Canadian Chat

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

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

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

500 thoughts on “Canadian Chat”

  1. FYI — 5 year GICs are now available @ 5% for the first time in many years from Oaken Financial (covered up to $100K deposit insurance)
    Please note that effective Friday, June 24th, 2022, we will be increasing the interest rate for the Oaken short-term and long-term GICs as noted below:
    Short-term GICs:

    180 Days GIC – 2.25% (currently 2.20%)

    Long-term GICs:

    1 Year GIC – 4.05% (currently 3.75%)

    18 Months GIC – 4.30% (currently 4.00%)
    2 Years GIC – 4.50% (currently 4.30%)
    3 Years GIC – 4.60% (currently 4.40%)
    4 Years GIC – 4.65% (currently 4.45%)
    5 Years GIC – 5.00% (currently 4.45%)

  2. IN CANADA I TRUST:
    The Bank of Canada has hiked its key overnight interest rate by 50 basis points to 1.5% and will also continue quantitative tightening.
    Nice to see a Central Bank that is grounded in economic reality and not a mismanaged roadside circus like the US Fed and ECB.
    Five year non-redeemable GICs at 4.25% is music to my ears.

    1. Rolling over previous 5yr has been a welcome surprise. Waiting on 5.5-6% before unloading stocks.

      Never had a GIC draw down.

    2. just picked up a $5000 Brookfield Properties (BBB low) short term bond maturing July 3/23 @ 4.13% There is also a Brookfield Property bond maturing Mar 1/24 showing at 4.80% in my CDN discount brokerage fixed income dept. I will those all day long for security right now.

      1. CB, do you have any opinion on the relative merits (or demerits) of Brookfield Property vs. Brookfield Finance vs. Brookfield Infrastructure vs. Brookfield Renewable? Should they all be viewed as separate beasts?

        1. Hi Bur
          truthfully I’ve never sat down and poured over the financials of the various Brookfield entities. I do hold a number of the common and prefs in the various companies and am basically relying on BAM as the overall parent to ensure they will all stay viable. In this case buying a bond I figure at least I’m moving higher up the foodchain in a worst case scenario. Mind you I keep a wide assortment of holdings so no one issue going under will impact me more than 1% or so. FYI– I copied the specifics below for the bond I mentioned in earlier post.

          IssuerBROOKFIELD PPTY FIN INC ULC
          Coupon4.30%
          MaturityMarch 01, 2024
          TypeBond
          CUSIP #11286ZAC8
          Credit ratingBBB(low)
          Payment frequencySemi-Annual
          Instrument currencyCAD
          Yield
          4.83% Semi-Annual,
          4.89% Annual
          Face value$5,000.00
          Price (per 100)$99.1685
          Accrued interest$57.14
          Exchange rate1.0
          Estimated cost$5,015.57
          Settlement dateJune 06, 2022

        1. Richard here is a GIC article from today’s Globe & Mail with some other ideas. Myself I am using a 1 yr cashable GIC (after 30 days) and getting 2% – so if/when rates go up after the 30 days I cash in and reinvest at higher rate. Have two years worth of my required RIF payments in this product so if markets tank I don’t have to sell my equities

          Rob Carrick: GICs with an escape hatch for the indecisive investor
          ROB CARRICKPERSONAL FINANCE COLUMNIST

          Investors willing to lock money down for one to five years are being rewarded with GIC rates not seen in years.

          But what if you don’t want to commit for at least a year, or you think you may have a need to access your money? A few players in the market for guaranteed investment certificates have an option for you – the cashable GIC.

          There’s little point considering cashable GICs when you can get comparable returns from high interest savings accounts, which cost nothing and offer complete liquidity. You can transfer money in and out any time on your phone or computer. Today, though, cashable GICs are available with rates that beat many high interest accounts.

          Oaken Financial’s cashable one-year GIC has a rate of 1.7 per cent after 30 days and 2 per cent after 90 days. Royal Bank of Canada recently offered a special 1.8 per cent rate on a cashable one-year GIC, which compared to a posted rate of 0.75 per cent. Both of these GICs were available for non-registered accounts.

          A couple of points about cashable GICs – they’re not always offered by the alternative banks and credit unions with the best rates, and there’s a significant rate penalty for having the option to cash out.

          Non-redeemable GICs are hard, if not impossible, to cash out of before maturity and you should expect a penalty fee if there’s a way to exit early. GIC issuers are strict about this because they precisely match funds taken in from GICs with money lent out for mortgages and other purposes.

          The best non-redeemable one-year GIC rates are in the 3 to 3.65 per cent range. Why consider cashable GIC, then? Because rates on high interest accounts aren’t that competitive for the most part.

          A rate of 1.5 per cent is widely available from savings accounts offered by alternative banks, and a few go up to 1.7 per and 1.75 per cent. But the best rate of 2.4 per cent is available from Saven Financial, which serves Ontario residents. Saven is a division of FirstOntario Credit Union.
          Cashable GICs will not score you a rate to celebrate, but they do offer at least something for the investor who can’t or won’t lock money down.

          1. Hubert cashable 1 yr GIC 3.20%….cashable every 90 days, collect 3.05 for first 3 months, then 3.15, 3.25,3.35.

          2. Thanks for the information. My experience trying to time interest rates is barely better then my attempts to time the market. Even though higher rates in Canada are almost guaranteed at least through the fall….I’m more inclined…within reason…. to lock in the highest rate I can each time I’m ready to invest. Its probably not the optimal approach but anything that’s 4% or more is completely satisfactory in terms of my needs.

  3. I was wondering if any of my US fellow investors could clarify a point on George Weston (WN:TO). Of course they own Loblaws but they also own Choice Properties REIT.
    I was concerned that for US tax purpose that their REIT holdings might tilt them into being classified as a PFIC (Passive Foreign Investment Company) which is not an area I want to tread in.
    I’ve written to their Investor Relations group but haven’t heard back from them yet.

    1. George Weston is known as the bread man. Family owned corporation which has recently tilted towards financial sector.

      Last time I held stock or preferred they where eligible dividends in Canada.

      Recently sold my position due to the family desire to get out of the bread game which was my reason for owning.

  4. Was in my CDN discount brokerage account today looking at the fixed income options and came across a couple strip bonds which I purchased. 1) TD strip maturing Sep 14/23 yielding 3.46% and 2) BNS strip bond maturing Jan 18/24 yielding 3.71%. Not quite sure why they were available but figured I’d grab them quick as a place to park some money at a reasonable rate for less than 2 yrs.

      1. thanks Mike – certainly looks like good news on this Brookfield entity. But boy have my BBUC and BBU.un shares taken a hit this past 3 months. Oh well just hold on and let the Brookfield boys do their thing. CDN energy shares are still helping my portfolio offset some of the drops in prefs.

  5. I was wondering what people’s general opinion is of PREM WATSA and Fairfax Financial [FRFHF]. My only present exposure is thru bonds owned of Allied World, but I found reading FRFHF’s recent quarterly report to be fascinating… They seem to be so so conservatively run at this time with regards to their approach to dealing with rising interest rates , it’s almost like reading a cautionary tale to all who have not seen a rising interest rate environment. – https://seekingalpha.com/article/4505284-fairfax-financial-holdings-limiteds-frfhf-ceo-prem-watsa-on-q1-2022-results-earnings-call?mailingid=27545864&messageid=2800&serial=27545864.856&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=27545864.856

    The comments that struck me include these:

    Second point I wanted to make is on investments. And for this you go into page 20, slide 20, and there were two major trends that we protected our company from. One was rising interest rates, interest rates were very low, we were getting 5 basis points or 6 basis points on our cash, we then reached for yield. So this on page 20, just shows you that interest rates have been coming down for 40 years and the reversal taking place is taking place dramatically. High inflation in the United States, high inflation in many parts of the world, and we really don’t know how high rates will go, but then now the tenure rates, treasury rates are very close to 3%. Our duration in our cash and bond portfolio of $37 billion is approximately 1.4 years, so there is very little loss to us as interest rates go up.

    Slide number 25, on page 25, in the AGM presentation shows that 400 basis points, you have — our investment income goes up by about 222 million — 220 million. So the investment income goes up because interest rates are going higher and we’re rolling over our cash and short-term holdings and they’re very short, so you get the higher interest income and it shows you that the pre-tax unrealized losses on our bonds 294 is very low because, of course, we’ve got a duration of 1.4 years. You’ll find that that’s a huge advantage we have and I think looking at competitors, most of our competitors don’t have a duration as low as we have.

    Yeah, so, Tom, we think the big risk today is the fact that people have not — for 40 years, interest rates have gone down and you have to be in the business for a long time, like in the ‘70s, to have seen how interest rates went up, inflation went up, interest rates went up. So the big risk today, as I said, is interest rates going up, and we don’t know how high it is going to go. So what we’ve done is just one or two year bonds — we are limiting our investments to one and two years, which by the way significant increase in interest rates have taken place in that term one to two years. And Brian Bradstreet, that’s what he’s limiting it to, two years max, and just rolling it over, as Peter told you in his presentation.

    And from Peter Clarke – At the end of the first quarter, the company’s insurance and reinsurance companies held 23 billion in cash and short-dated investments, representing 46% of our portfolio. With every 100 basis point increase in interest rates, this would provide us with approximately 230 million of additional annual income. We continued to have approximately 1.2 billion at the holding company, predominantly in cash and short-term securities, and our 2 billion bank line is totally undrawn. Please note our cash in the holding company is to meet any and every contingency that Fairfax might face. We are not making any long-term investments with this cash other than to support our insurance and reinsurance operations.

    1. 2wr, Touching in from Mendocino CA. Will be out until first day of Summer. It’s dead as a doornail everywhere we’ve gone, over 50% just closed. Looks grim, but good for early seasonal privacy. Good trout in CO.
      Yes, Prem is a real investor’s investor I have followed for years. This excerpt is the primer for us all. Fairfax is solid. How would you like to show up to work everyday and work on rolling a two year duration $37 billion dollar portfolio as they mature?!
      Another CN company that is almost mythical is Power Corp.
      Ramrod Managements.
      I just looked at my resets portfolio after six weeks of being gone and am gratified to see that the “panic” has created an opp for me to place a few divy accumulation buy limit orders. Hoping for Xmas in July.
      Jim Hymas (PrefBlog in Canada) has made a few comments recently about investors not really understanding what they are doing with the resets, but welcome to happy upgrading of quality.
      Some of the very recent CN issues, fixed rate, high IG’s are already down at $20, in a few short months! Wonder what the IPO buyers will do here with a 20% loss? Don’t buy ’til you smell blood and are willing to hold thereafter.

      1. Hardest part of investing is sitting on the bench and not doing anything. Why take risk when Gov/Muni/GIC paper finally found the elevator out of the basement.

        CDN Government up into the 3s:
        CANADA HOUSING 1.6% 15DEC31
        CANADA HOUSING TR 1.9% 15MAR31
        GOVERNMENT OF C 1.500% 01DEC31

        CDN Muni’s inched into the 4s:
        CITY ST JOHN’S 2.916% 03SEP40
        CITY ST JOHN’S 4.215% 24MAR36
        CITY OF TORONTO 4.700% 10JUN41
        MONTREAL QUE 3.15% 01DEC36
        WINNIPEG 5.2% 17JUL36

        GIC Paper
        HOME TRUST COMPANY Apr 29, 2023 1 yr 2.91
        HOME TRUST COMPANY Apr 29, 2024 2 yr 3.56
        PEOPLES TRUST Apr 29, 2025 3 yr 3.81
        PEOPLES TRUST Apr 29, 2026 4 yr 3.81
        ICICI BANK CANADA Apr 29, 2027 5 yr 3.85

    2. Just my personal observations about Prem Watsa – he is always referred to as Canada’s Warren Buffett and certainly has a lot of respect within the business community. BUT his results do not seem to back this us. A simple comparison of Fairfax to Berkshire Hathaway over past 5 yrs shows Berkshire up 93% vs Fairfax up only 13% (with a lot more volatility). When he came out with a Fairfax India fund a few years ago I invested in it but again it was a disappointment. His India fund over past 5 yrs is -13% whereas a Blackrock India ETF (XID) is +26%. So I certainly listen to what he says but have steered away from investing in his entities.

      1. Thanks, CB. That’s the impression I have had of him as well…. It does seem as though his underperformance in the past 5 years has been fueled by his over conservatism in managing investments and that seems to be consistent with the comments made in CC about how he’s feeling now…. might bode well for bond or preferred holders vs common shareholders though…..

      2. I took a small position in India fund too, DEEP, deep value allocations. That fund annual report is a look into his mind. I feel that that is what core certainty investing is all about, esp if you are looking out about 100 years (generational wealth) as the entire culture rises again.

      3. Looking at the last report the NAV is building nicely now that India is pulling out of covid. Problem with closed end fund structures is NAV and price can become dislocated to the benefit of the asset manager. Fairfax could tender realizing the funds $19/share asset value.

        Have been using ETF DNL as my allocation Global ex‐U.S.

  6. TSE:BAM.PF.C
    TSE:POW-B

    Is anyone else interested in jettisoning 5.8-6% issues to buy low coupon issues that have fallen through the first floor. Or wait patiently to pounce when they are in the mid to lower teen values.

    Thinking its still too soon.

  7. Yet another attack on wealth, success, shareholders and investors. Now that Trudeau has laid siege to the Energy Industry he’s going after the big banks with his “one time” (until the next time) windfall profit tax on banks.
    Any thoughts on this longer term from other dividend investors on the board.?

    1. Richard only good thing was the surplus tax on financial institutions was not as punitive as the Liberals had proposed in their election platform. Which is why banks are up today after selling for for the past couple weeks awaiting this new tax. Also their had been talk about a windfall tax on energy companies in view of their huge cashflow gains this year but luckily that didn’t materialize. So I remain with a good weighting in Cdn energy shares in addition to CDN banks.

      1. I was watching a piece on BNN about Suncor and their divestment off solar and wind which has a contribution margin of next to nothing and a change of focus to hydrogen and carbon capture which tie in to their current core competencies.
        Any thoughts on that? Through I’m happy to see Energy bounce back and seen some pundits who refer to the current situation as an “Energy Regression” not an “Energy Transition”. It still concerns me that this turn around could be short lived and Energy could turn into a value trap.
        And I agree, what showed up in the budget wasn’t as bad as I thought it was going to be either.

        1. Richard I follow Eric Nuttall who is frequently on BNN as energy specialist and also follow him on Twitter as he posts frequent updates supporting his view that CDN energy stocks are in a long term bull market. Took a look at some of my holdings and all (other than CNQ) are still well below their previous highs during last oil spike in 2014. ARC, MEG still only about 50% of their 2014 high, Baytex way below 2014 and even Suncor was $55 (CDN) back in 2018 ($33 CDN now). So I have taken some profits on names where I’m up over 100% in past year but still continue to hold good weighting and selling some covered calls for income and downside protection.

        2. Richard – Oil companies operate on a simple principle net present value for all projects.

          For carbon capture and all these green ideas to leave paper someone (cough tax payers) are going to need to de-risk these projects for them to compete with the real money maker projects.

          I suspect that is why no price tag was associated with this new virtue signal as tax payers may choke especially after swallowing de-risking costs of the TransMountain expansion project.

          1. My son works in the skilled trades and back in 2014 when his work was slow in Ontario the Alberta oil fields were booming. So he and a lot of other tradesmen from across Canada worked in the oil sands near Fort MacMurray. He was telling me the difference between how Imperial Oil (Exxon) got oil from the oil sands vs Suncor’s method. Imperial was basically huge open pit strip mines where massive dump trucks were loaded up with oily sand and then took it for processing. Suncor’s method was much less intrusive by having multiple small drilling huts spread over their properties. So our new Minister of the Environment (who was initially thought to be Alberta’s worst enemy) is now seemingly adopting a more balanced approach. IE. the government needs the huge tax revenues coming out of the oil patch right now to help pay for government spending (deficits) and if the oil companies can do it in an environmentally carbon neutral way Trudeau can have it both ways. I’m by no means an energy expert but only interpret what I read in the Globe & Mail.

            1. Oil companies got on board with the Alberta Government (NDP) to create new stricter environmental regulation and implement a carbon tax in an attempt to create social credit with the feds. Feds turned around and implemented different environmental regulation creating a double burden.

