and several other issues for several weeks and hoping they would move lower, but nothing is cheap these days. C$ strength hasn’t been helping either.

      1. Welcome to the club, Grichter. Toeing in is the way to go. Amateur credit ranking order from these five to me would me…Canadian Utilities, Fortis, Emera, Enbridge (its rated a bit higher split decision than Emera last I checked, but Emera has more regulated utility earnings of good quality which is my personal bias), and then Altagas…Credit agencies are “working with” Alta in presently keeping their BBB- unsecured debt. So far so good, but more is needed in debt reduction at appropriate pricing.

        We could lower the ratings if AltaGas is not able to sell the planned assets
        or receives lower-than-expected proceeds, or acquires debt that results in
        forecast AFFO-to-debt below 10%. We also expect the company to maintain its business mix, which is highly weighted toward the more stable utility cash
        flows. A material increase in the proportion of more volatile cash flows, such
        as from riskier midstream or unregulated power, without a corresponding
        improvement in financial metrics, could also lead to a downgrade.

        1. Thank you Gridbird – I really appreciate all the people who post on this site! I currently own two of the Enbridge issues and Emera. I have been working orders for Canadian Utilities and Fortis for the last couple of weeks but the price keeps moving away. Trying to stay patient…

          1. Glad I can assist in any manner. Just remember like most, I am no brainiac. I simply parrot the best info I know I feel like I can trust. The pricing has kind of went into no mans land on resets.. Even the fixed Series DD which has jumped about 75 cents since I bought most of mine at last month and is now probably at $16.20 USD and not appealing to add (which I dont need to anyways as I have a full position).
            ERRAF has started to sag again on TSX. But I need closer to $1.50-2 sag from here to take that next bite of the apple. So I would have to sell something now. Got about 18 issues, and really would only be interested in peeling off maybe 2, or take some SR-A off table. But it would have to take a nice drop to entice me for Emera anyways. I have a decent position already. And it hasnt been my path to riches this year, so I think the best way for me to come out a head long term (since it is an indefinite hold) is wait for another meaningful pullback hopefully from the bond market.

    1. Bob, you kind of mailed it in on this effort, the other two were much better…….Just kidding, another EXCELLENT post, Bob! But, I dont get much diversity from you, because your thoughts make me think we are brothers from another mother though, lol… I cant really think of an investment comment from you, that I didnt agree with.

      1. Mr. Lucky, you are correct and it was quite funny you posted that being Amy and I just bought that one today. We had been cussin and discussin for a few days on it before we could get the deal done. She made a small purchase to where I could call TD to show its active and then get it unlocked for me. All the shares traded today were ours. She got a nickel better deal being a bit more patient, so I have to tip my hat to her…
        This qualifies more in the risk bucket as Alta still has to get more deleveraging done from engorging on debt acquiring US ute WGL. They are about 50% reg. Ute and rest midstream and energy with energy the smallest part by far and getting smaller. So some risk as they work to maintain their investment grade bond rating.
        The terms of this issue are way more appealing than the finances (unfortunately). A very nice 5.25% par floor with a nice 4.19% kicker. The issue resets first time in 2020. CAD price ended $21.75 today. So worst it will yield at reset is smidge over 6% even with a 0% or lower 5 yr CAD. A modest purchase for me….

        1. I have done some more rounds of selling as some have hit the mid $26’s. Then taking the big gains and putting into new issues, and or value based or pinned to par ones where they are close to 1 divy from par. I can tell you it is getting harder and harder to find things. Seems it was easy pickens for several years. Good thing Christmas came last year as that already produced 1 year of dividends in a couple of months.

          I am hoping for an event where investors run for the doors, but that might not happen for awhile. Investors have been getting out of common and moving towards fixed investments. In the mean time, the Canadian one’s have been catching my attention and have been investing in them.

  21. I have to confirm what my Dad said to me at least 45 years years ago, ” Maybe it makes sense to hang out with people who at least ACT smarter.”
    Appreciate all these very beneficial coop efforts here! It is a small modeling of future opp. for community decision/actions that we need so badly.
    Nice job All!!

    1. Joel, your father reminded me of another saying I loosely use in investing…If you sit in on a poker game and don’t see a sucker, get up. You’re the sucker.”
      This is why I probably don’t play poker.

    1. EBBGF is one to be careful with. It reset in June, 2018, off a very high BOC rate. Even though reset is more than 3 years away, there is a big rate drop built in at present BOC rates. So the 7.36% stripped yield is deceptive.

    2. Mikeo – Since TDA’s Think Or Swim was not recognizing EBBGF, I tried a test order on the website… When that didn’t enter, I picked up the phone to see what’s what. As it turns out, it took a call like mine for them to start the process, so EBBGF will not be activated at TDA until tomorrow at the earliest. That’ll give me the weekend to read up before attempting to corner the market with a 20k order as Grid called me out for doing on SLMNP… Hmmmmmm, now that I think of it, with EBBGF being a $25 par issue and SLMNP an 1k one, I better start thinking of a 1 mil share order! lol

      1. 2WR, I’ll watch for that 1M order to cross the wire tomorrow (Hehehe)
        Bob’s excellent work has brought me to the conclusion there are too many moving parts in most Canadian preferreds for me. So I’ll steal one of Grids phrases and say “I’ll just stay in my lane”, which is on the U.S. side of the border.

        1. Mikeo – though I certainly understand where you’re coming from, I’m wondering if you’re willing to go into a bit more detail as to the whys (I skipped the apostrophe out of fear) of your decision… Personally, I’ve done the same thing as you by eliminating all but the very few USD denominated issues and to my way of thinking, having done that, then the only wrinkle more frequently used in Canadians than US F/F is the use of a 5 year reset more than a shorter one and perhaps the use of UST instead of LIBOR… Those seem manageable variables to me to think about, but then again, I guess I’m on record as thinking these things through differently than some others. So far, over a short period of time, these have not worked out, but I agree that these are for long term views and opportunistic grooming..

          1. 2WR, to be honest you are 100% correct. But philosophically I am 100% with Mikeo also. When you first read it, its undigestable. But then you study it and it all soaks in. Im interested for Mikeo’s response. But Im willing to bet Mikeo made the “eyes glazed over” decision. Happens to me on about 95% of things. A lot of good investments…even the apostrophe ones like Howard mentioned. Usually I am intellectually lacking curiosity, but a few things do interest me greatly and that is where I stay at in my investing lane. For example my TGAPF purchase today may appear random but I have followed the company for years and know the company as about as good as a layman investor can. So I am comfortable owning the issue and can accept whatever price movement occurs north or south going forward. But my guess is we are still in “circle the wagons” mode on resets. Best chance to make money is for them to go down more then buy a second tranche. But already owning a few of those I admittedly cheated with TGAPF with the 6% minimum floor (off purchase price) in place, but possible upside potential with the high 4.17% kicker. Of course I am sacrificing my usual lean to quality (along with currency risk) for this feature.

            1. 2WR and Grid, I really like complicated and fast moving machinery, cars and motorcycles come to mind, but my willingness to study financial reports or IPOs (no apostrophe abuse here) is right down there near the bottom—shear lack of interest and laziness I guess because my IQ is not wanting. This tendency has cost me in the past, I will admit to jumping without doing my DDD. Hey, I’m trying to get better, slowly, and I’m not ruling out CAD preferreds forever, just not comfortable with it now.

              1. And a needed addition would be; without the generous assistance and unselfish information sharing by all of you here I would not have had the happy outcome enjoyed after starting this effort in early December. Much appreciation to all, especially Tim for making this possible.

              2. Mikeo, you may be called into StL to eventually fix my electro mechanical 1970s Lawman pinball machine. If you know motors this will be a piece of cake for you. When I bought it, I didnt take time to reflect there are no pinball doctors around. One of these days I wont be able to fix it, as my skill and luck level is fast running out.
                Anyhow, you are wise to stick with your comfort zone…Know your risk level and comfort zone and match the investments to it. And being able to accept the outcome either way. See that is why I wont buy those AHT preferreds. I would love to jump in and buy a modest serving. But I dont trust them, dont trust the external management self dealing, and the extreme leverage they blatantly use. If it cratered a couple more bucks after I bought, I could easily fall into the buy high sell low trap of panic investing thinking bankruptcy or going private and delisting preferreds and screwing me over…If SR-A would drop a buck, its oh well I guess more people didnt want them today than people that wanted them. Life goes on as company is fine.

                1. mikeo, 2wr and grid, Agree on all. Like Mikeo, I’m really not interested in a lot of nonsense that requires handholding, though do appreciate the unique qualities of the CNs. I stay in my lane by owing only one CN: EBGEF. Picked up 1K shares and happy to average down at already set downside mileposts. Counter-intuitively, I actually hope it drops enough to be able to average down a bit as this has the hallmarks of a very LT hold. Looking most of my other holdings, I could easily convince myself it makes sense to unload almost all it at current prices, notably the sub 4% YTCs and wait for an “event.” But not the EBGEF as though it may be an e-ticket ride, appears it will stay on the rails for many years.

                  1. Alpha, my criteria probably doesn’t vary from yours much (except my mad money). I spent this year strategically repositioning for better quality and YTW but done recently and now cash started growing organically from income and bonds rolling off. Remember that the 52 week highs we are seeing challenged were those set in the rising rate environment with multiple more forecast. Now that we have entered what appears to be a falling rate environment the challenge is not that surprising….. if all other things remain equal. However last year we saw what happens when the market decides all things do not remain equal. Ugly. “It is hard to make predictions, especially when it involves the future” comes to mind. I see no reason compelling enough to start selling off stuff today, it was hard to come by. Of course that might change tomorrow. What to do with the cash? I try to put some numbers on it, maybe not exact but something in the same ballpark. With a few exceptions anything I would buy is IG, pays 5.5% plus and with similar YTW. So pretty much down to a new issue I like. Don’t see one of those right now. I can buy something outside of that or I can put it in 2% bin. The spread is 3.5%-4.5%. What’s the odds of a 3.5%-4.5% selloff in the next year, or a 7%-9% selloff in the next two? There’s my answer. But for each his own of course.

                    1. P, You outline a compelling viewpoint. I have sold off a few minor positions such as UBP-G which was one of my few remaining NRs that rose to a pre-dividend “projected” YTC of -7%. I mean, that’s just crazy.

                      Staying up on the IG ladder with you P. I do believe a 4% selloff ($1 on a typical $25 issue) is 50/50 possibility in the next year. And if a greater selloff occurs, would be happy to pick up more NCZ-A at $22.79. Should have backed up the truck that day.

                      But I might be distracted anyway as son #1 just got engaged a few days ago to a fabulous woman. For anyone that knows it, they hiked for a few days to the top of Mt Shasta where “she said yes.” She’s AAA IG, high-yield, qualified, noncallable and non-convertible. lol

                  2. Alpha, a good woman is harder to find than a good deal on a preferred any day. Mine is the best deal I ever made hands down. I don’t know how I got so lucky. Congrats to you and your son. I know Mt Shasta and many others north to BC and some in Alaska. Climbed a couple but those days are behind me now. I still paddle my canoe around some of the high mountain lakes because I like to fly fish, they only cost me about $20 per pound. Way cheaper than the ones I catch from my boat at $40 per pound. Golfing would be much cheaper but I like fishing better.

                    1. P, They were going to climb Rainier but my son is in the process of readying a company for sale and couldn’t afford the extra days needed for that ascent. They’ve been up Whitney a few times and are climbing Aconcagua (22,841) in the Andes later this year.

                      You’re location sounds idyllic. Think I need to find you and head down to the canoe salesman. I’m sure investing decisions are much better after a morning on the lake.

                2. Hahaha, Lawman pinball machine? Regrettably, at 76 I no longer do my own wrenching. I find computers most enthralling now and like to build my own desktops and repair laptops (screwdrivers only) as a hobby. Here, again, speed is paramount in moving bits and bytes around.