              As a result of this social experiment the pain got to great for Shell, Conoco, Devon, and Encana who exited Canadian assets creating a much smaller energy universe and a drastic cut in employment due to redundant accounting, administrative, engineering, and field operator positions being eliminated. Overall reducing the tax base during this period of industry consolidation.

              Canadian market is constrained due to no new export capacity to major markets being built. Rail costing $8-12/bbl additional. This has caused a no growth environment. With only debt repayments, share buybacks as ways to create earnings growth.

              Methods of oil extraction (Recovery Rate):
              Conventional Drilling = ~10%
              Horizontal Multi-Frac = ~12-15%
              Steam Assisted Gravity Drainage (SAGD) = 50-60%
              Mining = 90-95%

              In the Fort McMurray region Mining/SAGD are the two most common methods of oil extraction. Reason being is the oil is located between 50m to 500m below the surface which is unique to this region. Most drilled areas oil/gas deposits are located thousands of feet below the surface.

              Fort McMurray projects typically have horrendous upfront costs to setup the initial steam plants ($700M-1B) or Mines ($3B-7B) but due to the nature of the extraction process (60-95%), long reserve life (30-50yr) and low decline rate (oil production rate does not go down). Oil companies become money printing machines.

              Recently the focus in the Fort McMurray region has been to dramatically reduce extraction costs. Initial industry costs ranged from $40-85/bbl with the top operators now hovering around $21-25/bbl.

              As an energy investor. My focus has always been laser focused on this extraction cost as when commodity markets turn the lowest cost operator will survive. (lowest cost operator will eventually own all assets).

    2. It’s simple, Canadia is a social democratic country regardless of the PM, just as we point to whom ever is POTUS and blame the general American Accepted Policy of Hands-off Capitalism on some rotation of the Party of One…Private Wealth.
      So, who created the profits at the banks and even energy companies? The public “social” population., just as they do here in the US. The system there is slanted toward that social population and their welfare (which is NOT a bad word if taken by definition and not the political idealogues).
      Many other countries are balancing their model of Policy Structure too.
      Somewhere in the middle is the truth (small t).
      I’ve lived in Canada and like the people and the peaceful demeanor there, much wider view of the globe, their corporate governance and progressive managements. I’m in up to my neck in CN issues. We have some things to learn by examination/comparison/contrast.

  8. pow.pr.e – participating shares

    From the research I have done so far it appears the dividend floats with the common shares. Still searching for the prospectus to confirm the redemption date and call price.

    Does anyone have this information?

    1. In going through all the prospectus filings on Sedar the only reference to series E (Nov 13 2001 00:09:04 ET) does not make sense with how the preferred is operating.

      1. Right off their homepage if this may help:
        https://www.powercorporation.com/en/investors/stock-information/#participating-preferred-shares
        Seems to be a declaration of $.938/year, but a current payout of $1.98 to yield 4.5% currently, same div as the non-voting commons. Has followed common up recently and have 10 votes/share. Looks like the only preference is that it gets the votes.
        Do not see anything on any of the pref sheets for this E pref.
        If you want something specific I have had good experience emailing Investor Relations and getting quick response with Canadian firms. Try for prospectus link….??

        1. Micahc & Joel — you have me curious about this issue so I just emailed the investor services @ Power for more details on series E. Will post any reply I get from them. Power seems to be in an upswing past 12 months so not sure if buying the common and getting the same dividend may be a more attractive way to play it?

        2. super voting rights makes sense as this is a family controlled business.

          Also volumes have been almost non-existent.

          1. There is the ‘base div’ which makes it a pref.
            The story and tentacle stack of Power Corp is truly amazing and storied. Seems like they are trying to monetize its value. Almost like a hybrid vestige of Old Europe and Capitalism. Could be compared to BRK.
            Good luck and Skill

          2. Here is the reply from Power Investor Relations – basically just confirms what is already known.

            POW.PR.E are the Corporation Participating Preferred Shares.
            The Participating Preferred Shares are entitled to a non-cumulative dividend of 0.938¢ per share per annum before dividends on the Subordinate Voting Shares (POW) are paid and have the further right to participate, share and share alike, with the holders of the Subordinate Voting Shares in any dividends that may be paid with respect to the Subordinate Voting Shares.
            Dividends are payable when declared by the Board of Directors. The Participating Preferred Shares are entitled to ten votes per share.

  9. I suspect the answer is still: None
    I just had a Bell Of Canada 3.35% Corporate bond called a year early. I’d like to replace it with another Canadian Corporate Bond but as I remember, there were no Canadian FINRA like or other websites that listed bonds being offered in $CAD on the secondary market.
    I was wondering if anyone has any insight into this as I no longer have a brokerage account in Canada that I can use to do research.

    1. Canadian Corp bonds looks pretty slim pickings for around PAR issues:

      TELUS CORP 4.7% 06MAR48 Mar 6, 2048 Yield%:4.792 98.6309 BBBH/Baa1/BBB+
      FAIRFAX FINL HLDG 3.95%03MAR31 Mar 3, 2031 Yield%:4.455 96.3021 BBBH/Baa3/BBB-
      BROOKFIELD RENEW P4.29%05NOV49 Nov 5, 2049 Yield%:4.403 98.1883 BBBH//BBB+
      ALLIED PROPERTIES3.117%21FEB30 Feb 21, 2030 Yield%:4.333 91.9207 BBB/Baa2
      BROOKFIELD INFR 2.855%01SEP32 Sep 1, 2032 Yield%:4.278 88.1098 //BBB+
      ALLIED PROPERTIES3.394%15AUG29 Aug 15, 2029 Yield%:4.261 94.5400 BBB/Baa2
      SMARTCENTRES REAL3.526%20DEC29 Dec 20, 2029 Yield%:4.243 95.3026 BBBH

      1. The Canadian Bond market is generally slim pickings compared to the US market. Actually, I picked up a $US Telus 3.4% 2032 bond that trades on the US market to replace my Bell of Canada bond.
        Closing my Direct Investing account in Canada and moving the holdings down to the US has been a mixed blessing.

    2. Richard, Are you looking for specific range on term of maturity or more motivated by inv grade for sustained income? So many bond prices are already blown out to the high side and just now taking the first small dip back twd par.
      I have appreciated the High IG pref like the new issue IFC.PR.K 5.25 coupon with five years call coverage at $26 ramping down to $25 until 2031.
      Or look at GWO.PR.Y same, newer issue also very high IG, 4.5% coupon with same type of call profile. It has come way down to around to $22.60 yielding 5%.
      Of course these fixed may go lower yet and I am accumulating divs for an opportune time to stack a few of these away, maybe next tantrum (May?),
      These available thru Interactive Broker account bot directly in CN$ on TSX.
      The 5 year Rate Resets are getting bid up and I have had them run away from my buy orders by a full dollar in just the last two weeks since this current tantrum.
      These issues are pretty liquid too, unlike CN bond brokerage Markup/down scalping.
      Hope that may be helpful. JA

      1. Hi Joel….like many here, I’m an income investor though capital preservation remains my top priority. Other then a rare high yield corporate bond, investment grade with a company I feel comfortable with is a must. I’ve been investing in Rate Resets since around 2005 and own GWO.PR.R and GWO.PR.P as well as Rate Resets from the top four banks, CU,FTS and TRP. But whenever it was, about two years ago, when everyone moved away from Rate Resets and they seemed to become an investment class in decline or disuse I switched over to just buying common shares of strong dividend payers. I think the last Rate Reset I bought was TD.PF.M back in 2019.
        But from what you are saying it may be time to take another look at them. As much as I like TD, RY, BNS. NA, BCE, Telus, NTR and BMO I have to say…I sleep better at night when something has a par value.

        1. Richard FYI — from today’s Globe & Mail
          March 28, 2022

          The good news in bond land: 4 per cent yields now available – A roundup of investment ideas for active investors
          A funny thing about the bond market is that we measure damage by noting how much yields are going up.

          Rising yields means falling bond prices – that’s Bond Investing 101 stuff. But if you have new money to add to bonds, higher yields are a fantastic development.

          Government of Canada bond yields have rocketed higher lately, but we’re still talking about a five-year yield of 2.3 per cent. Provincial bonds offer minimally more yield than that, while investment-grade corporate bonds do better still. In fact, there are corporate bonds with a credit rating of BBB or more that offered a yield in late March of 4 per cent or more for maturities of five or six years.
          With inflation running at 5.7 per cent, no one’s going to set off fireworks to celebrate a 4 per cent bond yield. Yet this yield threshold does have some psychological value. It feels hefty and comparable to the yield on many much-loved dividend stocks.

          A quick check with a big online brokerage uncovered these 4 per cent corporate bonds:

          -First Capital Realty maturing May 6, 2026: Yield is 4 per cent.

          -Allied Properties REIT bonds maturing May 15, 2028: Yield of 4.1 per cent

          -TC Energy bonds maturing May 26, 2028: Yield is 3.98 per cent (these bonds are listed under TransCanada Pipelines, TC’s former name.

          -SmartCentres REIT bonds maturing Dec. 18, 2028: Yield of 4.3 per cent

          Prefer the instant diversification of a bond exchange-traded fund rather taking on the risk of holding one or two individual bonds? The iShares Core Canadian Corporate Bond Index ETF (XCB-T) offers an after-fee yield to maturity of 3.4 per cent. This ETF was down a substantial 6.7 per cent for the year through late March – that’s why the yield has been heading higher.

          Expect bond yields to climb further – how much exactly depends to a large extent on whether inflation plateaus or keeps growing. This will be bad for bond prices, but good for yield-hungry investors with new money to add to their accounts.

          — Rob Carrick, personal finance columnist

  10. Panicville,
    The transition to Google Drive messed me up I suppose and I have lost ability to call up Yuriy’s fabulous Canadian Sheets, especially the Reset Sheets.
    Does anyone know how to find the original link which allowed access?
    Sending Yuriy a shout-out too.
    Heeeellllppp! JA

    1. Hey! I figured it out! The icon changed to Drive from Sheets and I had to ask Google how to fix itself. Panic resolved.
      I had to look at the 14 point jump in the Five Year CN bond. Should begin to smash the fixed rate prices, saw that beginning last week. May be a place to by some very high grade with future divys for the annuity account over the next year?
      For some reason the Resets are down and many are way below par! Need more cash!
      Spinnin’ plates on an 81 degree day.

      1. Roger, Reminder: All these are available thru an IBKR account.
        Here are the original links from 5-11-21:

        “For Yuriy’s a jolly-good fellow!”
        I did have a moment of dependency panic. Thanks, JA

        Ok, now it’s ready:
        Resets https://docs.google.com/spreadsheets/d/1UB3TVsCo_bPDD4tkYu88tQxEO1KrybbY429PoObEYS0/edit?usp=sharing
        Fixed https://docs.google.com/spreadsheets/d/1nJTjD1H3PKvqcuntO7hL3rwI2p5-7AIBa5bplxKky-U/edit?usp=sharing
        Floating https://docs.google.com/spreadsheets/d/11vDz_swj2Z8-VQjl7nKgnlSRURz3k8Y8YLqCDMwC-II/edit?usp=sharing

        Please let me know if you find there some error-trouble-etc.

        1. Thanks for those, Joel A, very much appreciated. I’m new to IBKR…how do I find these at IBKR, if you have time.

          1. Are you asking what convention IBKR uses to designate pfds? It uses the .PR. convention. So BMO-Q would be entered as ‘BMO.PR.Q’. Was this any help?

          2. Enter on to a Watchlist. The search process (FIND) will ask you to verify the symbol (Click on the issue ADD) and description and the exchange, ie: TSX.
            Then once it on Watchlist click on it to open trade screen. You can create your own categorized Watchlists. You can arrange your trade screen view by using drop down menus like Unlock Design, size your panels and Lock Design (you arrange your view) . Play with it. My words may not be exact.
            There are good Google searches for things like: “TWS (Trader Workstation) set up for beginners”, ETC. Make it fun and click around on everything.
            The hard part for me was getting currency transactions. The Windows website login is much easier than the blackscreen TWS, but I have learned to like the blackscreen much better.
            Very best of Skills! JA Go slow.

            1. Thanks again Joel A. My mistake, I thought you meant the links were available thru IBKR (the 3 google spreadsheet links), and possibly missing another IBKR feature/resource.
              “Roger, Reminder: All these are available thru an IBKR account.”

              I’ve been using the Web Portal so far and not TWS.

  11. Brookfield jettisoning…oh…repositioning assets?
    Getting ready for next round of buying developed assets cheap? That’s their stock in trade. Still pissed about IPL myself.
    Looking for clues from the actions, NOT the words, of the pros.

  12. I would like to start a position in Nutrien (NTR) but am kind of concerned about their CEO turnover and lack of transparency about it. And then there is the competitive threat from BHP coming on before too long.
    Any opinions about NTR especially this turnover in top management?

    1. CEO exits are anybody’s guess but I do not believe it’s of consequence in a 23000+ employee company.

      Downside risk is taken care of by BHP take out bid as that sets the floor for business value.

      Recent risks to the business have been getting product to market via rails due to oil shipments increasing.

      Nitrogen based fertilizer products will continue to increase in demand as soil quality degrades due to ever increasing need for yield at all cost farming mentality.

      1. a take over by BHP or any other company is very unlikely to be approved by CDN competition bureau as NTR viewed as being too important to stay in CDN control. It is discounted by the various portfolio mgrs

        1. Buck, currently setting on a 80% gain in NTR and weighing options,what effect would Russian invasion of Ukraine have on, this stock ,thanks Mike

          1. NTR key product is fertilizers (food production).

            Natural gas is a key feed stock to make nitrogen based fertilizers. Russia presently supplies Europe with roughly 40%.

          2. Hi Mike

            I do hold NTR and similar to you have a nice gain on it. I did sell appx 25% after CEO left last month but also taking some profits was a reason too. Still hold shares and will continue to hold as commodity upswing still has legs. I attached below NTR website and you can see they have wide global operations but none close to Russia. So to me as much as a Russian invasion would not doubt likely cause short term volatility for NTR it would likely only benefit them.

            https://www.nutrien.com/

            1. Buck, “you the man!” Just the answer I was looking at. By the way got big gains on BAM, BIP an the free C shares. Thanks Mike

            2. Buck took out half my position “[this afternoon” 3/4/ 2022 on NTR @$93.50 got my cost below zero gonna let the rest run thanks, Mike

              1. Good for you Mike – unfortunate that it takes a crisis like the situation in Ukraine to actually help the TSX to out perform. It was actually up 1.4% this week in view of all the CDN energy and commodity stocks. Something I didn’t realize until the invasion of Ukraine is Canada has the third highest number of Ukrainians heritage (1.4 million) after Ukraine itself and Russia. A huge number came after WW I and II and settled in our Prairie provinces for farming.

  13. BAM results were very good this morning plus another possible spin off. Recap from this morning Globe & Mail below:

    Brookfield Asset Management, in reporting earnings this morning, said it is considering options including separating part of its asset management business in the public or private market. That unit alone would be worth $70 billion to $100 billion and open up growth opportunities, it said. U.S.-listed shares of BAM are up 4.5% in the premarket.

    Definitely staying long BAM and all its multiple entities

  14. I have not sold anything in my Canadian Reset account since building it out about two years ago.
    I rowed across the lake today to take a look around. The wind out of the south and the frantic interest rate grimaces have driven resets up to the point where I will consider paring gains.
    I set two orders to sell on my closest resets which reset 12-22. Both are above par and in lieu of a call, would collect the next div while waiting for a fish to buy me out. I hold about 25 positions as my ladder and have been pushing divs into long dated, already reset OR new issues which are rare. Luckily, there have been a few IG issues.
    Without going into every minutiae, I like the slower management game and feel rates will not go to the sky. Rising rates at the top end will be limited. Riding the waves up has been…gratifying. When the next EMT vehicle pulls up to the Fed, I will need cash to lock in some further dated, four to five year resets, at that time AND maybe sell off a few of the fixed rate instruments when ‘sentiment’ is buying. I believe sentiment is particularly a bad indicator to even look at at this time.
    My contrarian nature is managing in this manner with the foundation of IG and cumulative (non-NVCC) positions.
    Very best to all here!

    1. Joel…I’m very much in the same boat….but while Rate Resets continue on….I wonder about the efficacy of investing in a dying asset class that has almost completely fallen off the radar for large investment grade banks and energy companies.
      I just had BNS-H called and ended up reinvesting the money into BNS common stock with a dividend yield close enough to the rate reset that I don’t much notice the difference. Same with a National Bank Rate Reset that matured in 2021.
      Any thoughts

    2. Joel / Richard
      just my thoughts as a Canuck and having a number of both Cdn and US rate resets as well as common stock. Big difference on Friday was our labour numbers were actually worse than expected which may give the Bank of Canada a bit more thought on how aggressively they raise CDN rates. Also Liberal Govt is apparently going ahead with a special surtax on the CDN larger banks and insurance companies to help offset Covid costs. Of course being a cynic we know that the FI’s will just passed those costs onto the consumer so their good dividend yields should not be impacted. Also added a lot to my CDN energy companies as their cashflow is going to be huge and the dividend increases and special dividends should be quite nice in 2022 for those of us looking for income.

      1. CB….I follow Canadian news through BNN….so I have a limited knowledge of the political landscape. Does Trudeau have the votes to push through the surtax on banks? I would think that the Conservative Party and Québécois would oppose him. I don’t know anything about the positions of the “New Democratic Party”?
        Between Biden and Trudeau I’m afraid to touch anything related to Energy though I do own Enbridge Rate Resets. I find the Utilities and Telecom companies still of interest though they seem potentially under attack without warning also.

        1. Richard
          The NDP have historically been the party supported by labour unions and considered the most left wing of Cdn political parties. Therefore any legislation which aims to add additional taxation to the large financial institutions would definitely get their support. Cdn telecos and pipelines are also very good investments in my mind and I hold them too. Trudeau needs the huge revenues now being brought in by oil and gas companies to help cover their spending. If you follow BNN look out for Eric Nutall who is a portfolio manager specializing in energy companies. I have used his ideas in the past 18 months on specific companies.

  15. PKI.TO (Parkland Corp). They are back in the news with their recent acquisition and share price is down a bit because of that…maybe a buying opportunity with a decent dividend thrown in.
    I’m still reflecting on a not so positive experience I had with Alimentation Couche-Tard going back to March 2021 after suffering with the stock for the preceding six months.
    Any thoughts on Parkland positive or negative?

    1. Richard, I have been slowly building a position in Parkland during recent weakness via US OTC (PKIUF) in my IRA. They are a good consolidator it is one place where synergies seem to work- gas stations and convenience stores. Putting in EV charging in these sites as well. Pays monthly div slowly rises annually and divs for US not taxed in IRAs. I always use limit orders. DYODD of course.

      Talk about ‘full circle’… I learned about many Canadian stocks as a devotee of Tim’s old ‘Yield Hunter’ site where he maintained lists of things including CA div payers. Parkland is one I have traded intermediate term since those days! (Thanx again Tim for your many years of service to conservative investors!!! ) Bea

      1. You’re most welcome Bea — yes the old Canadian issues CanRoy before they got gutted by the goverment.

      2. hi Bea
        I owned Parkland a few years ago and eventually sold it as was looking for more growth. A thought occurred to merecently – with gas prices in Canada hitting record highs and forecasted to go higher to me this means people will have less $$ to buy other items in their stores which is no doubt where Parkland makes most of their profit. Also more and more people are just paying at the pump as opposed to going into the store. I’ve attached portfolio mgr comments on Parkland from BNN Bloomberg (Canada’s business channel) with some pros and cons for your consideration. Good Luck!

        https://stockchase.com/company/view/967/PKI-T

  16. The world’s first fully digital bank? Interesting CN research for those frozen in.
    Versa Bank which has a preferred: VB.PR.A (no otc I am aware of). The common looked more interesting back some months ago, but the rest of the story is very interesting and one can easily see a takeover in their future. Most of their employees are Tech people, a worthy, organized brain trust with proprietary operations.
    Pref is 5Reset , next 10-24, just above par now, yielding 6.772% at par. Could not find a DBRS rating. Subject to NVCC.

    1. https://www.prnewswire.com/news-releases/versabank-receives-investment-grade-credit-ratings-a-overall-and-a–sub-debt-ratings-transform-low-cost-deposit-opportunities-301263828.html

      Who needs a DBRS rating when you can have an investment grade rating provided by Egan Jones???? Not on the preferred, mind you but A- on subordinated debt… no mention of a rating on the preferred…

      LONDON, ON, April 7, 2021 /PRNewswire/ – VersaBank (“VersaBank” or the “Bank”) (TSX: VB), a leader in digital banking and cyber security solutions, today announced that it has received the following investment-grade credit ratings from Egan-Jones Ratings Company, a US Nationally Recognized Statistical Rating Organization (NRSRO) and US National Association of Insurance Commissioners (NAIC)-recognized Credit Rating Provider:

      “A” rating for the Bank overall; and,
      “A-” rating for the current subordinated debt issue up to US$100 million.

      VersaBank’s overall “A” credit rating is comparable to that of several of the “Big Six” Canadian Schedule I Banks.

      “This is a truly transformational event for VersaBank that will significantly expand our universe of depositors and open up a new, low-risk lending channel, providing the opportunity to further accelerate our growth by means that were not previously available to us,” said David Taylor, President and Chief Executive Officer, VersaBank. “Moreover, the Bank’s investment-grade ratings are an external affirmation of our low-risk digital banking model, which is a fundamental component of our ability to drive earnings growth and shareholder value.”

      “Importantly, the “A-” investment-grade rating for VersaBank’s subordinated debt provides the Bank with a new option for significantly lower-cost, non-dilutive, tax efficient capital that was previously not available to us to fuel our growth – especially beneficial during this current period of record loan growth. These new ratings are especially valuable as we explore the potential to launch our innovative digital banking services in new geographic markets beyond Canada, where we see significant unmet needs similar to those that have driven the Bank’s strong, steady growth.” …

  17. Thinking about starting a position in Quebecor. I already own Telus and BCE. But I can’t seem to find any information on what the difference is between QBR.B and QBR.A….. even on the Quebecor Investor Relations page.
    Is there anything to know or is QBR.B the default choice?

    1. Richard- Not feeling like doing anything particularly relevant toward beginning my own New Years resolution of spending more time researching my own investment ideas, I decided to see if I could find an answer to yours just for kicks… I think I found the answer in the notice of Annual Meeting of Shareholders and Management Proxy Circular 2021 – https://www.quebecor.com/documents/20143/223030/Circulaire_QI_En.pdf/8fe1e174-e1e9-b5f4-c98d-0a943a2e045e?t=1618145087267

      p 5 – The shares of the Corporation conferring the right to vote at the Meeting are the Class A Shares and the Class B Shares. Each
      Class A Share carries ten votes and each Class B Share carries one vote.

      The Class B Shares are “restricted securities” (within the meaning of the relevant Canadian securities regulations) in that they
      do not carry equal voting rights to those attached to the Class A Shares. The Class A Shares are convertible at any time into an
      equal number of Class B Shares.
      – Management Proxy Circular 2021 5
      As at March 11, 2021, there were 77,034,834 Class A Shares and 168,788,057 Class B Shares outstanding. In the aggregate, all
      of the voting rights associated with the Class B Shares represented at that date 17.97% of the voting rights attached to all of
      the issued and outstanding voting securities.

      Fidelity owns 10.91% of Class B and Quebecor’s Pres and CEO owns .49% of Class A.

      The Articles of the Corporation provide that in the event a take‐over bid regarding Class A Shares is made to their holders
      without being made concurrently and under the same terms to holders of Class B Shares, the Class B Shares will be converted
      into Class A Shares on a one‐for‐one basis for the sole purpose of allowing the holders of Class B Shares to accept the offer.
      This right is subject to certain conditions provided in the Articles of the Corporation, including the acceptance of the offer
      by the majority shareholder.

      Elsewhere I noticed that Class B sharehholders get to elect 25% of the Board as a class.

      And with this now done, I’ll go back to playing solitaire in my role as a master procrastinator…..

      1. 2Whiteroses…thanks so much for the research and explanation. When I didn’t see any “share” information at their Investor Relations site it didn’t occur to me to dig deeper into The Articles of the Corporation.
        Though I’ve always thought of my core competence as: Doing Nothing. I think developing my procrastination skills might be a useful adjunct to that, until the next correction, collapse or calamity comes along to shake me out of my 21st century stupor.

  18. I post this here as it is OTC related but not to their ‘devil’ rule! re Foreign OTC trading: I found out from Fidelity that eff 11/5/21 the DTCC( depository trust clearing corp) dumped 700+ foreign OTC tickers from their clearing service. FIDO and Vanguard use this to clear ‘f’ share OTC trades…so any of these tickers now you will incur a $50 fee to trade OTC. Of course you can buy on foreign exchanges but often these trades cost currency exchange fees and foreign trade fees.

    I found out on an Australian otc stock I held and had been trading on a core position thru the year.. shares traded in OCT- no fee.. in Dec. I tried to trim the position- and the $50 fee popped up before executing!

    fees, fees, fees! of course ADRs have fees too and often on the dividends paid on the shares as well. Always something in this ‘no fee’ world.

  19. CU.PR.J began trading today.
    http://prefblog.com/?p=42790 (description)
    DBRS 2high credit rating
    Other interesting CU issues in comparison to most of our issues with some callable and trading below par, at a just sub 5% range.
    May be a let ’em call and go into some high ig? Annuity like stuff.
    The common has just achieved ‘dividend aristocrat’ status, which to me, with great credit, indicates management success.
    Look around and as requested no ideas on if OTC available in US.

      1. Which broker do you use to buy shares of Canadian Utilities (I am assuming you are trading on the TSX)?

        1. Best choices are Canadian brokerage Royal bank, TD, or American Interactive Brokers.

          Points of Frustration:

          To avoid currency exchange issues you will need to have an account that will allow you to transact in USD and CDN funds.

          Placing your buys of Canadian securities in a Canadian account will avoid the problem of getting dinged exchange conversion on every dividend payed.

          After your purchase make sure your Canadian account balance is not accidentally negative or they will charge you interest at month end. This can be cleared up by performing and account transfer between US->CDN.

          If you are doing big bucks you might want to put a currency hedge in place. I have never done this preferring to keep my Monopoly money for reinvestment.

        2. Fidelity has a decent international trading platform. You have to sign up for it which takes a minute or two. I buy all my Canadian equities and Rate Resets on the TSX. Fidelity charges something like $CAD19.95 per trade. If the trade is large enough its not difficult to absorb the fee. Canadian dividend or interest income is also easily managed on their website.

          1. I only used it for trading on the TSX but it was very simple for both buying and sellilng. Just don’t expect your preferred stock dividends to be given qualified dividend tax treatment.

  20. Regarding comments made about Canadian preferred issues:
    It would be very helpful to me, and perhaps others here, to have the corresponding OTC symbol for each stock noted in your comment. As a U>S> citizen without access to direct trading on the Canadian boards, I often find it difficult to decipher which OTC symbol is equivalent to the Canadian symbol discussed. ( or, if there is a site where these are all listed, that would surely help )
    Thanks

    1. Depending on who your broker is, you may be able to trade on the TSX. It was easy on Fidelity’s platform.

      1. Hello TimW
        I use TDA, which has never allowed direct international/global trading, but when Schwab takes over, it will be available. Thanks for helping.

  21. Interesting 4th quarter results for Canada’s big 6 banks – BMO, TD and BNS were +ve surprises while CIBC, RY and NA missed analysts estimates. All the banks as expected had sizable dividend increases as they were finally allowed to do this (and of course at same time executive bonuses were allowed to be paid again and they too were sizable at over 20% on average). With CDN banks having an oligopoly they have always been a good long term hold. There is an theory regarding the banks similar to the “Dogs of the Dow” theory where each year you buy the worst performing bank as on average over the next 12 months it will be one of the top performers. As of now YTD performance shows BNS lowest at 21% followed closely by RY at 22% (these returns exclude dividends). Top performer bank YTD is BMO 41% (which was the laggard last year). Just some food for thought this weekend.

  22. link to info: http://prefblog.com/?p=42742
    New Issue: CU Straight Perpetual, 4.75%
    The offering is being made only in the provinces of Canada by means of a short form prospectus and the closing date of the issue is expected to be on or about December 9, 2021.
    – Rated 2H / DBRS
    -Did not see this on the last three issues, but if available, on IBKR, first date available is on the date of closing. Seems price action on IPO is much like issues here, lately cheaper in a few days.

    1. I have the common in US, CDUAF, bot in March at 23.95 before the runup..has pulled back a little but at US$28 or so still yields 5% w small div raises..would add on further pullbacks. The CA$ has been a little weak but I think it will strengthen, their central bank is more in tune w raising rates/stopping QE and the economy is strong w minerals, o/ng, grains etc. Have it in the IRA no w/h tax..a ‘sock drawer’ buy for me w the price I got. Bea

      1. Bea
        I’ve been noticing the recent pullback in the loonie as well.
        Started a position in Rogers Sugar (RSGUF) yesterday. A consumer staple company with a yield of ~6.6% that has just signed a multi-year contract with it’s union.

        1. thank you Greg, will have to look into it. I had some Maple Leaf Foods (otc MLFNF CA: MFI) I bot in July at US$19.65, planned to hold but it jumped to $25 and took profits collecting one div, it has pulled back a little; not a real yield play but divs rising, family controlled, capex pretty much out of the way to grow into the future. Mostly pork products. I have done really well for the most part w CA/HK/CN stocks in 2020/2021. My int’l allocation is tilted toward CN/HK at this time mostly. Bea

  23. New Canadian issues have come to market taking advantage of low rate environment.

    New PWF Straight Perpetual 4.50% Series 23
    Power Corporation to use proceeds to redeem Series I 6.00%.
    Closing October 15, 2021.

    New GWO Straight Perpetual 4.50% Series Y
    December 31, 2026 redeem for cash the Series Y Shares in whole or in part, at the Company’s option, at $26.00 per share. December 31, 2027; $25.75 per share. December 31, 2028; $25.50 per share. December 31, 2029 $25.25 per share. December 31, 2030; and $25.00
    Closing October 8, 2021

    Emera Straight Perpetual, 4.60% Series L
    November 15, 2026 the Company may redeem all or any part of the then outstanding Series L Preferred Shares, at the Company’s option without the consent of the holder, by the payment of: $26.00 per share. November 15, 2027; $25.75 per share. November 15, 2028; $25.50 per share November 15, 2029; $25.25 per share. November 15, 2030; $25.00 per share
    Closing September 24, 2021

    1. micahc, thanks for the notification.

      Reminds me that I miss Bob-in-DE’s input here…

      1. me too – interesting all the new issues were perpetuals under 5% — with CDN inflation rate and Liberal (minority) govt still having no plans for getting debt under control would not be jumping on these

      2. I posted it 10-11-21 right here friends!
        Our friend Yuriy has added them to those sheets except the GWO issue.
        The only other CN news I know is the DBRS has increase CSS credit outlook recently.
        Been following Prefblog from Canada by Jim Hymas every few days and will try to repost news here.
        Many eyes, many voices!

          1. Sometimes a more studied approach to investing is required beyond just another lead. Some years ago, I have immersed in many of the CN income issues that began here. During the early time, I did a diligence understanding into the split shares and their embedded concepts. I have not found any convenient spreadsheet or service for them. There are many moving parts worth understanding for when the opp arises, it may not be very often OR through a tip not understood. Somehow the brain just coughs up that previous work and experience.
            The split shares are worth understanding. The primary benefit, the one at the top of the structural list is that the TERM (think callable) is set by the Board periodically for the disposition of income and often, call writing incomes. The use of ‘preferred” in this case, is also different and must be understood; it is the application of a management tool.
            I have wrangled into two and since sold one out on a decent gain. The other I am collecting at 9.2% at my basis and it becomes ‘changeable’ by the Board in March ’23. Will prob be gone by then.
            THAT is why I do my own research, …just straight work, no sweetners needed.

            1. Fully agree, and… that straight work starts with as much data as possible. Until we find a service or regularly updated spreadsheet for these issues (which would not replace that work, only supplement it), III leads will have to do for me… to start with. Thanks again.