                  1. Trust me, Mikeo, if you can build your laptop you could fix one of these Im sure. 2WR, is a little younger than he is letting on..I sent him a picture of my Lawman with the playing field deck up blocking the view of the back screen while showing all the “guts” underneath. He didnt even know what it was…These young kids nowadays…. 🙂

                    1. Grid – “Ah but I was so much older then, I’m younger than that now.”….. Yup, me and Bobby D (not in Delaware)

                      And thanks, Mikeo for adding color to your reasoning… I too, have limits where I draw the line on how much esoterica I’m willing to absorb in trying to understand the inner workings of preferreds, bonds, and other financial crap, but I do like to theorize on a lot of it anyway every now and then…. What I’ve found is that doing so normally helps me pay for someone to come in and put the parts back in I always have left over whenever I take apart anything mechanical.

  22. I have posted part 2 of my 3 part series on Canadian preferred. It’s in google docs:
    https://docs.google.com/document/d/1mrVzzXGrBU9kGE8BStUQtECWhy_o6G6p6nchFeDWhO4/edit?usp=sharing

    Part 3, which will be out in a couple days, will deal with portfolio construction. I will be working from the following spreadsheet. Note that the spreadsheet is not dynamic, meaning it does not update prices, ex dates, or anything else. It’s frozen in time. Also certain to contain errors:

    https://docs.google.com/spreadsheets/d/1qHsSlhmrdE0rkmaz7oobmMLy1bXzx8J63dtJv9XDYtY/edit?usp=sharing

    1. Excellent post Bob…Congrats you are two for two batting 1,000! Better watch out, Rida Moron will be trying to get you to “join the team”. He pays more per click that is why they all to jump on board to be on “the team”. Of wait, never mind…It wont work, since you publicly stated you may have made an error.
      That is a prime directive “No No” of the team. Never admit errors or blatant lies. Stick with it and double down. So, since you are a man of honor, looks like you are “stuck” posting here for gratis 🙂

    2. Hi Bob,

      Thanks for posting this. Great information.

      I was trying to find Part 1….I think you put Part 1 in a post here but can’t find it. Hopefully, you will put all parts in a google docs format when you are done with your masterpiece.

  23. FYI: Here’s a curious research target regarding Canadian Preferreds: IPFF, iShares International Preferred Stock ETF. Yes it is an ETF but 85% CN prefs in a tidy package, most all look IG. Did a basic look at any specific internal issues and no work on whether the geniuses of the index are savvy on the details regarding resets, managing risks, etc or just another ‘income etf for a fee’.
    Just a point of interest and research at a time when we seem to all be watching the action from a perch. I’m distracting myself with stuff like this. CN Prefs without some of the barriers we all have encountered, but of course you take their mix. Look historically low priced and yield +-4.8%, 55 point fee. Disclosure: I own no ETFs.

    1. Hi Bob,

      I am able to open it. It does not play very nice with my old iPad so I will study it further when I get to my desktop. Thanks for sharing!

    2. Bob, Excellent compilation. Please add columns indicating what the rate/price will be after next reset out to 2024. lol.

      Seriously good and useful summary. Thank you for sharing.

      1. Alpha, as long as that’s not a big deal, let’s also ask for currency exchange rate graphed out for next couple years. Today one of my cusips morphed into EBBGF. Amy hard at work. Thanks Amy!

      2. Jerry – no crystal ball, sorry. But as you can see I do keep track of lots of metrics going to reset rates. Spread, reset date, how much they are “in” or “out” of the money (i.e. whether rates would reset higher or lower based on current BOC).

        It’s then a matter of how you want to play rates. I can give you low risk strategies, risk neutral strategies, and rate bull and bear strategies.

        If you like big risk/reward plays you have plenty of them available.

        Bob

        1. Bob, I only focus on a more concentrated segment, but basically as far as what I see, the current pricing bakes some of the future expectations in. Hence the higher current yield of Series 1 over the Series L. That is where one has to decide the importance of present yield over future expectations and subsequent repricing. The fixed floor minimums tend to track in tandem, and the no floor resets do also in their segment.
          Where one really earns their meddle in guessing to me is the battle between the lower kicker no floor resets and the relative higher kicker ones. For example if one is predisposed to thinking 5 year is gonna jump significantly down the road, you look at the lower kickers trading closer to 50% off par. That is where you get the double bang from the increased Tbill. Of course one has to guess the trend correctly to align with reset date. Get that wrong and the correct thesis still goes out the door.
          My personal feeling is if one is into these things, they need to spread the money across multiple reset years with similar ilk quality and terms as predicting directional rates daily let alone annually is very problematic. And always have an eye on the January 2016 reset charting lows as a baseline in thought process if assuming the worst is part of ones thought process.

          1. Agree for the most part. As I’ve dug into them I’ve come to the opinion that one has to decide if one is going to play the rates (based on a superior crystal ball) or do something more rate neutral.

            Episode 3 will go into some of that.

            1. “superior crystal ball” lol. I wanna meet the guy with that thing, but he’s been hidden deep in the forest all my life. I think he may be an effing werewolf.

              So, yeah, can’t wait for episode tres.

              Thanks so much for all this, Bob…

  24. I see a new Enbridge preferred ticker on Finra–EBBGF. But I can’t find anything about it online. Anyone familiar with this?

    1. Roger, its another “Amy special”…
      https://www.enbridge.com/~/media/Enb/Documents/Investor%20Relations/DividendandShare/Series1_ProspectusSupplementEN.PDF?la=en

      2WR, you being the brainiac and always wanting to know why 2+2=4 instead of just accepting it as so, I got a little treat for you. Hurts my brain so I pass it on to you…Remember when you were wanting to know of some type of conversion formula to decide on whether to convert to float or accept the 5 year reset? Well this guy dabbles in that process a bit. Maybe it will lead you somewhere. Here is a teaser and then the link…His example sited is in a blog about the Canadian Utilities Series Y reset notice from a few years back. You will need to pop the link to get other details.
      The most logical way to analyze the question of whether or not to convert is through the theory of Preferred Pairs, for which a calculator is available. Briefly, a Strong Pair is defined as a pair of securities that can be interconverted in the future (e.g., BAM.PR.T and the FloatingReset BAM.PR.W that will exist if enough holders convert). Since they will be interconvertible on this future date, it may be assumed that they will be priced identically on this date (if they aren’t then holders will simply convert en masse to the higher-priced issue). And since they will be priced identically on a given date in the future, any current difference in price must be offset by expectations of an equal and opposite value of dividends to be received in the interim. And since the dividend rate on one element of the pair is both fixed and known, the implied average rate of the other, floating rate, instrument can be determined. Finally, we say, we may compare these average rates and take a view regarding the actual future course of that rate relative to the implied rate, which will provide us with guidance on which element of the pair is likely to outperform the other until the next interconversion date, at which time the process will be repeated.

      We can show the break-even rates for each FixedReset / FloatingReset Strong Pair graphically by plotting the implied average 3-month bill rate against the next Exchange Date (which is the date to which the average will be calculated).
      http://prefblog.com/?p=34757

      1. Grid – Just catching up on this site now having successfully been capable to ride the range on my riding mower for 3 hours today for the first time in 2 months…. yay… When first reading this, my initial reaction was to wish I could remember the name of the security we laughed about a while back that mentioned the name of a crazy off the wall theorem that was used to determine a particular characteristic of the issue.

        With that in mind, I think I’ll begin my assigned task by first congratulating Amy, checking out the ins and outs of EBBGF, then mowing another 5 acres…..

        1. 2WR, thanks for the congrats. This had to be a record. I only asked for it to be assigned this morning!

          I was going to place a trade and go through TSX via Schwab but they were going to charge me $29. Grid can attest to just how incredibly tight with a buck I am….. and I also wanted you guys to be able to trade it, if interested, ……..so I asked the Schwab rep to get FINRA to assign a ticker so I (we) could trade it online for no commission.

        2. 2wr, Having worked on a farm as a teenager I came to appreciate the beauty of that ol bush hog. I could clear more acreage in an hour then four riding mowers, albeit with a bit less polish. Loved that job, except stacking the hay in the barn. Oh gosh that was miserable on those 90% humidity days. Jealous of your acreage. Having east-coast blood in my veins, sure miss those wide open spaces. Heck in CA, 1/2 the people’s driveways barely fit the cars. haha. Been reading the relocation comments here carefully…

      1. Hi Joel,

        When I tried to access the sheet it told me that I needed permission. Maybe the problem is on my end and others have been able to open it successfully.

        1. My first attempt with Google Sheets. over time, I have diligently added to my TDAM Watch List and exported it to a Google Sheets. I have liked TD’s system because I can create a Custom View and this is reflected on this exported version, including yield, ex-div, and a fuller description of the security all based on the symbol. Also, a click over to a full charting.
          I have gotten requests to access and have ‘given access’ when received by an email from someone else. I hope it is working. I am not a huge tech, but usually can learn a system by trial. I do not know how to create an open link. Now I see it is a matter of administrating also. JA

      2. I found Link Sharing and turned it ON. It should be available to anyone…I hope!! Good Research! JA

      3. Joel – nice spreadsheet. Does Google load the prices automatically (like they do for US issues) or are you doing it manually?

        1. No. I am not good enuf yet to do that. It is an export of my TDAM Watch List which doed update. I do not see an Import on their Watch Lists, but it is v easy to just enter ‘five symbol F’ and then Customize a view (gear icon). When hovering the full description pops up and allows for a click to interactive charting.
          I have had an issue following details on the Reset Column AN on your magnificent sheets showing Convert to a Specific Series. ie: AltaGas, Converts to H,B,J,L etc.

          1. I have found evidence that says, “…holder has the RIGHT to convert to Series I, etc…” not automatic conversion.

    2. It’s ENB.PR.V. Chart and prospectus available on line. It’s the last of the U.S. $ issues to get a U.S. ticker, including all four Enbridge issues.

      High strip yield but way out of the money on reset rate. Which, of course, explains the high yield. Coupon is 5.95 now but would rest to 4.69 based on current rates.

      1. Hi Bob,

        I am confused by your post above that it said it would reset to 4.69 based on current rates.

        If the current five-year is 2.34% and the kicker is 3.14%, why won’t the coupon (based on par) be 5.48%?

        When using the word “coupon,” share price, other than considering the par value of $25, would not enter into the equation. I would use that coupon % and multiply it by $25 to come up with my dividend amount which I would then divide by the current share price to get CY.

        What am I missing? How are you coming up with the 4.69%?

        1. I’m confused as well. Assuming I’m reading it correctly, the prospectus says US Gov’t Bond Yield, which later is defined as US Treasury Bond with a maturity of five years…Bloomberg Screen USGG5YR. If the US 5yr is currently 1.83, then coupon on $25 would be 4.97% (1.83 + 3.14 = 4.97, or $1.2425). Given the current price of $20.65…that would be a yield of 6.0%. Reset ~4 years out.

          1. Mrinprophet, you are correct. But Bob was referencing off par yield. That is the basis for which the yield and payment is derived and from where the company is concerned about. Various people have various purchase price points that determine their effective yield.
            Bob is guilty of becoming a serious student. He is correct as they are reset off par. Now us layman use our purchase price with pencil in hand to see what the yield would be in relation to a new reset. So long story short with politically correct answer….You both are correct! 🙂

              1. Mrinprophet, sure be glad to… We will start from beginning. This Series 1 issue was sent to market in 2013 at issue price of $25. $25 is the “par” price. In other words the beginning point and end point if ever redeemed. The issue “resets” every 5 years, with next reset June 2023. It will reset at then current 5 yr US Tbill (bond) plus 3.14% (which I always refer to slang wise as the “kicker”) .
                So reset time Enbridge must determine new payment…They dont determine yield they determine payment off par price of $25…Yield is what you get from your purchase price…So using todays bond price here is an example..
                1.82% +3.14%= 4.96%…To determine dividend then its… 0.0496 x $25 = $1.24 annual dividend at reset… Now if you bought at $20. Your yield would not be 4.96%, but 6.2% ($1.24/$20)

                1. Thanks Grid. That confirms my thoughts. What I struggled with was Bob’s statement “Coupon is 5.95 now but would rest to 4.69 based on current rates.” I suspect that it was transposition and 4.96 became 4.69.

        2. Amy, the 5 yr is currently is ~1.83%. So it would reset at 1.83 + 3.14 =4.97% at reset time if present 5 yr TBill held until then. Of course that is par yield. So at current trends at current price it would reset to 6.016%….Assuming my math is current which is a big assumption to make. 🙂
          I am decent with math, but when fingers, keyboard, distractions, and memory get involved, it degrades my math ability.

        3. Dang….I am not sure where I came up with a figure of 2.34 rather than 1.83 for the 5-year. My Google figures must have mashed a wrong button.

          Now Bob’s math makes sense!

  25. On to preferred structures …………..

    90+% of Canadian preferred issues fall withing one of the following structures. As you read through the descriptions give thought to how each interest rate structure behaves when rates change:

    Traditional fixed rate.

    Traditional fixed rate preferred are similar to U.S. fixed rate issues. CU.PR.H is a typical. The issue is non-redeemable for approximately 5 years from date of issue. After that, on 30-60 day’s notice, the company can redeem. When the issue is redeemed, there is a redemption premium that starts at $1.00 per share on the first redemption date and drops 25 cents per year until it is zero after fours years from the first redemption date. Not all fixed rate issues have this premium feature but most do.

    https://www.canadianutilities.com/content/dam/web/canadian-utilities/investors/prospectus-cumulative-redeemable-second-preferred-shares-series-ee.pdf

    https://web.tmxmoney.com/charting.php?qm_symbol=CU.PR.H

    Dividends are cumulative, unless it’s a bank (in which case it’s non-cumulative), and “qualified”. Whether or not your brokerage gets the tax forms right, I can’t say, but they are qualified and under the U.S.-Canada tax treaty treated the same as a U.S. qualified issue. Same goes for all the other issues discussed below. There are very few non-qualified issues among Canadian preferred.

    Similar to U.S. fixed rate issues, prices will move with interest rates but won’t (usually) make you sea-sick. My suggestion is play them exactly as you would the U.S. fixed rate issues.

    Floating rate.

    Floating rates may be either floaters from day one or, more typically, 5-year resets that converted to floating rate. Nearly all the floaters were converted from 5-year resets in the 2015-16 time period, when the BOC 5-year was under 1% (bottomed out at under half a percent) and the resets would have stayed at those levels for the next 5-year period. Better to float than get locked in at the bottom.

    FTS.PR.I is a good example. It began as a 5-year reset (FTS.PR.H) in January, 2010 and converted to a 90-day floater in June, 2015. The conversion was at the option of the holder (not the company) and issuance required at least 1 million shares vote for conversion. If you didn’t opt for conversion you hung on to your FTS.PR.H. Conversion is not automatic; you have to opt in.

    https://www.fortisinc.com/docs/default-source/default-document-library/series-i.pdf?sfvrsn=fb3a6a98_0

    https://web.tmxmoney.com/charting.php?qm_symbol=FTS.PR.I

    FTS.PR.I now floats at the 3-month Canadian treasury bill rate plus (in this case) 145 basis points or “bps”.

    FTR.PR.I is redeemable any time for 25.50 per share (a 50 cent premium) or on each 5-year anniversary of issuance (i.e. June, 2020; June, 2025; etc.) without premium.

    Finally, every five years after issue, FTS.PR.I can be converted BACK to its predecessor 5-year reset, FTS.PR.H, provided at least 1,000,000 share opt for re-conversion. In practice, I have never seen this re-conversion right exercised. The circumstance in which it might would be a very high 5-year BOC rate on one of the re-conversion dates. Ditch the floater and lock in the higher rate for 5 years.

    Floaters can exhibit a lot of price movement, and yield movement. When rates drop, prices drop and the dividends drops. A double whammy. Getting a good entry point is critical. Big cap gains to be made by good or fortuitous timing.

    5-year resets without minimums.

    There is the “fat” part of the market. Most preferred issued from 2000 to about 2015 were 5-year resets with no minimum. They continue to be issued.

    MFC.PR.Q is a typical example. Issued in February, 2018, it comes with a fixed rate of 4.7% through June, 2023, after which it resets every 5 years at the BOC 5-year plus 255 bps (i.e. June, 2028; June 2033; etc.). If the issue resets when rates are high, you are golden for the next 5 years. The converse is true, too. 5 years is a long time to be stuck in the basement.

    https://www.investingforme.com/pdfs/preferred-share-prospectus/MFC_PR_4_0%2027Nov12.pdf

    https://web.tmxmoney.com/charting.php?qm_symbol=MFC.PR.Q

    MFC.PR.Q is non-redeemable until the first reset date and is thereafter redeemable only every 5 years, on the reset date. In between resets, it is non-redeemable.

    On each reset date, there is also the option to convert from a 5-year reset to 3-month floater (same spread), so long as at least 1,000,000 shares elect to so convert.

    Resets can be exceedingly volatile in price as the reset date approaches, more so if rates are in flux. Now, with the market rather uncertain on the direction of rates, the issues that are coming up for reset are up and down like a yo-yo. If you are a day trader, this is a good place to be.

    Resets also can experience large, permanent capital losses. Appreciate, there are resets (with no minimums) from investment grade companies selling presently for half their issue price. They were issued when rates were high and subsequently reset to much lower rates. TPR.PR.B is a good example. Issues at $25 per share, it presently trades at $12 and has traded as low as $9 and change. Unless rates head much higher, and the reset coincides with the higher rate, these are down forever.

    5-year resets with minimums.

    Resets with minimums are the most recent specie of Canadian preferred. They came about because of the extreme volatility – and permanent capital losses – associated with many of the resets lacking minimums.

    There are perhaps 3 dozen or so resets with minimums, all issued within the last 5 years. Most were issues by energy-related companies (plus several from Brookfield). They are the same as the 5-year resets except there is a minimum rate below which they cannot fall when they reset, no matter how low rates at the time.

    TRP.PR.J, issued in April, 2016, is typical The initial coupon was 5.5%, with first reset in May, 2021. The reset rate is the 5-year plus 469 bps with a minimum rate of 5.5% This minimum provides a lot of backbone to the issue. Right now the issue is trading above par, as it has for most of its life. It’s a good candidate to be called on the reset date.

    https://www.investingforme.com/pdfs/preferred-share-prospectus/TRP_PR_J%2013Apr2016.pdf

    https://web.tmxmoney.com/charting.php?qm_symbol=TRP.PR.J

    Other terms are similar to the resets with no minimum, including the option to convert to a 3-month floater every 5 years. The minimum rate does not carry over to the floater, however. It is unlikely, in my judgment, that you will see many (any?) of the issues with minimums ever convert.

    If you want to play the Canadian energy market via preferreds, the resets with minimums are a relatively safe option.

    Final thoughts.

    Except perhaps for the resets with minimums, Canadian preferred are not for the faint of heart. Most of the concern (and price action), is due to interest rate sensitivity, not credit concerns. This is somewhat unlike the U.S. preferred market, where you need to be ever vigilant on credit quality. Not so much for the JP Morgans of the world but for the many issuers who are below investment grade or unrated.

    Next time, we talk about specific issuers and issues, with practical thoughts on how to play this market.

  26. I received about 50 requests for my list of Canadian preferred with U.S. tickers. Since then, I have identified about a dozen more. At some point I will update the list.

    There was a good deal of back and forth on the subject of Canadian prefs and I undertook with several of you to add some commentary to the numbers. This will be the first of (probably) 3 missives on the topic. Today, I will offer some perspective on the Canadian economy and the companies that sell preferreds. Next I will offer a short tutorial about typical terms of Canadian preferreds and how they move in response changing interest rates. Lastly, I will talk in more depth about specific companies and issues, complete with thoughts on portfolio construction.

    Canada has a population of about the same as the state of California and a GDP of about two-thirds that of the Golden State. Despite the relatively small size, Canada has a disproportionate number of heavy-hitters in the corporate world. It’s a concentrated corporate structure, with smaller numbers of larger firms compared to many other countries. Many of the larger Canadian corporations are world-scale, and most are well-managed and well capitalized. Many of those firms issue preferred shares!

    The banking industry illustrates the point. The big 5 of Canadian banks control (I’m guessing) 80-90% of retail banking in the country. They are well known to most here: Scotia, Royal, CIBC, TD, and BOM. If you stand at the corner of King and Bay Streets in Toronto, you are surrounded by 50-60-story building bearing the names of these institutions.

    Similarly, you have concentrations in non-banking finance (Sunlife, Manulife, Power Corporation), midstream energy (TC Energy, Enbridge, Pembina, Kinder Morgan Canada), utilities (Canadian Utilities, Emera, Fortis, BCE), as well as a few one-offs. Brookfield Asset and its related entities is one of the largest companies of its kind in the world. George Weston Ltd is both the largest grocery chain and the largest drugstore franchise in the country. By a wide margin.

    All of the companies named above issue preferred shares, some of them many, many preferred shares. BCE has 22 issues outstanding and Enbridge 21. Most of the prefs are investment grade. Those that aren’t are close to it. Compare that to the U.S., where most issuers are not investment grade. Many of them are far from it.

    To get to a close on today, two questions that came up in discussion were 1) why should I be interested in Canadian preferreds, and 2) why shouldn’t I be interested?

    To answer the “shouldn’t” first, if you can’t stand currency risk (or don’t know how to hedge it), stay out. Out of the hundreds of issues available only about 5-6 are U.S. dollar denominated. Also, if you don’t like volatility, or can’t or don’t want to manage it, stay away.

    For the “should”, I offer a couple possibles. First, I think there is alpha to be had here. Rates in Canada tend to run a bit hotter than U.S. Rates, all else equal. Second, the volatility, especially among the 5-year resets, offers good opportunities to time entry and to play the yield curve. You have to be nimble, and you can be burned if you get it wrong, but the opportunities abound. Have a gander:

    https://web.tmxmoney.com/charting.php?qm_symbol=ALA.PR.G

    I would also add that investments in Canadian preferred are a good diversifying opportunity. Most of us are probably over-concentrated in U.S. Issues. You also have some investment opportunities that you don’t have in the U.S. There is no real U.S. Equivalent of Brookfield, Weston and (arguably) several others. An investment in Canadian banks is not the same investment as a U.S. bank

    That’s it for today; chapter 2 sometime in the next few days.

    1. Bob, thank you for taking the time and effort to post such helpful information! Looking forward to the coming installments.

    2. Great post Bob….You have really taken the ball and ran with it! The reset preferred market constitutes about 80% of the Canadian preferred market which is about an $80 billion market. The traditional fixed would comprise most of the rest. To put it in perspective the Canadian bond market is about 1.6 trillion or so.
      Definitely a lot more volatility as you mentioned. My personal purchases for my objectives were not for Alpha or currency. I am more of a utility preferred investor and it is just another way to diversify in this concentrated segment.
      I do have the non currency risk issues from Enbridge, but have currency risk in my Emera and Canadian Utilities issues. Personally I would be more pleased if they were USD but it is what it is. I own a lot of the fixed perpetual CU that is not a reset. The fixed OTC Weston issue intrigues me, but I would like it to sag more. But it trades close enough in lock step to higher rated CU Series DD that there is no real hurry to diversify.
      This pretty much is where I hold the line for myself in investing in our great neighbor to the north.

      1. Grid – you may want to think about the banks. Canadian banks are more like utilities than U.S. banks. They operate under a government granted monopoly and the banking regs don’t allow for U.S. type craziness. TD and Royal are both BBB and have issues with U.S. tickers. Not RY-T.

        So, too, Manulife, Sunlife and Power Financial. BBB+ and A- PREFERRED.