  24. BCE announces renewal of Normal Course Issuer Bid for Preferred Shares

    MONTRÉAL, Nov. 4, 2021 /CNW Telbec/ – BCE Inc. (BCE) today announced that the Toronto Stock Exchange (the “TSX”) has accepted a notice filed by BCE of its intention to renew its normal course issuer bid (“NCIB”) to purchase up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the TSX (the “Preferred Shares”). The period of the NCIB will extend from November 9, 2021 to November 8, 2022, or an earlier date should BCE complete its purchases under the NCIB. BCE will pay the prevailing market price at the time of acquisition for any Preferred Shares purchased plus brokerage fees payable by BCE, and all Preferred Shares acquired by BCE under the NCIB will be cancelled.

    The actual number of Preferred Shares repurchased under the NCIB and the timing of such repurchases will be at BCE’s discretion and shall be subject to the limitations set out in the TSX Company Manual.

    The NCIB will be conducted through the facilities of the TSX as well as alternative trading systems in Canada, if eligible, or by such other means as may be permitted by securities regulatory authorities, including pre-arranged crosses, exempt offers, private agreements under an issuer bid exemption order issued by securities regulatory authorities and block purchases of Preferred Shares. Purchases made under an issuer bid exemption order will be at a discount to the prevailing market price.

    https://www.bce.ca/news-and-media/releases/show/BCE-announces-renewal-of-Normal-Course-Issuer-Bid-for-Preferred-Shares

  25. Consensus EPS Estimate is $1.28
    Consensus Revenue Estimate is $6.04B

    Canadian Natural Resources (NYSE:CNQ):
    Q3 Non-GAAP EPS of C$1.77; GAAP EPS of C$1.86.

    Cash flows from operating activities:
    C$4,290M in Q3/21, increases from C$2,070M in Q3/20 and C$2,940M in Q2/21.

    Board of directors has approved a 25% increase to the quarterly dividend to C$0.5875 per share, payable on January 5, 2022. This increase in dividend marks the 22nd consecutive year of dividend increases.

    1. It’s an early Christmas present from the CDN oil & gas companies as dividend increases and inceptions are happening across the board. Energy companies are definitely feast or famine so enjoy it while it you can. Hopefully with these prices it can last a couple years

  26. Expecting a div increase from Freehold and Prairie Sky Royalty which is consistent with their operating history and declarations. Both on OTC too: FRHLF and PREKF.
    Sorry I averaged a quarter out of Freehold about a month ago.

    1. I don’t know if you follow Rogers Sugar (RSI on TSX or RSGUF on OTC), now that the company has settled bargaining issues at Lantic’s Montreal Refinery, is now a good time to buy the stock? Any thoughts appreciated.

      1. Re: RSI: I left a comment here about five weeks ago. I have owned for awhile and followed it for years. Pretty conservative bunch. Divy regulars, but may not be highly leveraged to the price of sugar in general since market is controlled. Peoples eat every day. Read their website info. When it goes up I will sell/trade.

    2. CDN banks and lifecos were given the green light yesterday to increase their dividends, do share buy backs and of course increase CEO pay. Just a question of how much is already baked into share price.

    1. Yup go figure – our economy has still not reached pre Covid levels. Plus Junior’s new environment minister is a former Green Peace activist who has never owned a car (so you can imagine Alberta’s opinion for its oil & gas sector) At least the half a cent jump in CDN$ helped US investors exchange wise and jump in yields helped my F&F CDN prefs yesterday.

      Below are top CDN exports — so sure Junior why not kill our oil & gas sector:

      Trade item Value
      1 Crude Petroleum 75,259
      2 Cars 47,632
      3 Refined Petroleum 18,715
      4 Aircraft, Helicopters, and Spacecraft 7,322

    2. Bro Trudeau made a good choice QE creates deflation and with all the cheap foreign goods waiting to be imported we will have another deflationary jolt once supply chains are fixed.

      War on oil&gas will continue as it’s virtuous and right. Although a lot of people will question its virtue once receiving newly minted $1200 utility bills this coming winter.

      Energy industry has entered nuclear winter mode paying for maintenance out of free cash flow to maintain production levels. New pipeline capacity hits in 2023-2024 so no point expanding production until then. Expectation is to continue firming up balance sheets, big buybacks, and next year large 10% dividend increases.

      Oil and gas industry qualifies an investment based upon net present value 10. Borderline projects hover around 30-35% return rates with new regulations and increased borrowing rates push most projects unprofitable until oil is able to sustain $90-100 bbl so higher energy prices for longer should be an expectation.

      1. SU just announced great qtrly results and doubled their dividend. Up over 10% today. Many other CA O&G on the NYSE are up in sympathy. They are all lean and mean from the hard times, now printing money and vowing to put it in shareholder pockets instead of sticking it back in the ground for more production.

        Laissez le bon temps rouler but, yes, the poor will suffer this winter.

        1. completely agree — Banks and oils are going to be paying some juicy dividends in coming year and am overweight that sector for income purposes (plus long term growth in financials). Am up over 100% in most of my small cap energy shares and had two announce a dividend this week going forward. Energy is a sector like mining you make lots of money at the right time but don’t fall in love with the company or you’ll give it back in a couple years. Luckily am in position to help our kids & grandkids as young families with kids are in for a rough ride the next 5 yrs.

  27. Happy Thanksgiving to everyone in Canadia! Market closed today. (My own pet name)
    Give thanks for new IG issues:
    – GWO.PR.Y a high rated, new, fixed perp began trading Friday and traded down toward par at end of day., current ask showing 24.99. Very nice 12-26 first call, with graded call premium afterwards by $0.25 from $26 to par in 2029. A good “annuity holding”.
    – PFW Series 23 probably trading by Friday, fix, perp, 4.5%.
    – EMA.PR.L has been trading at 4.6% coupon. Already trading at a decent premium.
    Gobble…gobble.
    Before anyone asks I see no US OTC symbol.

    1. Joel not too sure I’d be looking at perps right now with the prospects of rising interest rates and inflation eating away at the capital value. I still like my 6%+ BBD prefs knowing that Junior (or his replacement) would never let Bombardier go under

  28. Canadian and US year five year starting to separate. Has been a spread of 10bps or less and now a spread of 15 bps. Canadian yields have been significantly higher than the US in the past when commodities are doing well. We could see Canadian preferreds going higher from both higher rates and a higher Loonie. In previous commodity bull markets Loonie has reached par against the USD.

    1. and for a year or so about 10 yrs ago when CDN$ sas about 10-15% above US$ and my wife and her friends were always going across the Blue Water Bridge to shop in Pt Huron. Huge line up of cars/trucks daily with 1 hr+ wait times .

  29. Re: RNW:
    https://transalta.com/investors/press-releases/transalta-announces-strategic-investment-by-brookfield-renewable-partners/
    It’s like a bad dream with these corporate raiders. Yeah, I want BEP at 27x. ..that’s fair…they are all geniuses as long as you can sit in an office in Toronto and refi on a straightline interest rate decline over your ENTIRE ego-career.
    Go out a nd REALLY build SOMETHING!
    I know…it’s legal and we gots us lots of attys!

  30. Both Canada and US five year close to 18 month high.
    Spread is tightening.
    Wonder why the Fed may taper on the long end?

        1. Canadian market does not have as many different types of swap lines and repo mechanisms as the fed.

          Treasury market is short on t-bills which is driving short end rates negative.
          Fed is trying anything possible to prevent negative rates as nobody knows what will happen. Reverse Repo is crow barring t-bills above 0.05%. While a second facility allows long end (10y+) maturities to be swapped overnight effectively making them t-bills.

          The whole maturity curve should slowly flatten out.

          Everything that I like (banks, mreits, etc) like steep yield curves so this is not a positive development.

  31. Bro Trudeau seems to have found some resistance to his good looks. Receiving a rough ride from the anti-vax / anti-mask groups due to party stance. Old fear and uncertainty tactics with the conservatives are not playing as well within the base.

    Will be paying attention to the first debate. To see if any points can sway the more moderate crowd away from more tax and spend.

    Was thinking that it was going to be an easy majority but the other hogs want a position on the trough.

    1. Your analogy is quite accurate. These ‘political animals’ have the ability to hit their own food supply button too. Quite a contradictory and destructive method of ‘governance and management.
      Decades ago we had a group in 4H and all had the duties of learning how to moderate food supplies to one or many animals. Most domesticated animals will easily eat themselves to death in short order. Indeed now a computer can monitor and do it best.
      Really a valid Parable for today. Maybe a computer can do it better without referring to a rewrite of many thousands pages of new handbooks rewritten annually by the animals themselves.

    2. surveys show 75% of CDNs say this election was unnecessary – looks good on the Liberals to have it backfire on them. So a PM who was a trust fund kid and only worked as a drama teacher supported by a Finance Minister who majored in Russian history will hopefully be shown the door (with full govt pensions of course). At least pretty well any other combination of a likely minority govt should be an improvement. Although a lot can happen in 17 days in politics

    3. Conservatives have a history of foot in mouth disease when playing with the other farm animals.

      Campaigns have not found their goat issue to raise the electorate out of its slumber. Anything is still possible.

  32. Bombardier common and prefs got pop up today on speculation BBD will be added back to the TSX index in a few weeks with the next rebalancing. Better to be lucky than smart sometimes as I picked up some up the higher yielding prefs a month or so ago after their relatively good quarterly results.

  33. I posted a comment on Freehold and Rogers Sugar a bit lower in the thread here. I remembered an older website that has been modernized, but went to visit again today: Stockchase,com.
    An interesting posting site for CN brokers regarding everything Canadian. I used to follow PennWest, Baytex, Alta, Crescent Point, etc before the return to C-Corps. I learned about a few others and the big oilys that stuck in my mind since brokers mention all sorts of opinion about their favs.
    Fun site that I am glad to see still is around.

      1. Well, you do have to believe that oil is not gonna go back down there in the near future. We’ll see.

        1. Predicting oil prices is a challenge. More pipeline capacity certainly boost the wellhead price on Canadian crude and up those royalty payments.

      2. Bob, Camroc has been unflappable in his sniffing and continual investing of hydrocarbons through the highs and the lows year after year. Rumor has it he is invited and attends all the Duncan family (EPD) reunions also, ha.

    1. Camroc – At least there is one person that is a friend to the hydrocarbon industry. In Canada drilling for hydrocarbons went out of vogue with governments enhanced interrogation techniques on full display royalties depend on continuous replacement drilling.

      Oil sands long life low decline with minimal maintenance capital assets have been the last oily bastion of hope for operators with existing permits. CNQ/IMO/SU are my three horseman of the apocalypse.

      Math is simple whoever is the lowest cost operator through the economic cycle will eventually own all the assets. Hint – CNQ

      1. Yep. I doubt using oil goes away anytime soon. I remember when frozen (TV) dinners came on aluminum trays. Now they’re all plastic, whose use continues to escalate. My house is full of it. My little fuel-efficient car has about 300 lbs. of plastic in it. Prolly why it’s so fuel-efficient. lol

        And all those developing countries yearning for what we have. That will take reliable power, fueled by hydrocarbons. I doubt they’re impressed by any virtue signaling going on in the developed world.

        I could go on, but it’s Sunday and tomorrow is a hard workin’ day. “Blue Monday, how I hate blue Monday…”

        JMO

        1. Camroc – Not contesting your oil thesis as I believe its true. Its only a matter of time before tragic underinvestment comes home to roost.

        2. Good ‘ole Fats…. I miss him…….. “This Is Fats Domino” was the very first vinyl album I ever bot on my own…… I think I was 11 years old.

      2. Ottawa will gladly sinking almost infinite sums into money loosing businesses that are politically favoured while at the same showing at best benign neglect toward the evil O&G industry, which doesn’t need government largess to thrive.

        Ottawa’s lack of involvement in the Line 5 issue was stunning. Yes, a shut down would have hurt western oil producers but the bigger harm would have fallen on eastern oil consumers. Most of the refined products produced at Ontario and Quebec refineries come from Line 5 crude. It is Ontario and Quebec that elect Mr. Dressup, which is the only reason Ottawa ever got involved. If it were just a western Canadian issue Justin would never have put on his big boy pants.

    2. FRU/FRHLF: Very specific operators. Amazing story that they just keep managing over decades. They make my kind of vitamins. Have been around a long time. Younger brother is Prairie Sky. Both disciplined payout share of royalties with very LOW overhead. Very interesting, very Commonwealth story which is reflected on their website. Worth the read. I’ve talked about them here several times.
      KNOW that they are pay as percentage of 3Xnet, goes up, goes down, but pays true royalties share based on sales.
      I have been accumulating for a long time and sold off a trigger order at US$8 on the F-OTC shares, which recently allowed a relocation to FRU in the IBKR account about 15% lower.
      Close to moving ALL CNs, prefs and commons, over now. That account was a labor born of activities of interacting on THIS SITE at a good time. Thanks for all the leads to those contributors! Resets and Oilys.
      I’ll throw out a flyer here, a CN common that I have followed for a long time, RSI/RSGUF, pure play on sugar, though regulated on exports, which has just jumped on Sugar News and a general commodity rolling enthusiasm. Staid, conservative, hands-in-the-pockets kind of management, divy payers.
      Nuff Said, Eh?

  34. I just looked at the list of SEC Rule 15c2-11 Restricted Securities as published by TD Ameritrade on August 2, 2021 and I am happy that none of my Canadian securities are now on the list, to wit:
    ALTGF (ALA.PR.U) AltaGas
    ERRAF (EMA.PR.C) Emera
    FXFLF (FFH.PR.C). Fairfax Financial

    In fact, I saw no preferred stocks of these companies on the list. Also, I saw no preferred of Enbridge on the list either. However, go to your own sources. I make no warranties or representations as to the accuracy of the info provided by TD Ameritrade.

    For those interested in SLMNP (LyondellBasell Advanced Polymers, Inc. (non-Canadian), it wasn’t on the list either.

  35. Anyone see news on the Brookfield takeover of IPL? Has it happened? Has Brookfield determined if there is going to be a proration between cash and stock?

    1. Randy – Brookfield had to extend offer to Aug 20th as they need 55% vote in favour and only had 52% at Aug 6th original deadline. They upped offer to $20 cash

        1. Brookfield last increased its bid in mid-July to $20 a share in cash to Inter Pipeline shareholders, up from $19.50 a share. Its original hostile bid in February was worth $16.50, which was comprised of a mix of cash and shares.

          Brookfield’s latest revision also allowed Inter Pipeline investors to take some shares at an elevated price instead of cash, offering one-quarter of a Brookfield Infrastructure Corp. share for each Inter Pipeline share. Inter Pipeline’s board ultimately decided to back this offer after rival bidder Pembina Pipeline Corp. bowed out of a bidding war.

          1. I would think that the fat lady has sung. With Pembina gone and just a few more votes to pick up it seems over. Agree?

            1. yes BAM is always going to prevail if it wants to own a company – deep pockets after all with growing cashflow year after year

              1. Please end the long suffering interpipeline shareholders pain with a quick takeover and better management.

  36. Later today, Canada will sign an agreement with Moderna for construction of a vaccine plant somewhere in the great white north. The PM is Justin Trudeau. The “Minister of Innovation” is Francois-Philippe Champagne. The announcement was made in Montreal and first reported by the Montreal La Press.

    Trudeau is expected to call an election for later this year. His Liberal Party is absolutely dependent on the province of Quebec for reelection. So, too, Ontario.

    I’m taking bets on Lethbridge, Alberta.

    1. JT and the Liberals are not scared of the abysmal competition at the taxpayer trough.

      Conservatives have fielded another 2×4 and NDP have reverted back to union first and give away everything politics which appeal to a minority of voters.

      My first thought was we could re-purpose the Edmonton Superlab but its already been demolished as it was expected to be run by Union group.

      https://www.cbc.ca/news/canada/edmonton/whatever-happened-to-the-alberta-superlab-1.5693158#:~:text=It's%20official%3A%20Alberta%20government%20cancels%20Edmonton%20superlab&text=In%20June%2C%20it%20became%20official,project%20had%20already%20been%20spent.

    2. LOL — yes nothing like Junior preparing to send the country into an election nobody wants as their are predictions for a 4th wave of covid thanks to the Delta variant. Junior just follows his PMO office mandarins who are pulling his strings.

      I’m betting on the new Moderna plant going to Quebec using an old Bombardier mothballed facility (they have lots) with lots of gov’t $$ used to grease the wheels.