        1. I agree with you, Bob, and would have no problem owning. I just personally dont need too much overexposure in CAD issues. Plus I am biased towards utilities for my comfort. But I will not discount ever owning. Some times I own a decent amount of bank preferreds and sometimes I dont. I have held FIISO for years and recently bought a decent slug of NYCB-U in $47.80 range. More as an upcoming interest capture than a long term hold. It is creeping up as it heads towards exD. If I am in a babysitting mood I may keep it awhile, but certainly don’t have the pom pons out owning it though.

        1. Hi Grid,

          This is a great chart! Thanks for posting.

          I noticed that FTRSF (Fortis series G) is missing. Any idea why?

          Maybe I’m blind and just missed it but I don’t see it.

          1. Hi Amy. Yep I didnt see it either. Probably human error. Something I excel at also, ha. I would guess they are missing a few others too, but it still is a decent primer list.

          2. Amy – Fortis G is one of the few resets that has no conversion option. Perhaps that lead to it’s exclusion but more likely just oversight.

            1. Hi Bob, I don’t think the ommission is due to the conversion issue. There are several other resets that are not on the list that do require currency conversion.

              That said, the list is very helpful for the issues that are listed.

              1. Amy, what I like about it is the updated credit ratings it has for the issues…You know, those things Moron doesnt like to mention in reco articles, lol. Whenever I have perused the many various credit ratings of companies, I have never seen the words “high quality” near B1 ratings, ha.

          1. Alpha, at this point in my life, I prefer the lazy route, also. This allows me more time to focus on what I enjoy most….Being lazy! As far as the steak goes. I just chewed down a $12 sirloin steak dinner at local diner, so you wont need to spend much to satisfy my palate. 🙂

            1. $12?!?! I just had a $1.88 Lean Cuisine meatloaf and mashed potatoes….I am a much cheaper date than you are. I won’t buy them full price…..this girl waits for a sale.

      1. @MAICAHC

        I trust this isn’t the mortgage money you’re talking about. I don’t pay any regard to Fairfax but the others I know. PPL is BB+ and TA is B+. Volatile issues in volatile industries. Timing matters a great deal. If you’re buying 2-3 year resets you’re effectively making a bet on where the 5-year will be in 2-3 years. I think this is the highest risk space you could be in.

        Safer would be a laddered approach (ladder reset dates just like you would ladder maturities in a bond portfolio). Otherwise, resets that are resetting very soon (or have reset very recently), where you are pretty much locking down yields for the next 5 years.

        Or look at the resets with minimums. Fairly good yield with downside protection. Some of these will actually go UP in price if rates drop lower (and the mins kick in).

        I have a piece pending review that goes into more detail.

        1. Just Lobster dinner money.

          Understand your concern GoC 5-year yield saw a drop of ~100 bps from nearly 2.5% since the last rate hike by the BoC in Oct 2018. This reminded me of 2015 when the BoC cut rates twice and caused prefs to fall by nearly 20% in the year.

          For resets I model a 0% GCAN5YR reset. To see if I can withstand not only the capital loss but income stream while waiting for rates to revert. Understandable dumpster diving can make you into trash.

          1. If you look at the link I posted to my google sheet of Cdn prefs you’ll find all the reset dates.

            For the broader audience I point out the extreme loss (and profit) potential of the no-min resets, especially those 2-3 years out from reset dates. If they reset at a low rate you are doubly screwed in that the dividend decreases in absolute amount and the price drops like a stone. The BOC 5-year is now 1.5%+ and went below 0.5% in 2016, so there is a lot of room for downside movement.

            Personally, I’m going for resets with minimums and a laddered approach to resets without minimums. If rates do drop through the floor I may get in to non-min resets in a big way, but not at present rates.

  27. Has anyone checked out the the Manulife preferred?

    MNLFF
    MANULIFE FINL CORP NON CUMULATIVE RATE RESET PFD SHS SER 4 CL 1

    1. Furcal – I make several suggestions to those contemplating Canadian prefs:

      1) look at the chart. In your case https://web.tmxmoney.com/charting.php?qm_symbol=MFC.PR.L

      See if that looks appealing to you.

      2) Look at the prospectus supplement for the issue. You can get it at the company’s website, as you can for nearly all Canadian pref issuers. Make sure you understand what your are buying, most especially the interest rate terms, adjustments, calls, etc. They are unlike American issues in several respects. This particular issue was converted from a 5-year reset to a 90-day floater in 2016, and can be converted back in 2021.

      3) Check your broker to see if you can buy it. Most will not trade it. TDA, I believe, will.

      4) Check S&P global ratings.

      That said, I’ll give you my 2 cents. It’s Grade A company. About as strong as any insurer on the continent. This is one of 15 issues MFC has outstanding, and the only one with a US ticker to my knowledge. The 5.5% yield (stripped) reflects that. The price is volatile and will be vary with interest rates. It’s a C$ issue, so you have to be content with that. Personally, I would not buy now based solely on my interest rate outlook. The 90-day is 1.66 now. I’d be looking for sub 1% to get in, maybe a part position at 1.25%.

      PS – don’t bother looking at US OTC quotes. They are non-existent or old. Get a price off the TSX and then convert to US$. Base your bid off the US$ converted price.

      1. I tried to buy a small position online yesterday on TDA and it wouldn’t let me, got a “symbol not recognized” or something of that order.

        1. Grichter, with TD, this has happened before. Either you will have to wait for a transaction to occur to wake it up, or call them to activate their ability to trade it. Unfortunately you probably will get someone on phone who is clueless to assist though. This has happened to me before. Once a trade occurred it was opened up for action on TD.

        2. I just found the same thing. TDA is hit or miss on the US tickers for Cdn pref. This one did not go.

          That said, IBK will take an order for MFC.PR.P, which is the same issue trading on the TSX.

          And, surprise, Schwab would take an order for MNLFF!

          This is why I have accounts with 4 brokerages presently.

      2. Might I ask for assistance with the supplement prospectus? On the corporate website I find the underlying prospectus but not any supplements. It is probably obvious but I would appreciate any assistance.

        1. TN – this is the quirk: Canadian companies file a so-called “base prospectus” or a shelf registration as we call it here, covering all future security issues. You don’t need that.

          When a company issues a new security they file a “prospectus supplement” to the base prospectus. This is what you need.

          In the case of the series 4, it was converted from the series 3. The terms of the series 4 are set forth in the series 3 supplement. The series 4 did not issue its own prospectus.

          Whether you click on the series 3 or series 4, it brings up the same series 3 prospectus. Scroll down until you come to the conversion section of the prospectus supplement.

          http://m.manulife.com/Preferred-Shares

          1. Bob, Many thanks! I appreciate your sharing and patience as this is all new to me. So, this issue floats quarterly tied to the CAN T. In 2021 it may be converted back to 5 year reset if substantial majority of holders elect?
            I think someone should prepare cliff notes for these prospectus! I would purchase. But, in the meantime I put in the effort and am grateful for everyone on this site’s assistance.

  28. Alpha – I understand your TDA broker is correct. THe likley best place to attack withholding issuers is with the investor relations dept of the issuer. They have more inventive than anyone else to get the tax withholding correct.

  29. Somewhat related to Canadian issues, I recently opened an account with IBK, my fourth U.S. brokerage. It’s now Vanguard, Schwab, TDA, and IBK. The plan is to eventually slim down to two, but I’m still working out which 2 that should be.

    I’ve found that no one brokerage, or maybe even 4, can provide my 3 must-haves: Low costs, access to gray market issues, and fast access to new issues.

    Low costs is for obvious reasons. Although I’m basically a buy-and-hold investor, I do a lot of trades in the course of a year and costs make a dent.

    I want access to “gray” market issues, meaning issues that just might not have ever registered with the SEC. I won’t name names but the veteran preferred investors know exactly the issues I reference. This includes many U.S. Issues but also nearly all of the Canadian issues with “F” tickers.

    I want prompt access to new issues. As in same day, as soon as FINRA has provided a ticker. I have bought 4 new issues this year, all on day of issue, but the 3-4-hour delays in being able to buy cost me several thousand. I mean, that’s almost a month’s wine budget. Can’t have that.

    None of Vanguard, Schwab of TDA does all 3 for me, hence the IBK account

    My hope is that IBK will plug the whole. After I’ve done the full evaluation I intend to prune. Observations thus far are that IBK provides poor access to gray market issues, but rather good access to direct TSX buys. For example, IKK won’t trade the ticker ALTGF, but will trade ALA.PR.U, which is the same security but trading on the TSX.

    Have yet to see how they do on new issues. Commissions are low but until I actually do some trades and see some statements I won’t really know. In the end I find one has to actually test drive a brokerage to see how it performs. You can’t get all the info on the sponsor’s website, or even with a phone call.

    So back to Canadian issues: I am now up to about 50 Canadian preferred with U.S. Tickers, some of which are of interest. There are many (many) more without U.S. Tickers, that should be accessible through IBK. This includes many of the biggest players in the Canadian economy, most of which are investment grade. I’m talking the likes of BNS, Power Financial, Sunlife, Manulife and George Weston. Will be looking through them in coming weeks (probably drag on beyond that) before heading north (yes, Canada!) for our annual sojourn in the Muskokas. Anyone near Port Carling?

    1. Bob, George Weston had a perpetual that OTC recently assigned a ticker too but it isnt awake yet. I almost had Amy do me another favor, but decided not too. Mostly because being a fixed brethern it basically exactly tracked the movement of CU Series DD I own, so really it wasnt important for me to diversify as I could just add more DD.
      I am not an expert on IPOs, but having a brokerage that partners underwriting is where you get the value. An online friend has Morgan Stanley as his brokerage and he can buy any new issue at $25 IPO on any of their offerings which has been very valuable for him on some new preferreds this year.
      Oh and your plan of eventually getting down to two brokerages? Ha! Now that you have gone down the dark road of unassigned SEC tickers you are doomed…Two months ago my plan was going all the way down to one brokerage…After opening up my taxable TD to consolidate (already had a TD HSA brokerage acct) everything, the only thing I accomplished was adding an additional sub account and I am still stranded with 3 brokerage accounts and no way to consolidate as they wont take the illiquids, grey markets, or “F” issues. Despite the fact I had the same dang tickers already in TD.
      Refusing to accept transfer preferreds from issues they allowed me to buy themselves seems a bit counter intuitive.

      1. I have followed your brokerage travels with amusement 🙂 I may regret what I’m doing but we shall see.

        I am waiting to see how IBK does on new issues. TDA has by far the least restrictive rules on what you can trade but they are not exactly low cost (even with negotiated discount). Vanguard is cheap but very restrictive on what can trade and always slow to get new issues up. I can be on the phone with Vanguard at 830 AM and might be able to enter an order by Noon at best. By which time the price has gone up 30-40 cents.

        The Weston issue shows one trade in June and TDA will take an order. At 5.4% for BB+ it’s thin. But a good diversifier as you won’t find anything like it among U.S. preferred. Groceries and drugs.

        The real fun, I think I will find, is going to be in the resets. What a roller coaster! If you can time well big bucks to be made. If you get it wrong you can take a real beating. For example:

        https://web.tmxmoney.com/charting.php?qm_symbol=BAM.PF.F

        1. Bob, TD wont take the trade. It recognizes the ticker and allows you to enter shares and price. But when you hit trade icon, it doesnt transact and says “Security not found”. This happened with Series DD from CU also, until Amy got it in “live action mode”. If it ever gets closer to 6%, I may try to twist Amy’s arm one more time to help.
          When you finally try to consolidate if you raise holy hell and get the right advocate you may get them moved. Camroc was able to finally push his through. I appealed and they took half of what they initially rejected. I didnt push again. I imagine over next 5 years I will have sold most at some time and then just slowly liquidate.

          1. No arm twisting required. Just let me know when you want me to start badgering the Schwab reps. I owe you.

            1. You’re the best, Amy. I will try not to abuse the privilege! Like Bob mentioned the allure is the grocery/drug sector for preferred yield (and higher quality) which is essentially non existent in US. If it heads north of 5.5% I will message you to beg one last trip to the battlefield. 🙂

    2. Bob, Please do let us know the results of your experiment. Someone suggested a Royal Bank of Canada account. I have been too busy (or lazy) to explore.

      1. TN – if you actually open a Canadian brokerage account (as opposed to buying TSX issues through a U.S. broker) you need to deal with FATCA, file a FBAR, and (possibly) a Canadian tax return.

        I already file a FBAR but I keep earnings on my Canadian accounts in non earning assets so as not to trigger a tax return. It’s an opportunity cost but I don’t want to end up filing foreign tax returns.

    3. I have the same situation Bob – just substitute Fido for Schwab, otherwise identical. In my experience, IB is good for buying native on Canadian exchanges (with an associated FX transaction), but quotes often show up later than Fido or TDA.

      BTW, thanks again for the spreadsheet.

  30. Comparing EBGEF vs EBBNF @ today’s prices of 18.66 and 18.16 – EBGEF WINS!

    Sitting around here nursing my broken leg, I’m doing nothing more exciting than playing around with some numbers. Doing so, I just came to the conclusion that for EBBNF to be a better buy at its last trade price of 18.16 vs buying EBGEF @ its last of 18.66, the 5 year Treasury would have to go UP 92 basis points from present day 1.74% to 2.66% in the next 3 years when EBBNF resets for EBBNF to be a better buy. If that happened, then on 3/1/24 when EBGEF would reset, an investor in EBBNF would have earned the equivalent income an investor in EBGEF would up to that date of 3/1/24. Wanna check my numbers? Let’s assume you buy approx 10k of each, or 550 shares of EBBNF and 535 shares of EBGEF and you compare the income you receive up to and including 3/1/24. 535 shares of EBGEF will generate 19 quarterly payments of 179.736 for a total of 3414.99. EBBNF will earn 13 payments of 170.50 or 2216.50 thru 9/1/22 plus 6 payments totaling 1198.31 to and including 3/1/24 for a total of 3414.81 thru the same date. Given all resets are seemingly being decimated today because of expectation of lower rates, this scenario of Treas being higher by 92 basis seems to be considered unlikely, however, if it did happen, I suppose the price appreciation for EBBNF around its 9/1/22 reset date might exceed EBGEF’s but that’s all speculative. On the other hand, if you assume the market’s right that interest rates are going to zero and staying there forever and you then assume EBBNF were to reset with the 5 year Treasury at .50% on 9/1/22, EBGEF would generate 13.4% more income than EBBNF by 3/1/24. As this year has proven, accurately predicting the direction of interest rates for any length of time beyond a number of months is as difficult to do as it is to time the stock market and yet, all these resets are projecting well into the future that what’s happening now with interest rates will continue happening and will last forever…. To come to that conclusion, one would have to begin by accepting those famous last words, “It’s different this time,” and not recognize how historically low interest rates are right now… With that in mind, I own both EBGEF and EBBNF, but as long as they stay this close together in price I’ll add to EBGEF before I’d buy more EBBNF….. Would welcome to hear different opinions, but now that I’ve said my piece, I’m going to go back to sitting around doing nothing while enjoying wearing my brand new Betsy Ross Nikes… Happy 4th.

    1. Sorry – I forgot to add that in the assumption, EBBNF will reset to 5.81% on 9/1/22 if the 5 Year Treas were at 2.66% on that date.

      1. 2WR, Sorry you had to break a leg to churn out the great summary. Heal up soon! Another perk with EBGEF is its $US-denominted jacket so no currency risk. Viewing EBGEF as a potential 9.5 year hold – or longer. Current declining rates and negative sentiment in my view are collectively creating an exceptional average-down opportunity; deep under par, 6%+, IG, QDI, with 5yr index declining toward zero. Assuming the 5yr does not go negative, EBGEF has a defacto “floor” rate of 4% for buyers at $17.63 or lower even if the index is at zero. Liked it in the 19s and would be thrilled to buy more in the 15s but will absolutely pick more up on the way. No grocery money here as these are LT holds. Thank yous and kudos to Grid and Bob-In-DE for shining the light on these. Was happy to read about your Betsys.

    2. 2WR, I cant dispute math from a man with plenty of time on his hands. Especially to my Vegas math from a pool side, so I certainly wont dispute it.
      It just depends on what factors and math one wants to use. All in all I think the market largely discounts it all based on what projections they are using and of course current sentiment too.
      But all things stripped away (which is also in itself an unreasonable theoretical analysis like any thing else mentioned) the 35 basis point differential cannot be totally discounted. In a totally theoretical world of 0% world. That 35 extra basis points is worth $2.50 in par value that EBBNF holds in favor. Simply put EBGEF at $22.50 would equal EBBNF at $25. Right now there is about 50 cent differential. And of course we know why that theoretical $2.50 spread is only 50 cents now.
      All resets in general move in tandem to a certain degree, so probably on another meaningful downward pricing event I will probably not add to either and go the utility reset route. I think I have about as much in Enbridge as I want.
      Its a fine company but it faces significantly more economic, sentiment, and governmental head winds than a regulated ute has. So I probably have reached my investing limits in EBGEF and EBBNF.

      1. Grid – Sure, I agree there are a lot of moving parts in any of these exercises with nobody able to accurately know or predict how these parts will move at any particular time, but my head is just trying to pin down what I’ll get in dividends in the next 4 years, no longer, if I add to either one of these today at their present levels. And though I’ve not tested your math that says in a .50 Treas environment EBBNF’s extra 35 basis (which is actually 33) is worth an extra 2.50 in market value, I’m guessing the likelihood of a .50 basis point environment staying in place for a year and a half between 9/1/22 and 3/1/24 is pretty slim… Yeah, I get it, what I’m stating is purely an arbitrary opinion but that’s on top of the present market’s purely arbitrary opinion that today’s interest rate trends will continue nonstop until 9/22 and beyond. AND, if you see EBBNF adjust to a .50 Treas environment on 9/1/22 while EBGEF remains unchanged until 3/1/24, how bad will the market price differential be between those two on 9/1/22 in EBGEF’s favor when EBBNF’s coupon will be 3.85 and EBGEF’s will still be 5.3753? All mental gymnastics.

        1. BTW, Grid – I see where Wynn stock was up almost 10% this past week… Coincidence? I think not…

        2. 2WR, I used the 2.82% kicker compared to 3.15% for EBBNF. The 33 basis point differential is this…If EBBNF and EBGEF had same reset dates. EBGEF would be worth over $2.50 less a share than EBBNF is 3.15% was markets base current calling kicker rate that commanded a par pricing. It would take EBGEF to drop to under $22.50 ( I actually round up for EBGEF considering $23.50 is only a 3.13% yield, not 3.15% so its a bit worse). This has value and a lot of it. It just depends on when its unlocked…Which could be never as it depends on the reset yeild and sentiment.
          Yep, heading home today. 4 days is plenty here. My NFL investments were made this week with a concentration of Cowboys 8.5 ovr, and Titans 7.5 ovr, and Titans 8 ovr (better payout odds at 8).

          1. Grid – I feel like by responding I’m trying to right fight and that was not the point of the exercise, however, that won’t prevent me from doing so anyway… lol. When you say, “If EBBNF and EBGEF had the same reset dates…,” it reminds me of the old saying, “If pigs had wings…..” https://www.youtube.com/watch?v=e_vFQpjI6fQ They don’t and that fact has to be a part of the equation too. How much that should factor into the equation is another question. Certainly today, imho, because of how close the two are in price, the market is already giving value, perhaps too much one direction for interest rates only value, to EBBNF’s added kicker amount. To me, it’s valuing it too high because you have to pay approx 30 basis less in current yield for EBBNF vs EBGEF. Also, as you and I both agree, the value of the 33 basis point difference in reset premiums between the two increases the closer you get to zero interest rates and, conversely, decreases as rates go up. How did you arrive at your number of 2.50 less value for EBGEF if both reset when Treasury is at .50? Are you equating current yields at the “if” date? Currently the market for these two believes interest rates will never go up again, today’s action in rates to the contrary, and if that’s true, if you’re a buy and hold for the income investor, it’ll take more than 5 years to do better with EBBNF. I’ll favor the bird in hand… And as far as the Titans bet, I have no clue, but given the sad state of NY sports, with Knicks situation even worse than the Giants, all I can say now is Go, Titans! Go Grizzlies! And inviting personal attack, Go, Predators! This carpetbagger’s going local!

            1. 2WR, know I dont consider this a right or wrong situation. In fact I am not disagreeing just pointing other pricing variables. My previous post has to be read in conjunction with yesterdays. Its all theoritcal. Any added present divi gains could be negated by cap gains of EBBNF.
              My $22.50 reference point is that is price EBGEF would have to be at to counter a par 3.15% of EBBNF. It may take decades do to randomness of 5 yr at reset…But math wise 33 basis points is equivalent to a bit more than $2.50 in par preferred stock pricing off a 3.15% base. As mentioned Im just talking in theory and own both.

            2. 2WR, Titans were very good to me last year covering 8 even with worthless Gabbert QBing in 8 games last yr. They deserve the chance to make me money again, lol.. The ‘Boys is a partial fan bet but going 9-7 or better seems very doable.

            3. 2WR, Tagging on…If the 5 yr index = 0% “today”, then EBBNF’s .33 would equate to a price differential $2.62 to EBGEF. However, at today’s “actual” index+margin, that differential equates to $1.65 – and as you have pointed out, that $1.65 is is heavily compromised by EBBNF’s shorter calendar to reset, ergo the only .50 differential. Also, assuming rates will at some point pass the current cycle rate nadir, EBGEF will enjoy that differential in reverse. This means it’s price relative to EBBNF should rise faster in a rising interest rate environment. Buying EBGEF near the nadir in my view will be one of the best openly visible total return opportunities I think we’ve seen in quite a while. As I only opened a partial position in EBGEF, will be adding as the price drops. This assumes of course the other factors that make ENB attractive remain intact.

              1. Alpha, you are making my point….And actually 2WR’s… The damn thing is unknowable and value is based on ones prejudicial variables and future guesstimates. And largely at any given moment in time the market has it baked into current pricing. The only thing that is entirely certain is EBGEF will generate more dividend payments from now until reset time of EBBNF.

                1. Guy, I love your conviction. One dreary winter I built a Excel spreadsheet for this type of thing. Had price @ par, price @ market, reset rate%, current base %, assumed reset base rate%, time to reset, accrued $ to reset date, assumed capital gain/loss at reset date derived from reset up or down, assumed market yield on a fixed rate at reset date, assumed fixed accrued, assumed market spread between Gov and Corp rates at reset, other variables and hypothesis I can’t remember but deemed relevant at the time. Took me days to formulate and it became a monster. I deleted it because I got headaches. 2WR hope your leg heals before you get to that point.

              2. Fun, huh? Thanks for chiming in, Alpha… always fun to add another bellybutton, uh, I mean opinion…. I think I understand your math: in a 0 Treas world and with both resetting on the same day, EBBNF would have a 3.15% coupon and, EBGEF would be 2.82% and, assuming EBBNF would be at par, EBGEF would have to be at @ 22.38 to have a 3.15% current yield identical to EBBNF. But of course, taking different reset dates out of the equation today, with EBGEF now at a 7.20% current yield, EBBNF ought to be at 17.22 to equate to EBGEF’s present day current but it isn’t. It’s at 18.16, thus making EBBNF the lesser well priced animal. My personal belief is that even if interest rates continue to head toward zero, the likelihood of them staying there 3 1/4 years from now (9/1/22) THRU and beyond 4 1/2 years from now (3/1/24) are slim and the odds favor interest rates being LOWER in 2022 than in 2024. That makes me feel as though when both of these reset next time, odds are in favor of the interest rate environment at each date will negate much if not all of EBBNF’s extra 33 basis point reset rate advantage…. I now rest my pontification..