  37. Saturday morning musings from the great white north after enjoying a Friday night baseball game in London (intercounty minor minor league but still a great night with the grandson).
    — Brookfield needs Bob to vote his shares in favour of their take over of IPL as they still have not reached the required 55% approval level ; so no choice but to extend their offer
    — for yield I put some more $$ into Bombardier prefs this week as they showed continued improvement with latest quarterly results. This is purely a ‘feeling in my gut’ decision as on paper they are still a basketcase but knowing neither the federal or provincial (Quebec) govts would ever let this company go under I figured what the heck.

    1. Have been using CCS.PR.C for my cash account.

      Bombardier and air Canada bailout kings living off Canadian taxpayer oxygen. People get angry at the General Motors bailout but atleast taxpayers recovered something.

      1. For those who think that Bombardier still makes snow mobiles you are stuck in the 60s. The company bought Lear some years ago and they now make jets. Bombardier is kinda the poor mans Gulfstream.

      2. so very true about GM. Co-operators certainly very solid company just a question how the 5% will do if/when interest rates start showing upward trend.

    2. So, do you think Bombardier may be too French to fail?

      Justin delights in sticking it to money making Alberta every time he can while at the same time he has infinite amounts of money to shovel into the cash drain that is Quebec.

      Ils ne laisseront pas Bombardier faire faillite, mais dans les moments difficiles, ils n’aideront pas les actionnaires.

    3. I like minor league baseball. I can watch the Bluerocks from the best seats in the house, be there in 15 minutes, and have a good time, all for very little money.

      Or I can drive to Philly, spend an hour and $50 parking my car on some guy’s lawn and another hour retrieving it at the end of the game, lay out $100 for tickets and another hundred for a couple hotdogs and beers, and sit where I need a telescope to see the game. All while sitting among what must be about the worst “fans” in professional sports.

      For me, it’s not a hard choice.

      1. Bob, you forgot to add the cost of $10 worth of batteries to throw from stands when going to Philly games, ha.. Oh wait, that was at “The Vet” and I think they quit doing that activity anymore, lol..

        1. The Philly “fans” are animals. I would go to a pro wrestling match before I would go to a Flyers game. There are more fights in stands than there are on ice.

  38. Brookfield strikes again.  Following the very successful launch of tracking stocks BEPC, BIPC and BAMR, Brookfield is doing it again.  This time with BBU, Brookfield Business Partners.  BBU is a Bermudian partnership and the tracking stock, BBUC, will be a Canadian corporation.  As with the other Brookfield pairs, BBU and BBUC are designed to be economically equivalent. BBUC will be exchangeable into BBU but not vice versa.

    The difference between the two is tax treatment.  Depending on who you are (individual, institution) and where your are (US, Canada, elsewhere), one will work better than the other.  Institutions generally can’t own partnerships but they can buy the corporation tracking stock, so BBUC is their only option.

    If you are a “U.S. person” for tax purposes, BBU has no withholding and the distributions will be a mix of whatever.  But no UBTI. (BEP is similar and generates almost 100% qualified dividends).

    BBUC will get you 15% withholding and will be a qualified dividend (my guess) or ROC, or possibly a mix.  If you put it in a qualified account the 15% withholding tax goes to zero.

    I don’t own BBU and have never done a deep dive.  It’s a mixed bag of business that don’t fit into the mandate of either BEP or BIP.  It is not as compelling to me as BAM itself or BEP or BIP.  But you may like it.

    BBUC will be distributed to existing BBU holders later this year.  There is no “IPO”.  It will trade NYSE and TSX after that.  Yes, SEC registered.  You can actually trade it.

  39. I know the 31st landed on a Saturday but has anyone received their Toronto Dominion Common Stock dividend yet? I received all my TD rate reset divs but no common stock as of 6:47PM EST

  40. As the resident Canuck on III thought I would pass along a recent article from Globe & Mail to the US investors holding CDN prefs/common shares. Outlook now is for the CDN $ to depreciate over next year as opposed to further gains. Which of course is good for my US$ holdings but -ve for you holding CDN$ securities.

    Also for those following the Interpipeline/ Brookfield/Pempina saga two proxy advisory firms have now come out supporting BAM’s latest offer.

    Scotiabank takes the axe to its Canadian dollar forecasts
    DARCY KEITH
    PUBLISHED 2 DAYS AGO
    UPDATED 1 DAY AGO

    Scotiabank has scaled back its forecasts for how much the loonie will take flight over the next year and a half.

    As part of some “significant changes” to its forex forecasts released late Friday that extend well beyond the Canadian currency, Scotia now believes the loonie will close this year at 1.22 in US. dollars, or 81.96 cents US. Previously, it expected the Canadian dollar to be trading at 84.03 cents U.S. come the end of 2021.

    And by the end of 2022, it now only sees the loonie at 1.25, or 80 cents US – well shy of the 82.64 cents U.S. it had been forecasting previously, and barely above the 79.61 cents it was trading at late Friday.

    A lot of Scotiabank’s rethink has to do with it now believing the U.S. dollar has further to advance against major currencies. “While we think there are still reasons to be cautious on the general outlook for the US dollar (USD), it does appear as if its broad decline has stabilized since June and structural headwinds (rising US deficits) will likely be overlooked for now,” Scotiabank’s chief forex strategist Shaun Osborne said in a note Friday. “The window for the sort of USD losses we have been expecting to play out over the balance of this year has narrowed considerably now that the Fed has set the stage for tapering asset purchases in the coming months, a message that may be reinforced at the Fed’s August Jackson Hole symposium.”

    But the bank’s less bullish view on the loonie also reflects domestic developments and the currency’s inability to capture greater upside in recent weeks.

    “Indeed, we no longer look for the USDCAD to push under 1.20 into H2 2020 and early 2021, per our recent forecasts. The CAD’s weakness through mid-year has run counter to positive underlying fundamentals; the CAD has had a solid opportunity to strengthen against the USD but has not been able to press its advantage. The Canadian economic recovery should pick up speed in the second half of the year and reinforce the relatively more hawkish profile of the Bank of Canada compared to the Fed through the rest of this year and into early 2022. CAD-positive yield spreads and still (generally) firm commodity prices have failed to support the CAD in recent weeks but should still provide some anchoring for the CAD through the latter part of the year, assuming market volatility eases,” Scotiabank said

    “We feel there is some fundamental value in the CAD at current levels which should lift the CAD later in Q3 or in early Q4 when seasonal trends are more CAD-supportive,” he added. “But technical charts suggest that USDCAD holding major, long-term support around the 1.20 point earlier this year represents a significant turning point for the USD decline from the 1.47 peak made in early 2020 and we expect the USD to hold above the 1.20 (83.33 cents US) level moving forward.”

    Scotiabank’s new forecast for the Canadian dollar puts it more in the same camp with some others on Bay Street.

    Katherine Judge and Avery Shenfeld, economists at CIBC World Markets, for instance believe the market’s recalibration of U.S. rate hikes will weigh on the Canadian dollar for the rest of 2021. They expect the dollar will end the year slightly below 79 US cents.

    They believe next year could bring more of the same, as Canadian economic growth and inflation lag U.S. numbers.

    “As a result, look for the Canadian dollar to continue to lose its luster through 2022 on more aggressive policy action from the Fed,” the CIBC economists said in a note earlier this month.

    1. The Battle between BIP and PBA is interesting. BIP clearly doesn’t want to give up. It’s clearly a high conviction play for them.

      I am very leery of Institutional Shareholder Services (and similar outfits). ISS is a private company, unaccountable to anyone, unregulated by anyone, out there giving “advice” on significant transactions. It’s controlled out of Europe and with Canadian roots, too. I don’t listen to them.

      I own both BIP and PBA and would rather see the deal get done with Pembina. I don’t want the cash part of BIP’s offer as that would make the transaction taxable to me. Also, I see far more long term value creation with a PBA deal as there are real, physical synergies to be realized.

      BIP’s strategy appear to be to offer a little bit more than whatever PBA is offering and to outmaneuver PBA in the media war.

      1. thanks for the heads up on those firms Bob – I hold both BAM and Pembina however my miniscule # of shares isn’t too likely to hold much sway

  41. Article in Saturday Globe & Mail regarding the ongoing saga of Inter Pipeline take over (and the lawyers are getting richer and richer)

    Alberta securities regulator hears complaints about bids for Inter Pipeline
    JAREN KERRMERGERS AND ACQUISITIONS REPORTER
    PUBLISHED 1 DAY AGO
    UPDATED JULY 10, 2021
    FOR SUBSCRIBERS

    The board of directors at Inter Pipeline Ltd. said it supported a takeover deal the company signed with Pembina Pipeline Corp., despite an increased offer from Brookfield Infrastructure Partners. That has now led to an unfair tactics dispute with regulatory agency.

    HO/THE CANADIAN PRESS

    Inter Pipeline Ltd. IPL-T
    unfairly favoured Pembina Pipeline Corp. PPL-T
    by agreeing to pay it an onerous break fee if Pembina’s takeover offer does not succeed, rival bidder Brookfield Infrastructure Partners LP BIPC-T
    told a regulatory hearing on Friday, while Inter Pipeline countered that Brookfield’s offer was misleading and deterred other parties from bidding.

    The battle between Brookfield, which lodged a hostile bid for Inter Pipeline in February, and Pembina, which made an improved white knight offer in June, has moved to the Alberta Securities Commission after all parties complained about unfair tactics in the takeover fight. Pembina’s bid is supported by Inter Pipeline’s board of directors.

    Lawyers for Brookfield argued Tuesday that there should not be a $350-million termination fee attached to Pembina’s friendly takeover offer for Inter Pipeline, which is payable if the Pembina deal does not succeed. If the fee is not removed and Brookfield’s bid is supported by Inter Pipeline shareholders, Brookfield will effectively have to pay it.

    Brookfield’s lawyers said the fee is “option chill” that serves as a tax on Inter Pipeline shareholders who could have unlocked value by now, and said Inter Pipeline never consulted with Brookfield about a suitable sum for a break fee.

    Inter Pipeline’s lawyers said the break fee was within a typical range, and necessary to attract Pembina’s friendly bid. They countered that Brookfield’s use of securities known as total return swaps to acquire an ownership stake in Inter Pipeline was misleading because the swaps made Brookfield appear to have nearly 20-per-cent voting control in the company, when it actually has just less than 10 per cent.

    Brookfield owns a 9.75-per-cent stake in Inter Pipeline’s common shares outright, and has another 9.9-per-cent economic interest in Inter Pipeline through its total return swaps with its counterparty, Bank of Montreal.

    Lawyers for Inter Pipeline also referenced court documents that said that BMO would receive a $15-million success fee if Brookfield’s hostile bid won, which, they say, creates a conflict of interest and could sway BMO’s vote as a shareholder of Inter Pipeline.

    Inter Pipeline’s lawyers argue Brookfield has always combined the outright ownership with the total return swaps in its materials, which effectively discouraged other bids for Inter Pipeline.

    Canadian securities laws require shareholders with a stake of more than 10 per cent to publicly disclose their holding. The rule is meant to prevent creeping takeovers, in which a shareholder amasses a large position covertly and can then effectively control the outcome of a takeover battle. Brookfield has remained below the early warning threshold because it owns just 9.75 per cent of Inter Pipeline.

    Brookfield made its takeover offer in February after Inter Pipeline’s stock plummeted because of weak oil prices, along with delays and rising costs at its Heartland Petrochemical Complex northeast of Edmonton. The facility has been under construction for more than three years, and Inter Pipeline struggled to find a partner on the project until Pembina’s offer arrived in June. The facility will convert Alberta propane into polypropylene pellets for manufacturers.

    The ASC panel said it expects to deliver an oral decision on Monday.

      1. The merger vote was set (still is I guess) for Aug 6 and I’m assuming Pembina thought IP shareholders would vote in favor of the BIP offer. You read same or differently?

        If BIP will pay the price they are paying with zero operational synergies they must see big value in IP once the megaplant is complete.

        1. Bob,

          I have two thoughts.
          – Brookfield was willing to keep increasing their offer and PBA did not want to over pay.
          – Likely some institutional holders (beyond ISS) have told them they will vote for Brookfield.

          While it would have been a great combo, the $350 million looks good on their balance sheet.

          1. Looks like Brookfield was going to pay 1 buck more than whatever Pembina was going to offer. Brookfield has more money than Pembina.

            I assume that Pembina was being told that the Aug 6 vote was going to go Brookfield’s way.

            The 350M breakup fee is good for Pembina. Works out to about 65 cents per Pembina share.

            Still, I think this went the wrong way. Institutions will sell you out for a nickel and they have the patience of a two year old.

            Here’s a thought. This could end up down the road with Brookfield acquiring Pembina. The fit is too good for it not to happen one day. BIP calculated they could get the two cheaper buying one at a time than the two combined. I’ll be buying more Pembina.

            1. Bob, I see that Pembina declared a June 2021 dividend of $0.21 (unchanged since Jan 2020 from what I can tell). Yet Yahoo Finance is reporting annual divs of $2.00. Any idea why they shouldn’t be reporting $2.52 instead?

              1. Bur …..

                without looking I think what you see is the currency difference. Pembina is listed on both TSX (as PPL) and NYSE (as PBA) and trades on both in the local currency. 0.21 CA$ per month works out to 2.00 annual in US$.

                Confused yet?

              2. Bur – as per Bob’s comments I got my latest 21 cents (CDN) on July 15th which times 12 equals the $2.52 (CDN) or appx 6.4% yield on common price today

  42. So for anyone looking at a possible cause and effect event – just saw item on CDN biz channel that the annual Calgary Stampede is back on this year after being cancelled last year due to Covid. What does this matter? According to the reporter who covers CDN oil patch a lot of M&A activity gets discussed during the social meet and greets during the Stampede festivities. Ergo – if you like to dabble in smaller cap CDN oil & gas stocks there may be some activity this fall (kind of like the hedge fund that tracks corporate jets to try and figure out potential M&A’s)

    1. Geez, can’t imagine what the gold ol’ boys from Canadian oil have got to talk about this year. Nothing going on in pipelines. No lawsuits flying. No M&A action.

      Been a longggg time since I was at Stampede.

      1. Completely off topic for this board, but one of my fondest memories is of attending the Pendleton Round-up as a kid with my great uncle back in the ’70s.

      2. LOL — Bob the biggest challenge to the Cdn oil patch is the fact that Junior and the Liberal party have 0 seats in Alberta and Saskatchewan so consequently no big urge to offer much assistance. Then you add on our new Minister of Finance (Chrystia Freeland) has a BA in Russian history & literature and was a business journalist before becoming a politician. Poor John Kenneth Galbraith (born about half hour from where I live) would be spinning in his grave.

        1. not to be political.. but have read in a number of places that everything Galbraith put forth and been proved absolutely wrong.

  43. BAM & BAMR ………..

    The story is half Canadian anyway. Out of the box BAMR traded all the way up to 85 when the stock it tracks, BAM, was in the low 50s. Well, reality has caught up with the theory and the two tickers are trading at almost the same figure now, 52 for BAMR vs 51.58 for BAM.

    If you have existing holdings in BAM in a TAXABLE account, I would look at converting to BAMR. But look at cap gains first (this is not a tax free exchange), as it may alter the decision. But going forward, certainly, you should prefer BAMR over BAM. No withholding on BAMR (15% on BAM) and your tax rate on qualified dividends may well be less than the 15% withheld. It may be zero. So, BAMR saves on taxes.

    If you hold your Brookfield in a ROTH I don’t think it matters what you hold as there is no tax and no withholding on either. But be alert for arbitrage opportunities between the two. Sell the pricier one and buy the cheaper one. More shares for less money and since it’s a Roth you don’t have to worry about taxes from trading back and forth.

    For a REGULAR IRA, well, after thought, I decided I wouldn’t personally hold either BAM or BAMR in a regular IRA. The dividend yield is only about 1%, so the current tax savings isn’t much and an IRA (dirty little secret!) converts what would be LTCG into ordinary income when the profits are eventually withdrawn from the IRA. Most of BAM/R’s long term return is going to be cap gains so holding BAM or BAMR in a regular IRA may actually leave you with less money that holding in a taxable account.

    Save your IRA space for something that pays a fat dividend and won’t generate as much in the way of cap gains. ENB, with a 7% dividend yld, comes to mind.

    My take anyway ….

  44. Some of the big oil companies in Canada are looking at significant blowout FCF leverage to oil prices for the long term , even with bouts of reversion to downward pricing in the future. Their business expenses have been wrung out during this last cycle, technology applied and much of the CAPEX needed already in place. The gusher phase is now in their view.
    Just as a general personal prediction, I would not be surprised to see some of the preferreds, now below (some way below) par and yielding decently for the holder for a few years, being redeemed at call from free-cash. Interest rate refi risk may just not be an issue.
    They are also aggressively and realistically going after the Green Questions with very realistic applications.
    Way long after a long study. Been shifting these instruments and commons with call writing into sheltered accounts.
    Too bad govts aren’t run by these forward-looking bad-ass managers! We need a ‘lottery of this type of Unwilling, but uber-competent’ at election time. At one point that was a promise of business/govt partnership, but the undisciplined have to end up somewhere.
    I am going to try to go up into Alb and BC this Summer, but will see what a passport can do at the border.
    PS: All Hail the Canadiens…again?

    1. Joel – CDN energy has a history of feast or famine and we are definitely in the feast phase right now. As energy proxy the I Shares Cdn Capped Energy (XEG on TSX) as of June 30 is YTD +56% and 1 yr +132% but 3 yr – 9% 5 yr -3% and 10 yr -5%. So timing is everything. I follow an energy specialist portfolio mgr (Eric Nuttall) who appears frequently on BNN Bloomberg TV (Cdn business channel). There is a 1 hr show at noon (Market Call) where portfolio mgrs take calls / emails on stocks from viewers. You can find the show on the internet and there are frequent calls from US viewers. Right now Nuttall is looking at smaller cap CDN energy companies having more leverage to higher oil prices. Nuttall’s fund is Ninepoint Energy if you want to see what he is currently holding.

      Les Canadiens have certainly make it exciting for us Canucks this year as Vancouver was the last Cdn team to even make it to the finals and that was 2011 (Montreal last winner 1993 with Patrick Roy in net)

      Happy July 4th by the way !

  45. Underwhelming news of Canadian preferred ……

    Two new issues with OTC tickers:

    GWO.PR.H is available as GRWLF, and
    SLF.PR.D is available as SLFIF.

    Both are strong investment grade FIXED (not reset) rate issues yielding 4.86% and 4.47%, respectively.

    Better than one can get on comparable U.S. issues but that’s a left handed compliment. I’m much preferring Bermudian insurers now, with their higher yields and NO withholding.

    And a rarity! A variable rate issue, BAM.PR.S (aka BMKAF) will self-destruct and turn back into 5-yr reset BAM.PR.R (BAMGF). This is as a result of the once-every-5-year option that resets carry to convert to floating rates, and vice versa.

    The holders of the variable voted for this. They are trading in a variable rate of 2.41% (yld 3.14%) for a rate fixed for the next 5 years of 3.24% (yld 4.22%. Point being that the expectation among those voting was for rates to remain low.

    To my knowledge, this is the first case of a converted variable converting back to a reset.

    And for the second year running the trip to Muskoka is off. Canada will just have to survive without Yankee tourists, and their money. I’m surprised the LCBO in Port Carling has survived, not to mention Silver Stream farms. Between Justin and Joe it’s a race to the bottom.

    1. Bob you need to be wearing a Vegas hockey jersey to get across the border right now. (go Habs go !) I believe the border is going to open July 22nd but Junior & Dougie Ford seem to change the rules every other day. You like BAM I believe and I stumbled across a unique BAM offshoot called Brookfield Select Opportunities Income Fund (BSO.un ticker on TSX). Has about 10% yield and quarterly pay . Threw a few loonies at it out of curiosity.

      1. Junior, you mean the former drama teacher?

        Since I pay taxes to the demented one I’m looking for the new BAMR starting Monday. Gets me rid of that pesky 15% withholding.

        1. yes along with a few other names the drama teacher has been tagged with Junior in deference to his father . Who knows you may be in same boat some day with Don Jr or Ivanka : )

    2. Bob I see that GWO.PR.H is trading on the TSX at $25.03 ex div date was June 1. And the other symbol GRWLF brings up a price and a blank page on the OTC and a listing on Quantum Online of a Preferred that has/had a call date of 9/30/2014.
      Are you sure those symbols are right?

  46. TWIMC, Domtar (UFS) going private, equity up debt down. They have 2 issues, both are long (’42&’44), now trading with ytm of about 6%. Looks like a buying opportunity to me 🤔

    1. Yuriy – anything to add to initial report? I do have a toe hold in the 2044 bond and the recovery was nice but it’s now time to harvest or grow.

      S&P characterizes the recent deal as an acquisition of Domtar (US) by Paper Excellence, a private (but large) Canadian company. Bonds are callable by the company, with make whole, and puttable by the holder in a change of control at 101%. S&P has them at BBB- with neg watch, the neg watch being a consequence of the acquisition.

      Looking at the merger agreement, the plan is to de-list and de-register Domtar securities in both the U.S. and Canada. There may be little if any public financial info about the company post merger.

      Is 6.75% enough in this situation?

      1. Hi, Bob.
        I believe these risks are typical for a private equity company, so each investor himself assesses how critical they are for him. Perhaps I would not get involved with this in other conditions, but today there are practically no interesting points on the market for investing capital. Since I needed to place somewhere the funds received from closing the position in T I took some of these bonds, taking into account the fact that their debt load is relatively small (by today’s standards) and the issue’s amount itself ($ 250 mln) looks like a not so big to create a real problem for the company of this size.
        Anyway this is not a “risk-free” bet and it is better to limit the max position size. Let’s see what further decisions the rating agencies will make, although it is clear that in the short term this issue cannot go significantly lower than 101, regardless of the decision taken.

    2. Yuriy – have you been following the Domtar bonds? There is a tender out for them right now and my quick look says the tender price is way low. Below current market and well below recent prices.

      Am I missing something here? I didn’t read the full offer.

  47. Cdn min rate preferreds, what a preferred ought to be.

    Preferred perfection except for the rich pricing. Table sorted by Column N, time to reset. If you own any coming up to reset soon you have your fingers crossed that they don’t get called. (BIP.PR.C announced intention to call this morning). If you own any that recently reset and was not called you are breathing a sigh of relief.

    For newbies: these reset once each 5 years, can only be called when they reset, cannot drop in coupon but can go up, and have a built-in option to go from fixed to floating rate. The universe is small and shrinking.

    This is a static sheet, meaning figures do not update. Everything is as of close of market last Friday.

    https://docs.google.com/spreadsheets/d/1dC5hVZrElXm8jg7zZivWSUBbLp3p24XcDXkuooHF_4s/edit?usp=sharing

  48. Misc Canadian ………..

    Canadian resets remain at close to a 52-week high (see ZPR) and the CA$ is close to a 5-year high. Not an especially attractive place to put new money from a U.S. perspective. If the (relatively) stronger yields attract you be sure you can live with big draw downs, so you will be around to collect those yields.

    If you have a sizeable position in CA$ preferred (or bonds, or common), you may want to consider selling CA$ futures to lock in that exchange rate. It’s close to cost-less (unless it’s a naked position) and easy to do at IBKR. CA$100k for full contracts and CA$10k for minis. Even if you bought your issues in $US on the OTC your real exposure is in CA$.

    A number of Canadian preferred have redeemed recently and it is likely more will be. Few new issues, some redemptions, and the option for financials to issue something called LRCNs (in lieu of preferred) means a shrinking universe of Canadian preferred in the long term.

    Finally, a word on the Enbridge Line 5 situation: For the benefit of Americans (Canadians will get this) the threatened closure of Line 5 by the State of Michigan is tantamount to a declaration of economic war. No exaggeration. Line 5, in relative terms, is more important to Canada than is the Colonial pipeline to the U.S. And had the Colonial pipeline been offline for months rather than days the U.S. was in for economic calamity. The closure, even for a short time, of LIne 5 would decimate the economies of Ontario and Quebec, and Alberta.

    The U.S. really needs to stop doing these kinds of things. Reminds me of the economic warfare that the U.S. was waging against the Japanese (you read that right) prior to Pearl Harbor. The confiscation of Japanese assets and the economic and shipping blockades of Japan lead directly to Pearl harbor. Sorry, but most of you learned the history backwards.

    Now, Canada is not about to invade the U.S. but the closure of Line 5 would sure be interpreted as an act of hostility. It would not lead to anything good. Geez, maybe I need to re watch Canadian Bacon!

    1. we would not want a repeat of the war of 1812.

      fortunately in 1977 America granted non-interference clause for utilities and pipelines crossing boarders for this very reason.

      1. Where did she graduate in her law class? The lure of political ego can be very strong. Few really control it well.
        Sounds like there is no real senior party planning/advise, on either side of the aisle during this Age of Arrogance. Canada is our last real friend. I lived there and would again. They have real clout here, but may not have the political will to flaunt it.
        Politicians worry about the Unwashed Masses? It’s always a wild-eyed wannabe with no real skill. It takes real, long term consensus and planning to really perform, not a slick picture and a campaign. Exactly what the uber-pros at ENB want to execute! Hell of a way to get attention. Enbridge wants to spend over half a billion dollars of PRIVATE cash on real trickle-down on joint Jobs, Infrastructure and Security and all they get is the raspberry and a threat?How sad.
        Just because you may not live in Michigan does not mean you can not send an email with your public opinion:
        https://www.michigan.gov/whitmer/0,9309,7-387-90498_90663—,00.html

        Long ENB and three prefs.

        1. just to illustrate the connection between Mich & Ont – as noted in NYT at start of covid in 2020 – 1600 nurses and health care workers crossed the border daily from Windsor (population 210,000) to work in Detroit hospitals .

  49. Regarding the fx-currency conversion place concurrently with an order at IBKR.: See below the email response I got from IBKR toady.
    Originally, I had attached margin and used this method upon placing the orders out of USD. When I had margin, it had to do with using the “advanced tab” and choosing, then approving the small lot. Soon I ended up totally in CAD.
    Eventually, I rescinded margin after I had fully invested all that cash allocation. I realized I would keep this a “pure” Canadian account and intend to keep it that way, even if base currency was USD. Of course to send monies out at some point I will have to do a manual currency transaction, and that is easy on the Account Management Screen/Client Portal where it is almost impossible to mess it up. Distribution is a couple years out for me.
    Divs still dump into CAD and are stored that way and no currency transaction needed for reinvesting. (which I just did yesterday with two new sliver additions).
    Like most things I dive into the deep end/explore then retire to a stripped down version of just what I really need. Like Grid, now I want warm water, in the shallow end with an umbrella drink and a ‘nice’ view.

    PS: I am still waiting for IBKR’s “supposed” and “coming-soon” direct investment into Sov. Bonds. No follow through yet, but I am not expecting to see it UNTIL the rates are firmly going against the Pros and THEY need liquidity chumps. For me, THAT will mark the bottom of Central Bank, secular, Global Rate Regime.
    Here’s the email reply: Keep Pushin’! Here’s to coffee! JA

    Our system reflects your account is a Cash account. Only Margin accounts can use an attached FX Hedge order. A Cash account cannot use a FX Hedge attached order because it takes IBKR a fraction of a second to see how much negative cash is in the account after the non-base currency stock order executes. Even though it would only be a short amount of time that the Cash account would be holding a negative cash balance, a loan to the account is not allowed under any circumstances. In a Cash account you will need to first execute a FX currency conversion order and then place an order for a contract denominated in a foreign currency.

    Please note any residual cash balances (less than USD 5 or non USD-equivalent) in non-base currency post currency conversion are converted automatically in base currency (USD for your account) within 2 working days at no cost for clients.

    1. speaking of currency — just FYI — CDN $ vs US$ is now at a 5 year high due to our more hawkish central bank forecast and correlation with oil prices. So good for US investors who are gaining on currency but negative for this Canuck holding US$ investments – but my US$ will allow me to go see the Tigers/Red Wings once borders open up again

      1. Last time I saw Wings in person Gordie Howe was still on the team. You think Ali had a good left hook?

        1. Craig Berube is a Canadian so this fits the forum. Jeremy Roenick said in his rookie season he cheap shotted Berube in a game. Berube said he would get him back. But that was Berube’s last year. Fast forward 12 years later as an asst coach Berube went into Roenick’s locker room after a game and slugged him in the kisser and said “I told you I would get you for that”. Roenick said he deserved it, lol…
          Ottawa Senators are my Canadian love this year. I had $2500 on their 47.5 over as my big season bet. They went on a late season 8-2-1 tear to pull over the mark, and leave the Nucks in the cellar.

        2. the “Gordie Howe hatrick” (as opposed to 3 goals in one game) was a goal, an assist and a fight. Reputed to be the strongest man in hockey in his prime – an amazing athlete and truly humble person

          1. Many an opponent tried to pick off Gordie How only to find themselves lying on the ice with a bloody nose. I don’t recall Gordie starting many fights but he sure did finish them.

  50. Just an idea for resource:
    III, Tim and Yuriy have been a real godsend to pushing into preferred in general, Canadia and IBKR.
    IF? …there is a way to help with a donation to whom ever is the organizer of the Canadian Sheets, as well as Tim’s sheets; I would be a willing subscriber. Keeping the data in an updated is an effort and a job and has really been proven with a “freebie-window” thus far that has PROVEN its merit to me.
    If there is a way that I can participate and contribute, you know how to reach me personally by email.
    Re: CA Resets: I see opp in these issues still. Also, see some close in resets being called in this environment just as in US. Seems that I have been “neutrally rewarded” in following a laddering structure that I began two years ago, but since I am NOT selling or spending today must manage the roll outs (compounding). Hopefully a neutral tactic will continue to serve as an antidote to my desire to apply a crystal-ball approach. Again, having access to this data has been fantastic and very useful.
    Thanks, JA

    1. Joe–have you seen Yuriy around lately? I can post his spreadsheet but not without his/her permission.

      1. Hi!
        I am here all the time, just more in reading mode lately.
        Tonight I will update the spreadsheets, there are several positions for which the rate has already been reset or they was called. I would be happy if they be helpful to the members of community, of course you can publish them as you see fit.

          1. Yuriy, You are gathering very good karma!
            Thanks, I have a small list of changes I will compare a few details this week. I’m trying to learn to do shorter screen times now, but still chicken scratch every corner of the yard. I am thinking we may see a few already suspect issues go down in inv grade in both countries.
            It just so happens I launched a major portfolio and reinvestment deep dive on these again. Been rewarding on market timeliness, interest rate reversion AND currency triad! Trying to wait to see if there are calls instead actual selling below pars. Yields are getting bone dry there too in the face of real inflation.
            THANKS again! JA

    2. Hi, Joel.
      Unfortunately, the number of interesting positions in the Canadian market is also steadily decreasing. I even thought about adding split companies to the spreadsheets, but I’m not sure whether it is a good idea to popularize such risky instruments. I also still hold a lot of Canadian securities (about 1/4 of the overall portfolio, both preferreds and commons), but I haven’t added anything from that market for a long time. Let’s wait, maybe the situation will change in our favor, as it was last year.
      WBR.

  51. Does anyone use a Schwab Global Account to trade Canadian stocks on the Toronto Exchange in Canadian Dollars? I would appreciate your comments. I deal with TD Ameritrade and I can only buy those stocks that have OTC symbols.

    1. David – it can be done at Schwab but it’s awkward at best. This is 2nd hand but I’ve heard the same thing from many people.

      If you really want to buy off the TSX, using TSX tickers, you need to go to IBKR. Executions are actually on the TSX, not OTC, in C$. You can fund the account with US$ but you need to convert to US$ to C$ or else you are taking C$ margin loans every time you make a buy.

      The only exception would be the 5 or 6 TSX issues that are priced and traded in US$.

      1. Bob, thanks for this note: I wrongly assumed that IBKR would automatically convert my USD to CAD when I bought a CAD issue on the TSX (which I haven’t done yet, but looked into with BEP-G (their Ser.7)).

        1. Re: IBKR:You can add an order to automatically transact the FX conversion, on any given order and it asks you to approve that action before placing the order, but it is always an odd lot and a bit of a more cost. Lately, and nicely, it has been good for my account to just plop all my usd into cad since the dollar has been in the crapper…that’s the technical term.
          I segregate all my Canadian holdings now in one account there and it has been a bit of a learning curve, not too bad since I knew exactly what I wanted to do and hold. My advice would be to, right now, sign up for and begin their papertrading account, developing the Watchlists and retrieving reports. Getting in touch with them for broker assistance with ANYthing is teeth grinding, but possible if you have no expectations on service protocols (see…I put that NICE!)
          Use their TWS platform since the online {Client Management Portal) and mobile app is like writing on toilet paper with a magic marker and mailing the order in to them. Only good to do a view in my op.
          Has been a good move for me.