                1. yes,this was just theoretical. My personal opinion is if I am in them I think diversity in reset years through various issues of similiar quality is more of an important decision for me than an either or on one issue.

            4. 2WhiteRoses, Thank you for the analysis and follow on by all. I am slowly adding positions. Sentiment in Canada (from recent visit and CAN citizens) is one of frustration. I suspect CAN will have change in P.M. and Govt. policy in next few years. If so, will be good for ENB . As a 5th generation Tennessean, welcome! Nashville has become IL, CA, NY central. Just add the TN Volunteers to your list and you are bona fide.

              1. TNT, CA is in the midst of an exodus. Barely a day goes by we don’t hear about it or of someone else leaving.

              2. Thanks, TNT – The Vols were an easy add right from the get go… We’ve been here in TN 12 years now, half way between Knoxville and Chattanooga so have lived thru the dismal post Fulmer revolving door years offset by having been able to experience Pat Summit’s achievements. Liked Pearl and do like what Barnes has accomplished. Undecided on Pruitt. Am really rooting for Bone to do well in Detroit as a hidden gem in the NBA as Kamara was in the NFL. Ho hum on Williams and the Admiral.

    3. 2WR, I was looking at the week close on TSX pricing this morning. I would suggest if EBGEF won in your comparison on Thursday, they would even more so now. As EBBNF is now $18.60 up 44 cents while EBGEF is $18.83 up only 17 cents. EBBNF is actually higher than it was a month ago, while EBGEF is actually still about 50 cents lower than last month. There can be tradeable opportunities between these as they always dont move daily in tandem. Its just too difficult for me to exploit though in any meaningful way.

      1. Grid – Oh sure, rub it in…..lol… Actually I don’t often visit the TSX site unless I’m ready to enter a trade, so I didn’t see that… On TOS last trades were 18.16 and 18.75, thus showing a slight widening but I have no doubt the activity on TSX is higher and probably more accurate. Your bringing this up reminds me though, that perhaps trying to actively play this spread thing by buying one and selling the other while maintaining the long position overall might be an alternative to participating in the IPO flip game you guys have been playing and I’ve been reluctant to do… I actually successfully play this game for a year or two earlier this decade trading in and out of the various 5 series of outstanding IStar preferreds when the spreads got too thin or too wide…maybe that’s repeatable with these…. Trouble is, the STAR preferreds were in an IRA and these are not, so right now trades on ENB preferreds would be taxable…. Maybe I should start new positions in my IRA just for the fun of it. As long as I’m willing to own ENB in any case, it might just goose the return a bit without much risk… Thanks for the thought…

        1. 2WR, I could never exploit this because as you know one needs to see bid/ask prices to see what is going on. Im flying blind on OTC. Amy, however, has the platform to see bid/ask TSX spread on her brokerage. Based on last couple weeks price movement on a quick trade, I would go with EBGEF for that.

          1. The TSX website has real time prices and last 25 executions to the second but I don’t think they show bid-ask. I’ll look on Monday.

            When my own trade executed on Schwab I saw it immediately on the TSX website. Interestingly, although the order was entered on the U.S. ticker the confirmation I received from Schwab was for the Canadian.

            1. Bob, I have never seen bid/ask either. Amy has access though through her brokerage account which has foreign operations. Yes, many of my OTC trades went straight to TSX and bypassed totally OTC ticker volume and trade. Have not determined any pattern from it though.

    4. Roses – a suggestion: when you look at prices of Canadian “F” preferred, don’t use the prices reported through FINRA, which would include any quote you would get from a brokerage website (or Marketwatch, etc.). They are often days old and you will find that you can’t trade at those price.

      Using EBBNF as an example, the last FINRA quote is 18.16 on June 28. The last TSX price on ENB.PF.U (same security) is 18.60 (all in U.S. dollars).

      https://web.tmxmoney.com/quote.php?qm_symbol=enb.pf.u

      That difference – 18.16 vs. 18.60, may change the analysis.

      To make it more challenging consider that ENB has a total of 21 preferred issues outstanding, with variable pricing structures, spreads, reset dates, and currencies. Try picking the best from that lot!

      Cheers from DE.

      1. Thanks for the suggestion, Bob… I got your spreadsheet so also thanks for that very helpful tool….. In practice, for now I’ve chosen not to expand in Canadians beyond ENB until I feel more comfortable, and being of simple mind, I’ve also limited myself to those in USD only. Were I to choose to get into CDN issues, I’d have to figure out the proper conversion rate and whether I wanted to root for the USD to go up or down, and that always hurts my head, so I pass for now… I do, however, know enough to check on TSX prices before entering a trade on EBGEF or EBBNF. I had also reviewed all the various ENB preferreds, but my other parameters do eliminate many of the 21 even though I know some on TSX onlyissues seem to trade cheaper….To the best of my knowledge, I do not have access to TSX at Fidelity or TDA but will be interested in your new experiment with IBK What I haven’t spent much time on trying to figure out yet is what the circumstances might be when an investor in the resets would want to convert to the floating mirrored issue or whether or not that’s only a company option not an owner’s…

        1. Good morning 2WR! The conversions on these Canadian resets seem to be fairly standard practice across all lines of preferreds I have owned and researched…For your example, I am posting the terms of your BFF, The Series 5 (EBGEF).

          Holders of Series 5 Shares shall not be entitled to convert their shares into Series 6 Shares if the Corporation determines that there would remain outstanding on a Series 5 Conversion Date less than 1,000,000 Series 6 Shares, after having taken into account all Series 5 Shares tendered for conversion into Series 6 Shares and all Series 6 Shares tendered for conversion into Series 5 Shares. Furthermore, if the Corporation determines that there would remain outstanding on a Series 5 Conversion Date less than 1,000,000 Series 5 Shares, after having taken into account all Series 5 Shares tendered for conversion into Series 6 Shares and all Series 6 Shares tendered for conversion into Series 5 Shares, then all of the remaining outstanding Series 5 Shares shall be converted automatically into Series 6 Shares on the basis of one Series 6 Share for each Series 5 Share on the applicable Series 5 Conversion Date.

          So, its never cut and dry…If too few tender, you dont get to convert…If too many want to convert, and you dont…Sucks to be you, as you get converted anyways.

          1. Yeah, I’ve read all that, Grid…. and I get the not cut and dried sitch…. What I haven’t spent enough time trying to figure out is under what circumstances, or in what interest rate environment, would someone want to convert? BTW, unrelated, along the lines of my having mentioned CUBI preferreds to you, I’ve noticed that INBKL says, “if three-month LIBOR is less than zero, three-month LIBOR will be deemed to be zero.” Of course from my point of view all that means is an increased expectation that INBKL will be called on its float date and in my world, that’s not a negative.

            1. 2WR, Some conversions came a few years ago, with various preferreds on expectation of rising short end yield curve. Plus it of course adjusts on a floating basis then so you get any immediate yield improvement on a quarterly basis plus any price increase baking that expectation in. An inverted yield curve of the two would be a possible reason also. It like anything else we do. Ya place your bets and take your chances on where you think either instrument is going…..As a general rule though, history shows the majority have never exercised that floating option.

          2. As an empirical matter almost all the resets have conversion options (from 5-year reset to 90-day float, same spread) but very few get converted. They all have conversion minimums (1 million shares is typical).

            That said, there are some 90-day floaters out there, most having been converted in the 2015/6 time frame when the BOC 5-year was under 1% (almost down to 50 bips). Yeah, if I had a 5-year reset with a 120 bp spread and a 50 bp 5-year, I’d not want to be holding that thing for 5 more years at the same rate. I’d take chances on the 90-day.

  31. I’m noticing some buy on vol interest in some of these resets. Could be one of two things: Grid buying while he has some winnings left while he’s wearing his lucky Blues jersey in Vegas!…OR a perceived bottom in rates as the Fed may be stonewalling rates?
    Stay tuned…It’s hard to wait for a solid turn in thinly traded issues as they can just walk away and fast. (PS: Never a recommendation for action) J
    I prob won’t get over there to really look around until next week.

    1. Joel, waiting in line for my free Wynn buffet so Im surfing, lol.. Remember these really arent that illiquid since they flow through to TSX. Somebody(I was either here or SA) gave a link from major brokerage saying they were buys. And they have been climbing a bit since. I just have dabbled buying a couple hundred more of ERRAF last week and a bit more of Canadian Utilities fixed DD the other day. Wont be blowing that Blues cash because I basically spent it on NYCB-U and have to pay myself back. Noticed Emera last week had its ratings affirmed and stable from Moodys. That means the preferred is still BB+.
      Glad I didnt own any ATH. Never have trusted that leveraged outfit.

      1. If you want some amusement (don’t we all) check out Rida’s articles on AHT, one in 2017 singing its praises and one just recently explaining what went wrong and how its really has been a dog all the time.

        I put Rida in the same category as Cramer – negative indicator. When Cramer yell BUY! it’s time to sell, and vice versa.

    2. I picked up 500 shares of EBGEF (first purchase of this series) on hopes we are seeing expectations of a bottom. JMO, but I think there is a contingent (Powell, Meester) that really does not want to lower rates to make sure they have the tools if things end up being more severe than expected.

    3. Grid may be able to move markets but probably not in this case. The resets, those without minimums (which is most of them), are very sensitive to interest rate changes. In just the last week, as odds of a Fed rate cut (followed by a BOC rate cut) diminished, prices shot up quite a bit. Some were up a buck in just days.

      1. Bob, Im not Rida Moron, I cant move my GF to do what I want, let alone markets, lol… Here is you question, Bob, as I know you read prospectus material and I havent seen the answer. And Canadian reset prospectus are very short reads comparatively to US preferreds….So, a scenario…… Take the Enbridge Series 5….For simplicity say its resets with a negative 2.82% 5 yr, plus 2.82% kicker…Will the yield be 2.82% off par, or 0%…As prospectus says the sum of 5 yr. and 2.82%…. This prospectus was issued prior to negative interest rates.

        1. Grid – except for the issues that have explicit minimums there is no downside limit on the resets. In theory the rate could go to zero. If it went negative you send them a cheque each quarter. Not sure how that works.

          1. And if I dont get the check sent to them by payment date, do I owe a late payment fee? Possibly an extradition warrant for my arrest for non payment? …..Why are you are you jail, extradited from US, Gridbird? Murder? Larceny? …No, I forgot to pay Enbridge my negative yielding preferred dividend I owe them. 🙂

            1. I had some insight but didn’t extend that deep into the details. But maybe US check wouldn’t work but they might set up a US account for US shareholders. Otherwise you might need to wire it. I’m unsure what the fee would be for that. If it’s not a large amount maybe just pay entire year and avoid recurring monthly wire fee. Would need to do the math on that first though. Besides Grid, if you do wind up in Canadian jail I’ll start a go-fund-me page for your bail. I’ve made money off some of your ideas and probably chip in hundred or two. Who says I’m a curmudgeon now?

              1. Ok, P, reluctantly I agree to accept your delisting from the Curmudgeon list. That leaves Camroc as the last man standing. 🙂

            2. Well …. Canada (unlike the U.S.) does not extradite for fiscal crimes. They will wait until you cross the border then send you off to Kingston.

  32. For those of you that follow Canadian preferreds I have just recently updated my tracking sheets and will make same available by email upon request. These are the sheets I use to both track and make investment decisions from. Covers only those with US tickers, about 35 in total.

    To obtain, you can either post your email here (strongly discouraged) or send me a PM through Seeking Alpha with your email address. I use same nic on SA as here.

    Price is only …….. wait, this is III, not SA! Gratis, of course.

    1. Hi Bob,

      I tried searching for “Bob-in-DE”, but it just provided any reference to just “Bob”, and didn’t see your comment or user profile anywhere. Any chance yo could post a link to your SA profile to contact you? Thanks.