          1. Good info, Joel. I do explicit US$ to CA$ conversions but if it can be automated it removes the risk of accidentally getting into CA$ margin. If you go the explicit exchange route you can do full contracts ($100k) or minis ($10k) at a very slightly higher rate. Institutional rates, so it’s great.

            Keeping all your Canadian “stuff” in one account is a good idea. That’s what I do. One account for all things Canadian; one for all else.

            Learning via the paper trading account is also a good idea. It is 100% totally realistic except that it’s not real money.

            The Webtrader platform is excellent but requires that you have at least a $100k account to access. I use Webtrader for 99% of my IBKR trades and it has become my favorite trading platform not just at IBKR but at all brokerages that I inhabit. Sometime, when I have spare time, I may learn TWS. It is a beast both in complexity and power.

        2. Bur – it’s not automatic but as Joel reports it can be set up to be automatic. News to me but it is good news.

    2. I do it in Cd$ but usually settle in USD. If I had a Cd$ balance in my account I could transact in that currency. Making purchases it isn’t too bad if you call the International Desk to transact, but working through the regular trading desk is a pain. A few issues will let you transact yourself without calling anyone, but very few. Selling, on the other hand, is very easy as you can do that unassisted. I am still waiting for an official response to my request for correcting Cd$ preferred dividends to QDI status. I hope this will come through, but in the meantime my CPA believes I have excellent documentation to justify this characterization in my 2020 returns.

      1. Whoops – my answer is in reference to Fidelity, not Schwab. The latter is on my mind because I moved my preferreds away. I find Fidelity easier on sales but basically the same on most purchases.

  52. I just can across this on Yahoo Finance dated April 21, 2020. It sounds like a new Rate Reset. but I cant find any other information anywhere:

    April 21, 2021·2 min read

    NA-PA.TO
    +0.08%

    NA-PC.TO
    -0.31%

    NA-PE.TO
    +0.53%

    +5
    /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

    MONTREAL, April 21, 2021 /CNW Telbec/ – National Bank of Canada (“National Bank”) today announced the closing of its previously announced offering of $500 million of 4.05% Limited Recourse Capital Notes, Series 2 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “Notes”).
    Concurrently with the issuance of the Notes, National Bank has also issued Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series 45 (Non-Viability Contingent Capital (NVCC)) (the “Series 45 Preferred Shares”) to be held by Computershare Trust Company of Canada as trustee for NBC LRCN Limited Recourse Trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the Notes when due, the recourse of each Note holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets in respect of the Notes, which will consist of Series 45 Preferred Shares except in limited circumstances.

    The Notes and the Series 45 Preferred Shares were issued under a prospectus supplement dated April 15, 2021 to National Bank’s short form base shelf prospectus dated August 17, 2020.

    The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any state securities laws, and may not be offered, sold, directly or indirectly, or delivered within the United States of America and its territories and possessions or to, or for the account or benefit of, United States persons except in certain transactions exempt from the registration requirements of such Act. This press release shall not constitute an offer to sell or a solicitation to buy securities in the United States.

    https://finance.yahoo.com/news/national-bank-canada-announces-closing-140900466.html?.tsrc=applewf

    1. LRCNs are debt that turn into worthless equity if the company ever defaults. They are new, as in the last couple years or so. I would not buy them if you held a gun to my head. NVCC is the same concept.

      Canada, along with much of Europe, now requires financial institutions to issue securities that effectively become worthless if the issuer ever gets into trouble. This is so the government won’t have to bail them out. The risk is totally that of the security holder.

      The concept has not come to the US yet but probably will. 100% that this is under consideration by Yellen.

  53. A Canadian miracle ……

    No, nothing to do with Sainte-Anne-de-Beaupré but rather the Canadian preferred market. Not only did a non-garbage company issue a new preferred, it is a minimum rate issue. This is the first min in something like 3 years and I never expected to see another one in this environment. But here it is:

    https://sedar.com/GetFile.do?lang=EN&docClass=9&issuerNo=00011625&issuerType=03&projectNo=03183684&docId=4918926

    Buyable on the TSE as EMA.PR.J. No OTC ticker that I know of but I would not be surprised to see one pop up at some point. 4.25% for first 5 years. Can reset higher but not lower. The company has one shot at redemption every 5 years. Investors have the option to convert to a floating rate at the same time the company has the option to redeem.

    1. PS: to access the SEDAR filing you will have to do one of those annoying verification things. It’s not me; it’s SEDAR.

    2. thanks for the heads up Bob — Emera is a very sold well diversified utility with the common yielding about 4.5% too . Currently trading at $25.35 using CDN symbol

      1. Bob,

        It might be helpful to remind folks of another minimum rate issue preferred that will be around for at least another 4+ years.

        BEP.PR.G or BRENF in the OTC market has a minimum of 5.5% (based on a price of $25). It’s priced in loonies and pays in loonies.

        The security is Brookfield Renewable Partners L.P. Class A Preferred Limited Partnership Units Series 7 and does not yield a K-1 at tax time.

        FD, I’m very long BEP / BEPC and have some BRENF.

        1. You can play on my team, Greg.

          BRENF is a wonderful issue for a Roth (or Canadian equivalent). 5.5% MINIMUM coupon as Greg said and isn’t callable again for almost 5 years. The payer is a Bermudian partnership, meaning no income tax and no withholding. It all goes to your bottom line.

          At the time I bought it, the YTW was about 8%; now, it would be closer to the 5.5% coupon. I’d like it at a lower price but otherwise it is about the closest thing to “perfect” for a tax qualified account.

          I say the same about BEP and BIP, so long as you are buying the partnership and not the corporations (BIPC and BEPC). The partnerships get you a lower price, higher yield, better tax treatment, and no UBTI.

          Just wait for the next market correction to pile in.

            1. I don’t own it, but the description on QOL says it is debt, so it can’t be QDI and would not throw off a K-1.

              1. See my post of 3:12 PM. QOL is often wrong. Need to check original sources. The prospectus is only several hundred pages and the discussion of taxes is 50 pages at most. Bathroom reading.

            2. My interpretation: The issuer is a Canadian corporation. For Canadian purposes it is treated as debt but for US purposes it is treated as equity.

              What that means, if I am correct, and understand correctly, is a) no withholding deducted on the Canadian side, and b) treated as a QDI preferred for a US holder.

              Apart of my interpretation is the issue of whether your brokerage will get it right.

              This is a Brookfield special, a real oddball designed to test the waters on tax treatment.

              QOL just looks at the “subordinated note” in the title and comes to the conclusion that’s it’s treated as interest.

        2. Greg – just for FYI here is an article on CDN rate reset prefs from a couple days ago. Our Bank of Canada governor (Tiff Macklin) is a bit more hawkish on rising interest rates in next 12 – 18 months which also likely has helped this part of the market.

          What’s driving the surge in rate-reset preferred shares?
          ANDREW ALLENTUCK
          SPECIAL TO THE GLOBE AND MAIL
          PUBLISHED 2 DAYS AGO
          UPDATED MAY 4, 2021

          The prospect of rising bond interest rates combined with a bonus of several percentage points has turned rate-reset preferred shares into glamour stocks.

          Prices of rate-reset preferred shares, which pay dividends at a fixed rate until they’re reset every five years, have been soaring. And as interest rates rise, these shares’ payouts will increase as their rates reset – regardless of what their issuers’ common stocks do on the basis of sales or profits.

          Rate-reset preferred shares make up three-quarters of the S&P/TSX Preferred Share Index, which has risen by 56 per cent since hitting a low on March 16, 2020. Meanwhile, the S&P/TSX Composite Index has risen by about 62 per cent in the same period. Looking ahead, investors are pushing the prices of rate-reset preferred shares even higher in anticipation of further interest rate increases.

          What’s driving the performance of these stocks is their architecture. Every five years, they adjust their payouts to the five-year Government of Canada bond rate plus a hefty bonus of several percentage points. That varies with each issue.

          Thus, a rate-reset preferred share with a typical boost of four percentage points to the recent five-year Government of Canada bond that paid 0.94 per cent on April 26 will have a net return of 4.94 per cent. That’s the rate for five years regardless of how the issuing company does as long as it has the money to pay preferred share dividends.

          Those dividends have to be paid before common shareholders get their dividends. To be sure, dividends on rate-reset preferred shares are only paid when the issuing company has the cash. Yet, they get treated like common stock when it comes to taxes, and therefore have the benefit of the dividend tax credit, making them – depending on the holder’s tax bracket – a much more attractive investment than a fully taxed bond

          In a sense, rate-reset preferred shares are in recovery. When the Bank of Canada overnight rate, which had been at 1.75 per cent since October, 2018, fell to 0.25 per cent in March, 2020, as the COVID-19 crisis began to grip the Canadian economy, it dragged down all long-term interest rates and, in effect, rate-reset preferred shares.

          Now, the tables have turned. The market expects interest rates to rise, although there is disagreement about just when. Nevertheless, the prospect of rising bond interest rates plus a bonus of several percentage points has turned rate-reset preferred shares into glamour stocks.

          For example, Manulife Financial Corp.’s 3.80 per cent Series 17, MFC-PR-M-T +0.51%increase
          rate-reset preferred share traded at more than $22.50 for 2018 and much of 2019, then tumbled with falling interest rates below $12.50 in 2020. It has recently traded at $23.10 on the prospect of the rising five-year Government of Canada bond rate plus 2.30 per cent on the payout reset date of December, 2024.

          The bad news is that all preferred share dividends come after bondholders and other corporate obligations are paid. Moreover, preferred share issuers can call them – or redeem the stocks – on reset dates rather than pay higher dividends in the ensuing five years.

          That risk is evident in the yields of rate-reset preferred shares compared to yields of bonds and stocks. For example, BCE Inc. BCE-T +0.53%increase
          common shares, recently priced at $57.87, pay an annual dividend of $3.50 to yield 6.56 per cent. For preferreds, the BCE 4.26 per cent Series AO preferred share BCE-PR-O-T +0.61%increase
          was recently priced at $24.03 to yield 4.43 per cent. It resets on March 31, 2022. at the Government of Canada five-year bond rate plus 3.09 per cent.

          At the time of writing, the five-year Canada bond pays 0.94 per cent, so if the BCE rate-reset preferred share were reset today, it would pay 4.03 per cent – more than four times the federal bond. Meanwhile, a BCE 7.0 per cent bond was recently priced at $134.34 to yield 3.32 per cent. Clearly, yield rises with risk. But rate-reset preferred shares’ call price restrains how high their prices can go.

          In fact, Alfred Lee, portfolio manager and investment strategist at BMO Global Asset Management in Toronto, notes that 65 per cent of preferred shares are called by issuers, which then pay the usual price of $25 a share. If investors bought the share for more than the call price, they risk a loss. If not called, the shares, which are perpetual, can be outstanding for a great many years.

          In contrast, if investors bought a preferred share for less than $25, a call at $25 offers a capital gain. But even a small loss is mitigated by the fact that preferred dividends get the dividend tax credit, which makes them more appealing than bond payouts taxed as income. Investors have to balance the tax disadvantage, in the case of bonds, with tax-advantaged preferred share yield.

          But there is a catch, says Chris Kresic, head of fixed income and asset allocation for Jarislowsky Fraser Ltd in Toronto.

          “When you buy a preferred [share], you are transferring a call option to the issuer. It can take away the upside,” he says. “The investor has to price the call risk. It’s the difference between the current share price and the call price. That’s one potential loss. The other is that preferred shares, which are equity, tend to follow the prices of their issuers’ common shares. If the price of a common share goes down, the preferred share is likely to follow.”

          Looking five years ahead, James Orlando, senior economist at Toronto-Dominion Bank, says the five-year Government of Canada bond rate could be 1.95 per cent in 2026. That would make a typical preferred with a base interest of 3 per cent pay 4.95 per cent, a fact that would be noticed by issuers who could call at the usual $25 price, depending on whether they could refinance at lower bond rate interest, which would be tax-deductible as a cost of business to the issuer. Dividends for preferred shares, like common dividends, come out of profits. They are not costs.

          For rate-reset preferred share investors, the advantage of being first in line for dividends ahead of common shares needs to be balanced with the risk of the share being called.

          Your Globe

    3. Contacted TD Ameritrade to see if they could buy the stock for me on the TSE and they said “no.” So, I also hope that someone can buy it and get an OTC symbol established.

      1. David

        Are you trying to purchase BRENF (in the OTC market) on TD Ameritrade?

        The only brokerage I’m aware of in the US that will support purchases on the TMX directly is Interactive Brokers. (Which I find bizarre as the TD in TD Ameritrade refers to a bank in Canada.)

  54. Update from Canada ……

    The Globe & Mail (Toronto) runs some pretty good political cartoons. Most are good natured – too good natured by my calculations.

    Recently, in a Zoom meeting of parliament an MP (Member of Parliament, akin to a US Representative) appeared onscreen mine his coat and tie, and everything else. “Pontiac” is not a reference to the car but to the name of the Riding (parliamentary district) of the MP:

    https://docs.google.com/document/d/1FM_5X1142xhLfQu6H4cPo52f_hv9_V5ghG1wCIiWfME/edit?usp=sharing

    The undercurrent, as I see it, is that the cartoonist is using the “incident” to make a broader comment on the state of Canadian politics, perhaps a reference to the incredibly poor job Canada has done on COVID vaccination.

    You take the good with the bad.

    1. Sad but true. However what do CDN expect when our PM’s last job was as a drama teacher

      1. CB – I would have said he was a drama queen, like his mother was. But I will give Justin this: he is about the snappiest dresser you will ever see ruining (meant running, sorry) a country. That’s not just my opinion:

        https://www.amazon.com/Mr-Dress-Up-Justin-Trudeau-Colouring/dp/1696145295/ref=sr_1_1?dchild=1&keywords=mr+dress+up+trudeau&qid=1620078015&sr=8-1

        https://static.boredpanda.com/blog/wp-content/uploads/2017/11/halloween-superman-costume-justin-trudeau-canada-fb__700-png.jpg

        The photo is not a fake.

  55. Does anyone have current info on the IPL situation? By that I mean, has Brookfield raised its offer or has any new company stepped up, or has IPL found a partner to work with them on the new plant? I’ve owned this forever at $23.38. What a disaster! No one to blame but myself.

    1. Randy – last article in Globe & Mail regarding IPL from April 5th – Alberta government providing $400MM grant to IPL to assist with new complex

      Brookfield under pressure to raise takeover bid after Inter Pipeline lands $408-million grant for petrochemical complex
      TIM KILADZE
      EMMA GRANEYENERGY REPORTER
      PUBLISHED APRIL 5, 2021
      UPDATED APRIL 5, 2021

      was set to receive under a different government program.

      The Heartland complex just outside Edmonton lies at the heart of Brookfield’s bid for Inter Pipeline. The plant is overbudget and has faced construction delays, creating uncertainty that has weighed on Inter Pipeline’s share price. Management has been looking for a partner for the plant to split some development costs but so far has been unsuccessful in its search.

      The new cash grant is likely to change Brookfield’s takeover calculus. “We view this as a significant positive for Inter Pipeline as there were previously concerns about the recovery of the credits under the prior grant,” Stifel FirstEnergy analyst Ian Gillies wrote in a note to clients, adding that the updated cash grant translates to 95 cents per Inter Pipeline share. “We expect Brookfield may need to revisit its cash bid of $16.50 to $18.25 per share,” he wrote.

      The grant could also make the project more appealing to a partner by partially offsetting remaining development costs. However, analysts have argued that Brookfield is in the driver’s seat because it holds securities that amount to a 19.65-per-cent stake in Inter Pipeline. They have also argued that its bid range was fairly valued (before the recent grant).

      Yet Brookfield only has voting control over half of its position. The rest gives the company economic exposure to Inter Pipeline through securities known as total return swaps, but it is different from direct ownership. Brookfield declined to comment for this story.