    2. Hi Bob-in-DE, Always happy to compare/share notes and will be interested to see how you have everything laid-out. Message sent…

  33. EBGEF (Enbridge Series 5) update – After 3 weeks and 5 calls with various Schwab representatives, this is where I am on this. Apparently the company (in this case Enbridge) gets to pick their custodian or transfer agent for their securities. In this case, they chose Citibank. Citibank does not recognize/implement the Canadian/US tax treaty. Citibank withholds taxes regardless of the type of account. So even though I hold this in an IRA, the taxes will be withheld. The only way to change this, according to Schwab, would be for Enbridge to change their transfer agent/custodian or to get Citibank to do what they are supposed to do. As for myself, I am just going to sell my position as it is just not worth it to hold this security in an IRA.

    1. Xwords59, it seems like we all got partial answer with this dont we…But one thing we get is universal…Its someones fault and out of their control, ha.
      That doesnt appear to be a totally correct answer they are giving you because if Citi is ENB transfer agent why is TD not withholding then in tax free accounts on mine and others? One thing I know for sure is you wont get a satisfactory answer, so I dont blame you checking out.

        1. Others have posted it is not. I have EBBNF in tax free and it has no withholding. I held another Enbridge preferred for a while and it didnt have a withholding either. However, my EBGEF is in taxable.

    2. I would think your leverage lies with Enbridge. Call the investor relations people. They do pay attention to investors.

  34. Purchased Forts series G at US$12.36 It is CAN currency issued (wish was US). Cannot understand the continued decline but as fundamentals look OK, I’ll listen to Mr. Buffet and disregard the fearfulness of the CAN resets.

    1. TNTowanda, The ute is fine…One of the best. Its almost a defacto US utility in many ways being where its holdings are. Im sure you do as you have been reading, but remember worst case, if 5 year went to 0% and was there at 2023 reset, the yield would reset to about 3.20%.
      I sold off a chunk of my 4.5%fixed floor CU issue. It just is too high now, being 80 cents over par, under floor yield and well over what I paid for it.
      Used some proceeds to buy a little bit more of falling knife EBBNF when it went under $18 this morning and bar belled it with some more of the CU fixed perpetual DD series and Spire preferred when it dropped under $26.

      1. Hi Grid,

        Regarding FTRSF, you wrote:

        “but remember worst case, if 5 year went to 0% and was there at 2023 reset, the yield would reset to about 3.20%.”

        I’m drawing a mathematical blank here. If the kicker is 2.13%, what variables/equation are you using to come up with 3.20%?

        25 x .0213 = $0.53…..but my brain is not computing how you came up with 3.20%.

        1. Amy, I will let Grid answer but when I was evaluating and took the worse case of 0% reset, the yield would be 3.2% based on today’s purchase price (under par).

          1. I was wondering if today’s price was being used but with a closing of $12.52, a $0.53 div => 4.2% so I am obviously doing something wrong.

            I thought this was one of the issues that we didn’t have to do the conversion but if I take that $0.53 and multiply it by .75 I get $.3975…. and now with a price of $12.52, I come up with 3.2%.

          2. TNTowanda, Thanks for posting you “did the homework”. I enjoy discussing resets the most, because it interests me more than discussing same fixed perpetuals. But they are not my lifeline, just a piece of the investing pie for me. I am always fearful short posts lead to people buying something they do not understand or have incorrect assumptions. You know the game and the rules!
            This a counter intuitive play for me, also. Usually I buy hoping for stability or a bounce up trade. These reset issues I have bought, I want them to go down. And go down more… Hopefully 25% more…And I will buy more, lose more money, and then buy one more time! And then sit and wait and wait and wait until the coiled spring jumps…..I gots plenty o time!

            1. Grid, These are setting up to be one of those issues years from now someone will ask how we got in them. I’ll be happy to pick up a few thousand more shares if EBGEF hits 15. Own a chunk now, and it’s the first issue I’ve ever owned where when it drops, my anticipation grows. lol. The current 7% yield may melt to a 3.2% YTR (4% taxable equiv). However, at 15, EBGEF would yield at least 4.7% on new money; a terrific yield in a 0% 5yr landscape. This would provide substantial support at 15 while the issue will simultaneously be sitting on a potential cap appreciation launchpad – a very long way from par. Will pick up more about 1/2 way to 15 and then again if we get there. Staying in my lane as this is my only CN, which may act as a valuable wide moat hedge against near 7% IG perpetuals acquired 12-18 months ago. We just need patience and don’t use the laundry money. This one could pay out/play out over many years.

        2. Amy you are correct on par price, but that isnt purchase price. I was factoring in the new reset yield off her purchase price of $12.36 USD conversion price.
          Lets stay with TSX pricing and forget USD for convenience.. 0% leaves just 2.13%. Which is 53.25 cents annual. Current price is $16.62… $0.5325/16.62 = 3.20%
          So with a lower kicker it suffers more on low reset. But if or when rates rise down the road, it wont take much for the yield spring upward because the purchase price is well under par. But that is a long term horizon. A return to last fall 2.5% 5 yr would turn this into a 7% reset investment grade QDI.

            1. I usually stick with USD values because that is what Schwab uses. I don’t usually go to tmxmoney.com for the TSX values.

              1. Amy, my brain works best buy just following on TSX. If memory serves you have a more robust platform to look at that portrays it all in USD. If I had your platform I would also. If I remember correctly you also have bid/ask spreads in USD which is very nice as opposed to my fly blind pricing. But all I have USD is old and sometimes irrelevant F ticker prices so I follow TSX. BTW, these issues dont show prospects of an OTC price fleecing. A high “dummy” ask price would get intercepted and trade would flow through TSX for better pricing.

            2. Grid is correct, that is the analysis! Like someone said here recently, “you have to know the math of bonds…” Keep trudging forward!
              Also, look at the CNDollar vs. USDollar relationship:
              https://www.google.com/searchq=canadian+dollar+vs+us+dollar+chart&rlz=1CAXGER_enUS799US799&oq=canadian+dollar+vs+us+dollar+chart&aqs=chrome..69i57.11450j0j7&sourceid=chrome&ie=UTF-8
              Go to long term view and you will see a reversion to the mean on currency valuations. You will see CND at par with USD ‘recently’. You will see a big gain from currency valuations at various times and this can be a good diversifier. That is some of the reason why CN issues are beat down right now, but it will shift over time. Right now the dollar is “bully”. If inflation begins to rise commodity currencies can get very strong. Eventually, paper will weaken.
              There are plenty of long term studies that show hedging currency over long time frames, into international markets , is really inconsequential…unless you are buying into a temporary deep divergence in two fundamentally ‘sound’ currencies.
              Take it all in and keep plowing! JA

              1. Joel, I know as much about currency as I do curing cancer, so take this with a grain of salt. But I agree with your thought process. If one has time it basically averages out over longer haul. If one looks at a 40 year CAD-US currency chart it basically is unchanged from that duration. With CAD spending roughly as much time under 75 cents as above 75 cents. Ironically with the dollar being recently strong it has really had little over impact on CAD. In fact CAD is slightly higher now than 1 year ago, and also 2 years ago. Of course like anything, pick your reference point in time and one can make a case for the opposite, too.

  35. Trying to make a list of Canadian Resets that cross-reference OTC symbols to their respective TSX symbols. would someone post the TSX symbol for ENBBF? Grid, Amy?

    Thanks, Mike O.

      1. Good morning to you Grid, and thank you. So then is EBBNF = ENB.PR.U? No hurry, an after golf reply is fine. 🙂

        1. Taking the day off, Mike. :)…Yes that is the real TSX ticker for EBBNF. Its the Enbridge Series L preferred.

        1. A4I, this is what Bob was referring to as “catching up” to its real price because It hadnt traded as frequently as EBNNF has (Series L). ENBBF was actually up 25 cents today on TSX. The Series L is really at present the only reset I follow I could truly stomach holding with a 0% 5 yr. at reset. That would 4.38% at present price. Because we know what high quality fixed perpetuals would bring with a 0% 5 yr. And lets put it mildly…The current new BoA preferred that appears skimpy today would be a total gem at that yield, lol.

    1. Over the past few years I have followed Gridbird around and compiled many of his posts about preferreds (~50% of my portfolio) in an ongoing document I call The Wisdom of Gridbird. He is very generous and patient, answering some questions over and over, especially on CA resets, which seem to interest many here.

      So I’m going to post some of what I’ve preserved on them in hopes that you will find it useful (even if a bit is outdated) and that it may spare him a few repeated questions:

      EBGEF is the Series 5. What I like about it is it is based off US currency and divi…I also own EBBNF which is also USD and is the Series L. I bought around $18 a few months back and its a bit over $20 with a 6.2% yield or so. But it has a higher 3.17% kicker than EBGEF which just reset off 2.82 kicker. The Series L reset in 2017 off a horrid 1.8% 5 yr US Tbill. A lot of ways to pay these based off when they reset, current price, and kicker rate. I own Series 5, Series L, and Series B which has lower yield but way under par. Note the Series J which I dont own is also USD…I dont have access to TSX….But I think these shares along with other resets I own from Fortis, Canadian Utilities LTD, Altagas, and Emera are “flow throughs” from TSX. I have had no problems buying and selling them. I may ne getting scalped a few pennies though, so you could possibly get a slight better price.
      3 Mar 2019

      I got you a link you may find informative about more color on resets and how they “work”. Go to link #8 on “Resets”. You may want to read a couple times to digest it better.
      http://www.retailinvestor.org/preferreds.html#reset

      Emera pfd prospectus is here: http://www.marketwired.com/press-release/emera-announces-offering-of-ten-million-preferred-shares-tsx-ema-1662468.htm

      CA ticker for ERRAF is EMA.PR.A, EMA.PRA.CA

      Fortis pfd prospectus is here: https://www.preferredstockchannel.com/prospectus/?symbol=FTS.PRG.CA

      CA ticker for FTRSF is FTS.PR.G, FTS.PRG.CA

      CA Utilities Ltd prospectus is here: http://www.canadianutilities.com/Investors/Stock-Information/Documents/Preferred-Shares/Prospectus-Cumulative-Redeemable-Second-Preferred-Shares-Series-FF.pdf

      CA ticker for CDUTF is CU.PR.I, CU.PRI.CA

      CA ticker for CNUTF is CU.PR.G, CU. PRG.CA [not a reset]

      http://www.canadianutilities.com/Investors/Stock-Information/Preferred-Shares

      CA ticker for EBGEF is ENB.PF.V

      CA ticker for EBBNF is ENB.PF.U

      Enbridge credit ratings:
      https://www.enbridge.com/investment-center/stock-and-dividend-information/credit-ratings

      Altagas Series C prospectus is here: https://www.preferredstockchannel.com/prospectus/?symbol=ALA.PRU.CA

      CA ticker for ALTGF is ALA.PR.U (Series C)

      Jan 29, 2019

      EBBNF- Series L
      EBGEF- Series 5
      EBRGF- Series B
      EBRZF- Series D
      ENBBF- Series J

      Here is Enbridge link that you can refer each to…It will show TSX ticker symbol you can match up to. Also you can look at their divi to see if it is USD denominated or not.

      https://www.enbridge.com/investment-center/stock-and-dividend-information/preferred-hybrid-shares

      The above are the only ones I am aware of that presently trade OTC. You need to pay attention to reset date, and kicker yield as they are all different, along with wether it is USD or Canadian based payment. Not all of the above are USD so be mindful of that…For example EBRGF is a Canadian Tbill and currency preferred.

      Here is a link I found helpful on Canada reset issues. If you scroll down you will find those trading in US dollars.

      https://www.investingforme.com/data-room/rate-reset-preferred-shares

      But every good has its bad…These can (and will) trade counter to fixed perpetuals. Just as rising long yields are the death cross to fixed perpetuals, so can lower long end yields be for reset issues. Just imagine the potential damage in price to a reset if 5 yr Tbill went to zero. Especially if it has a low kicker add on.

      ***That is why I try to keep a variation as they all have different effects to pull on par…perpetual fixed, adjustable, call protected, past call, uncallable…etc.***

      GLTA

    2. Hi Mike,

      I notice that posters keep getting EBBNF (series L) and ENBBF (series J) mixed up within the same thread. You wrote ENBBF above, as did A4I below ( which happened in another thread here a couple of days ago) , but Grid’s answer referred to EBBNF.

      1. Amy, the tickers dont stick in my head either outside of EBBNF. The rest I just usually refer to by their Company and series name. I can remember that easier, otherwise I would need a cheat sheet to look at, ha.

        1. Yep but I just want to make sure that folks don’t get the two mixed up.

          My brain is getting very befuddled with the tickers and the series ID. I have always used the ticker so when the series is named, I need to refer to my cheat sheet.

          Ths foray into the Canadian issues has seriously taxed my brain. :>)

          1. This is from the Enbridge site or annual report (I don’t remember which) https://www.enbridge.com/~/media/Enb/Documents/Investor%20Relations/DividendandShare/ENB_Securities_Prefs_Summary.pdf?la=en It shows all the preferreds from Enbridge with their Canadian symbols. It’s a little outdated on the most up to date resets AND it doesn’t show the US symbols but it’s a good place to start when trying to get the whole picture… Grid – how many US symbols are there other than EBGEF and EBBNF? You can then cross reference the US symbols and update the newer resets elsewhere on their site. By default it’s in Canadian dollars but it clearly describes the issues that are US denominated.

      2. I try to use the Series as I find it is consistent when on Schwab, Enbridge or other websites. Schwab uses the OTC symbol when purchasing but then uses the TSX symbol when displaying- hovering over the holding Schwab displays the series ID. So, I need to stick to the Series. Likewise, I get a headache trying to keep all straight.

        1. I am also with Schwab and it drives me nuts that they list the TSX symbol which brings up zilch/an error message. So…..you have to know what the OTC symbol is.

          For example, CDUTF is listed in my portfolio as CU/PRI:XTSE but it goes nowhere when I click on it. In order to get any info, I need to type in CDUTF.

          For me…..on Schwab…..it is useless for me to use the TSX symbol.

        2. On TDAM, enter the F symbols onto a handy Watch List, then hover over the symbol and a pop up will appear showing the CN ‘titling’. You get both.

  36. Interesting, starting to see a bit of bifurcation with some. Take Emera Series C and Canadian Utilities series Y. The 5 yr lows were both in early 2016. However, CU is only $1.50 away while Series C is $3.50. The former has a 2.6% kicker and the latter a 2.4%. But CU-Y resets in 2020, so I think the worry is more because it could be caught in the teeth of the 5 yr down draft.
    I wish they would tank a couple more bucks so I could buy my second of three tranches in some of these. The CU Series FF which I own keeps climbing higher above par. I played with it the other day and noticed Vanguard is blocking me from selling it unless I phone it in. They really like putting the screws to me.
    I have more in the Spire preferred than I do in all my no floor resets combined. I am wanting to peel out of some of those shares and move to resets, but it just isnt time yet. Need to get closer to those 2016 five yr lows.

    1. Hi Grid,

      I am finally sitting down and making a more organized cheat sheet for the Canadian issues. I noticed that you said the Canadian utilities series Y resets in 2020 but I’m reading this from the prospectus and it looking like it’s 2022:

      “Series Y Conversion Date” means June 1, 2017 and June 1 in every fifth year thereafter.”

      Several places refer to “June 1, 2017 and every fifth year there after.”

      1. Hi Amy, Yes, you are correct. Maybe I was switched letters.Cant remember what I wrote…The one I sold yesterday was the 4.5% fixed floor which is Series FF. The Y issue is what I am zeroing in on if it would sag some more.

        1. Thanks, Grid. I also followed you in selling half of my FF (CDUTF) with the other half set to sell a bit higher.

          For others following this maze…..The series Y (CU.PR.C) is CNAUF and the series FF is CDUTF.

          I look at these Canadian issues and their symbols as exercise for my brain….

  37. Bob-in-DE,
    Are you holding BCE reset preferred’s or any BCE preferred’s? Thought I saw you mention something about them earlier. I’ve owned the BCE common for years and like the yield. I also hold its Canadian cousin TU. Both great telecom’s.

    Grid,
    Might be something of interest with this.

    http://www.bce.ca/investors/preferredshares

    1. Thanks A4I, but out of stubbornness, lack of trust, lack of mental firepower or a combination of all 3, I am sitting tight. I bought 500 more shares of the CU Series DD fixed perpetual today. That gives me $20k of it so I will sit tight for now. Kind of at a standstill after filling quota there. May not do a thing now unless any of the resets drop a buck more, then I will buy more.

    2. I own BECEF aka BCE.PR.H on the TSX.

      6.76% stripped for what is an investment grade ute. I’m happy to take the C$ risk.

      Read the prospectus; very different animal.

      1. Bob-in-DE, first of all thanks for highlighting this issue. I own it as well and like that it resets off of Prime and not a government rate. Its conceivable that government rates go negative here at some point as many already are in Europe and elsewhere (the lowest Canadian Prime got was something like 2.25% during the financial crisis). The only part I can’t quite figure out is the Adjustment Factor? My read of the documents suggests that there should be 4% added because the Trading Price is less than C$24.50. However, the Company’s dividend page shows the monthly payment of .08229, which is exactly 3.95%. Am I missing something?

        1. grichter – terms are odd, and somewhat complex. Right now, the floating rate is effectively pinned to 100% of Cdn prime, which is 3.95%. The 80% bit is inoperative right now. I don’t see that changing, although Prime itself could change. If that happens you have risk on both rate and price.

          As you know it’s trading wayyyyyyyyyyy under par, which is what gives it the good yield. It’s good enough for me to take the rate risk.

          See page 4. This is the series 18:

          http://www.bce.ca/investors/bondholder-info/2001-short-form-prospectus-series-17.pdf

          1. Thanks bob… very helpful. I picked up 100 shares today just so I can keep a better eye on it. I really like the ENB resets, but I’m a bit cautious given my largest common holding is KMI.

          2. Bob – Is yahoo finance wrong? They’re reporting month div currently at .8229. They claim that’s USD, but it can’t be, can it? That’s got to be the Canadian dollar amount because at 11.16 last, that’d annualized to well above 8.50 current wouldn’t it? I think they’re reporting stock price in USD and dividend pay in CDN dollars. Can you confirm?

            1. 2WR, go to CNBC stock website. It has it pegged correctly. The issue intrigued me some being a different diversifier. I will monitor. They took on a lot of debt like most telcoms. One rating agency downgraded and another was fine with it. This is a “veteran preferred”. It was their first preferred and issued in the 1990s originally as a fixed rate issue.

            2. On the Cdn prefs, I don’t trust US sources for anything other than the most recent trade price on its US ticker (which isn’t good for anything actually). Go to Canadian sources. For example:

              https://web.tmxmoney.com/dividends.php?qm_symbol=ALA.PR.U

              There, prices and divis will always be in C$ (unless its a US$ issue), so no confusion.

              For the Cdn prefs denominated in C$ I do all the calcs in C$ and only translate to US$ when it comes time to place an order based on the US “F” ticker. Otherwise, you will get dyslexic and you will make mistakes.

          3. Thanks Bob – I’ve read both the Prospectus and the “Notice to Holders of BCE Inc. Series AH Preferred Shares” dated March 16, 2016. Both documents have some language that describes the dividend is calculation. However, I can’t see anything that tells me how/when the 80% gets applied or not, nor can I see any language that tells me how/when the Adjustment Factor gets applied or not? I must still be missing something or there is another document that I have not found.

  38. Amy and all, Thanks so much for your efforts. I have an account with Schwab and note you have the global service. As it is no extra cost, I will convert my preexisting account to this. I see 4 ENB pr with $US base: Series J, L, 1 and 5. Is this correct? And, I see no US$ series resetting in 2020. Series 15 does reset in 2020 but it seems to be in CAN$. Is this correct? Again, thank you to everyone for all your wisdom and sharing.

      1. Gridbird, Thanks! This is helpful. I have good friends in CAN, he is actually a financial adviser. So, I emailed and am speaking with him later this week. if I learn anything useful, I will share.

      2. Gridbird, I read the retail investor document in the link you kindly provided. If I understood the reset section, resetting at a lower coupon rate is NOT reason for price decline. So, the fact that interest rates may go down is not a risk? Rather, it is the spread of the underlying security in relation to current market spread.
        This is something new for me. Is this your understanding? It puts a new “color” on analysis (for me).

        1. TNTowanda, he has some good points and brings about some clarity. But I am not hitching my wagon to that specific point you are questioning. The charts dont fully support his supposition. I get the theoritical point. But in reality it isnt working that way.
          But I do agree with the point about all the various reset kickers offered by same company moving based on overall then present yield expectations. The serial issuers had significant kicker changes in short periods of time. But you see the price of each preferred largely baking that in…IE, the higher the kicker the higher the relative price of the individual preferred compared to sisters.
          Yields dropping more today, hopefully a reset panic will set in even more and drop them down harder in coming days.

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

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

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

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

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

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

      I own both in roughly equal numbers.

  40. 1.37%. Yep that’s the rate on CN 5 year govt bond today. Topped out at 2.48% early Oct 2018. That is a yield panic. Seems like somebody is going to get slaughtered….at some point.
    Any prognostications on the rate in two to three years? I need to see good odds of 3.5% minimum on the bond to justify the reset risk say 2021-2022. Let’s see what the survey says…

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

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

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

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

          1. Hi Grid,

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

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

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

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

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

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

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

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

              1. Many thanks.

                Yes, Vanguard has shut all the “F” shares down. That’s why I have TDA.

                Life would be better with one brokerage but no one does it all.

                1. Bob, Im still stuck with Vanguard because many of my securities couldnt be traded to TD…So here is you a story today. Wanted to sell off some of my CU 4.5% fixed floor series today. So I had to call Vanguard. They informed me their dealers no longer trade in this security. So they had to get a third party involved who could trade international issues. They got it done eventually but it took an hour. They finally quoted me $19.32 which was right at last trade, so I said sell them.

                1. Bob, some of that has been me, and some of mine went to TSX. Oddly the pattern of this one mirrors more the resets. Wonder if it is just lumped into category since I think it is the only issue that is a fixed perpetual.
                  Here is a new ticker that Finra just kicked out this week. A fixed perpetual from Canada…
                  WGRGF…A fixed 4.75% Series 5 issued about 15 years ago…Trading just below $21. I bet you can figure this one out.

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

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

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

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

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

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

            1. Thanks for the kind offer, Bob, lol…I bought 300 of them about 4 years ago. I should have bought 600 but told Inspbudget and Moorebonds about them and they bought up the others. I knew the bank was good and the preferred payment was uninterrupted since 1998 issuance. But was a bit nervous as it was a deep dark illiquid…In fact when I first bought I had to call it in. Being grey market pricing is ambiguous and confusing even to the reps trying to buy. They said dealers were indicating some were available for $5 (it really hadnt traded on market prior to my purchase) so I said give me 5000 shares if they are available. Of course there wasnt any but we tried. For about 5 minutes on the phone, I thought I was going to get a $8.48 annual payer for $5 bucks, lol..

            2. Bob, the last time FIISO traded was 1/4/2017. Can you please share with us just how you are going to find shares that are offered? BTW, I’m not selling you mine my friend…
              Hoping you find your treasure, Nomad

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                Go figure.

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

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

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

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

                JMO

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

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

          5. Lot’s of luck with that. I’ve had the FINRA arguments with Vanguard and even when I was plainly right (Yeah, I read the regs) I lost the argument. You can’t talk sense to compliance.

            1. I had a standoff with FIDO that travelled all the way through their so-called senior desk management a few months back on on issue that was as plain as 1+1=2, but they kept coming up with three. One of those situations where during the conversation you pull the phone away from your head and look at it. Wrote FINRA and the SEC, attached documentation, problem solved.

              “On further review…”

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

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

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

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

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