      Should the grant result in a higher bid from Brookfield, it may appear that shareholders are benefiting at taxpayers’ expense. Asked about the timing, the Alberta government said Inter Pipeline’s initial application was made last November and added that the program application focuses on the project itself and does not take ownership into consideration.

      “All projects that meet the eligibility criteria will be eligible for funding under [the Alberta Petrochemicals Incentive Program], regardless of any specific ownership or shareholder situations,” Dale Nally, Alberta’s associate minister of natural gas, wrote in a statement to The Globe and Mail.

      Brookfield originally approached Inter Pipeline’s board about a full takeover last fall but was ultimately rebuffed. Frustrated, Brookfield went public with its intentions in February.

      Brookfield’s formal takeover bid is worth $16.50 a share. At this price, the 80-per-cent position it does not currently own is worth $5.7-billion, and Brookfield is willing to pay a maximum cash consideration of approximately $4.9-billion, with the remainder in shares. The offer values all of Inter Pipeline, including Brookfield’s stake, at $7.1-billion.

      Inter Pipeline’s board originally said very little after the bid was made public, but the directors have since adopted a new approach and launched a strategic review of the company.

      The Heartland facility will convert propane into polypropylene plastic pellets used for scores of products, including children’s toys. Last May, Inter Pipeline disclosed that its construction cost had jumped by half-a-billion dollars to $4-billion. The ready date was also pushed out, and Heartland is now expected to be fully operational in 2022.

      Projects like Heartland fit squarely into Alberta’s new grant program, which is designed to encourage building petrochemical facilities in the province. Alberta has ample supply of natural gas, and propane is a by-product of natural gas production. However, natural gas prices have suffered from growing North American supply over the past decade as technological progress made it much easier for producers to tap vast quantities of shale gas in the United States.

  56. EML.PRA called, a 5.75% issue that would have reset around 6%. since the five year shot up at this reset time. Another drip, another cut, death by Bula-bula.
    Say a prayer if it soothes one. This has been a brutal week of slaughter at the hands of special private, emboldened interests here and in Canadia. What’s the REAL end game and for whom? Pertinent question.
    I suppose non-voting common stock is all that is going to be left? Everything at risk? Capital Gains mined on the Big Rock Candy Mountian?
    Holding down rates artificially is NOT helping middle of the road citizens in ‘free’ countries retain their stability or a balanced social contract. This is NOT some aimless political statement, but our current accurate situation amplifying now into clarity.

    1. EML.PR.A call was a simple case. No reason for a BBB issuer to pay a 6% coupon when the going rate is probably 4 and a half. No great conspiracy here.

      One is unlikely to see many bank or insurance company new issue from Canada owing to ability to issue fake debt. Preferred are a shrinking business in Canada, which is something that should keep prices up over time.

      1. What rates would you get on lending your money to a company if rates were not managed? Eventually, the hand forms to the hammer.

    2. Joel – you could take a look at Cdn Convertible Debentures as another option – appx 100 plus trading on TSX (eg. Cargo Jet 5.25% debenture – CJT.db.d) I have a number of them along with pref shares. They took a real nose dive last year (especially the energy ones) but have all now recovered back to near par and in mean time kept paying good interest. Would have made some nice capital gains if I bought more last spring but was too nervous.

              1. Will read. Overall, less in fixed income is going to “retail” (exchange traded) and even in the institutional market more is going to 144A issues. Significance is that 144A issues can’t be traded by individuals, even at IBKR.

                The retail market is shrinking and the quality is going down! One of the reasons I suggest that individual investors get acquainted with the institutional market.

                1. Bob;

                  Where would I find information on institutional issues? I always enjoy researching new information, just not sure where to start on this topic.

                  Thanks.

                  Mike Havel

                1. Dang, that is crazy, it is now pay walled on my end too. It wasnt when I read it, sorry about that. In summary it was 74% of all high yield bonds are now 144a. 30 years ago it was less than 1%. It basically said what you have, retail investors get the crap offerings. And now small institutional firms cant even get a sniff either of them either. They gave an examples like Carnival Cruise (or one of the big name cruise liners) who offered during early Covid an 11% secured asset bond. It was high yield but little chance of default because assets secured it. Good deals like that where big institutions would gobble those offerings up. It implied it was just going to keep getting worse unless some intervention occurs to make offerings more accessible to public.

                  1. Retail investors are being squeezed out of the high-yield bond market
                    The SEC should reform 144A regulation to prevent Wall Street streaking further ahead
                    ELLEN CARR Add to myFT

                    The secured bond is the best deck chair on a cruise ship — yet it’s the only one you can’t sit in © Jorge Delgado/Reuters

                    Ellen Carr SEPTEMBER 15 2020

                    The writer is a bond portfolio manager at Weaver Barksdale

                    Every pandemic has a silver lining. For high-yield bond investors, one upside of stressed credit markets is attractive new issuance.

                    Many companies have tapped the market for investor-friendly rescue financing. Bankers have priced deals at concessional rates, which have resulted in equity-like returns for those brave enough to buy. A three-year, first lien bond from Carnival Cruise Lines in April, for example, was priced at $99 with an 11.5 per cent coupon. It’s now trading at $112. Even paying $112, an investor would lock in 6 per cent through April 2023 for a security with almost zero loss potential thanks to its collateral protection.

                    But there’s a problem. You cannot buy CCL’s bond, because it is a private placement. Individuals can’t purchase these bonds, also known as 144As after the Securities and Exchange Commission rule that relaxed disclosure for bonds marketed to “sophisticated” investors. Only “qualified institutional buyers” can. QIBs must have at least $100m of assets under management, so even some institutions are excluded.

                    According to JP Morgan, 72 per cent of new high-yield issuance in 2020 is 144A. You might think this share dates back to the Liar’s Poker era of frenzied bond sales in the 1980s. But, as recently as 2005, private placements were only 1 per cent of the high-yield market. To reach the largest pools of debt capital, issuers had to register their bonds with the SEC, or document their intention to do so within a specified period.

                    Today 144As “for life” are 48 per cent of the market and they are likely to continue their growth as companies replace registered debt with 144A issuance. Take Tenet, a hospital company that relies on the high-yield market for much of its financing. It has five registered bonds maturing in 2025 or earlier, but only one of its six bonds with a maturity longer than five years is registered. Tenet’s treasurer, like many others, no longer needs investors like you.

                    This might not seem like a big deal. Shouldn’t individuals leave high-yield debt investing to professionals in light of its higher risk? I am a professional investor, so of course my answer to that question is yes. But here’s the wrinkle: 144A securities are sometimes at pole position in the capital structure.

                    The secured bond is the best deck chair on the Carnival cruise ship — yet it’s the only one you can’t sit in. You’ll find several offerings of CCL unsecured debt available for purchase in your Schwab brokerage account, along with its common stock. You can load up the boat with the riskiest CCL securities, but its safest investment is off limits to you.

                    Should CCL file for bankruptcy, the QIBs who bought the secured bonds will be treated like first-class passengers, rowing for safety in their collateralised life rafts, while the steerage-class unsecured bondholders fight over the company’s shipwrecked remains.

                    This phenomenon in high yield bucks a larger trend aimed at making investments more accessible to individuals. The SEC recently relaxed the accredited investor definition to permit a wider group of individuals to invest in “private capital markets”, including private equity but not 144A bonds. The recent boom in Spacs — a backdoor vehicle for initial public offerings with lower disclosure requirements — has swept up individuals, despite risks to retail investors.

                    It is obvious who benefits from increasing 144A issuance: large high-yield managers. Fund structures are becoming the only way for individuals, and small institutional investors, to invest in high-yield bonds. The SEC should reform 144A regulation to prevent Wall Street from streaking further ahead in this important corner of the capital markets. Why not let individuals invest in private placement bonds? If they’re allowed to sit in the equity deck chair, they should have the chance to upgrade to the 144A cabin.

                    Weaver Barksdale may hold interests in companies mentioned

                    This is using a different app from outline or save to pocket

              2. I have been on the 144A crusade for a decade or more. Truth is you can buy all the 144A issues you want – through a fund. Several 144A funds are almost entirely 144A issues or other issues that individuals can’t buy. Just pay the Piper, and they are safe. It’s a Government-mandated shakedown.

                No sense in that. The SEC is decades behind on securities regulation. It’s almost like the Internet never happened.

                1. There have been a few 144A issues that have sneaked through for public trading such as CBKLP and CBKPP which are now caught in No Man’s land regarding ability to trade once you own them… As I remember some of the brokerage houses that allowed you to buy these CoBank issues now won’t allow you to sell…. I own both and haven’t been interested in selling but I do remember some old discussion on here where there now seems to be no way out…… Anyone tried testing this by attempting to sell?

  57. Cnd preferred ….

    Mins and resets remain close to all time highs. As Peter says below, follow ZPF (EFT) to get a one ticker sense of the market. A number of issues have been called, something that would have been unthinkable not long ago.

    I would not put new money into the market now. Why take 3% on Sun Life or 5% on Enbridge? If anything I would be a buyer of common.

    Personally, I find decisions on sell/hold trickier. I have big cap gains and big currency gains (measured in US$) but I don’t feel compelled to sell and I don’t have offsetting cap losses to cushion the taxes. So, I hold.

    I did, however, in something of a violation of personal policy, hedge out a substantial amount of currency “risk” through currency futures.

    This from the perspective of a US domicile, buy/hold investor, with a big appetite for international diversification. This may not be you.

    1. Would agree with your thinking Bob (but of course the reverse approach for myself as CDN investor). CAD$ dipped down to about 70 cents last March with fears in market and collapse in oil but now around 80 cents which tends to be the upper limit. CDN economists are forecasting our dollar to start declining again as we continue to lag rest of world in vaccinations and uptick in covid rates across the country.

    2. Agree – they are no longer a screaming buy, but relative to what you can find in the FI-like universe, can. Prefs are still cheap. I’m a dane (with a long history as a Fixed income PM), and I had almost 45 pct. of my net worth in can. Reset prefs a month ago. Of course that was aggressive, but having lived with negative rates for 7 yrs, you know how desparate investors will get searching for yield. That will not change. Most min. resets still offer value at par – same thing with dated/retractables @4-4,5 pct. (best credits that is)

    3. Yes, an interesting situation. The bulk of my holdings go long-term in early May through June. I’ve resolved to harvest some capital gains on holdings that are up 50% or more and/or have a current yield below 5%, which is 18 out of 24 holdings; not cashing out but recouping original investment dollars. Nothing goes up forever. I’ll end up parking it in cash but it seems the best course.

  58. Congrats to everyone, that held on to or bought Canadian prefs since march – it sounds kind of crazy, but ZPR (ETF with resets) have outperformed SPY and is very close to QQQ. Most just extrapolated the last 10years of performance instead of looking at valuation and fundamentals….Now everybody is looking for “rate-up” protection and “Value” names. Maybe it’s time to take some chip of the table….

    1. ChinChin! The problem is reinvestment risk, making a string of correct decisions in a row! Yield on ZPR went below 5% a couple weeks ago. The flipping game is great when rates are down and promised to be put-down by govt. Monetization has begun and now in Ring 3 for your entertainment: Inflation. There will be breathers there too. All eyes are moving there. Above pars may go, those HSE>CVEs have been a dream!

      1. I obviously agree with Joel about the importance of inflation expectations and believe that there is more room to growth, especially for the rate-resets. I’m not a buyer at these levels, but sure I will try to keep about 15% of my portfolio in these issues. Apparently no way for me to push the sell button.
        Just see nothing to buy instead of my current holdings, everything in the market looks too expensive to me.

    2. Here is an article in today’s Globe & Mail from investment columnist regarding CDN floating rate prefs for some ideas (note: symbols are the CDN TSX) :

      Rob Carrick: These preferred shares are right at home in a rising rate world
      ROB CARRICKPERSONAL FINANCE COLUMNIST
      PUBLISHED MARCH 30, 2021
      UPDATED 1 HOUR AGO
      The forward momentum in the stock market is so strong that even preferred shares are rising with gusto.

      But there’s one corner of the preferred market that could still be undervalued – floating rate preferreds. If interest rates rise as expected in the years ahead, these floating rate shares would be especially appealing.

      Most preferred shares these days are of the rate reset variety, where the dividend is reset every five years to adjust for changes in the yield on the five-year Government of Canada bond. Floating rate preferreds typically have their dividend rate adjusted every quarter, or even monthly in the case of some BCE Inc. shares. The reference rate for setting the dividend is either the average prime rate at selected big banks or the 90-day treasury bill rate. Investors may get 100 per cent of these rates, or a portion of it.

      The longtime lameness of preferreds is captured well in the annualized 10-year total return to Feb. 28 for the S&P/TSX Preferred Share Index – just 2.4 per cent. But things have changed over the past 12 months, with the index surging 17.4 per cent. Bank and Insurance as well as regular rate reset preferreds have led the charge, and floating rate preferreds have risen as well. Still, these shares typically traded in late March at levels below their $25 issue price.

      John Nagel, preferred share specialist at Leede Jones Gable, says these floating rate preferreds may actually be more suited than some fixed rate resets to the rising interest rate environment widely expected for the years ahead. “I’d much rather have something that adjusts quarterly or monthly than I would every five years,” he said.

      Here’s an example of a floating rate preferred share issue Mr. Nagel likes right now – Brookfield Asset Management Inc. Series 2 (BAM-PR-B-T ), with a yield is 3.67 per cent based on the current prime rate of 2.45 per cent and a share price of $11.68. If prime rises to 2.95 per cent, the implied yield based on today’s share price rises to 4.42 per cent; another increase of a further 0.25 of a percentage point in prime takes the implied yield to 5.17 per cent. The formula for these is 70 per cent of average prime based on a $25 par value.

      Another example is BCE Inc. Series AB (BCE-PR-B-T) where the dividend is reset monthly using a ratcheting formula that gives shareholders a minimum of 50 per cent of prime and a maximum of 100 per cent, depending whether the shares trade just below or just above the par value of $25 (a lower price means you get more of the prime rate). BCE.PR.B now pays 100 per cent of prime and will do so until it trades over $25. The shares traded in late March around $16.05 which gave them a current yield of 3.8 per cent.

      Some other floating rate preferred issues Mr. Nagel likes include

      Fairfax Financial Series F (FFH-PR-F)
      Brookfield Asset Management Series 13 (BAM-PR-K)
      Cenovus Energy Inc. Series 2 (CVE-PR-B)
      TC Energy Corp. Series 2 (TRP-PR-F-T)
      Brookfield Renewable Partners LP Series 2 (BRF-PR-B-T)
      All of these shares have current yields that range between 3 and 4 per cent, and have traded at prices much below their $25 issue price in recent days. If interest rates turn lower because of disappointing economic news, expect these shares to drop in price. If rates go up as expected, Mr. Nagel says you’d very likely get both higher dividends and a corresponding increase in your share price.

      While floating rates have moved higher in price over the past year, Mr. Nagel thinks there’s more to come. “I don’t think anyone’s gotten excited about them yet.”

  59. TCANF – There was discussion recently on III about buying AFINO because it has a long first coupon and will show as yielding over 8% instead of its actual 7.375% coupon yield when it first goes x-div. That got me thinking of the potential for the reverse effect to potentially happen on resets such as TCANF which actually did reset on Jan 30… When TCANF goes x-div later this month, it will have a rate of 1.949% (as confirmed by TC) for the next 5 years, down from 2.263%. Given the 5 year is up from approx .41% to 1.03% now since January and rising, that might come to a shock to holders… So after owning a small 1k amount for over a year and experiencing the volatility it had been thru, I decided to get aggressive and sell this morning at 11.06 average… What the heck, it looks great on paper with TCANF showing as being up 30%+ on the day, and at this level I think current is only about 4.30% or so. It’s been an interesting experiment that turned out fine with a 22% gain… I did manage also to do a couple of trades during that time taking advantage of both buyers and sellers who mixed up translations between USD and CDN prices, but I never did jump into CDNs asI thought I might other than this one (thanks for the ride, Grid!) and EBGEF/EBBNF. I’m sticking with EBGEF.

    1. speaking of pipeline companies — Interesting development overnight with Interpipeline ((IPPLF) the chairman has retired (age 75) amidst the takeover battle with BAM . Still holding onto my shares as take over price even if raised to $18.25 (CDN) too low

  60. Mr Yuriy and others,
    Do you understand via a simple formula the Floaters that have the 50% to 100% variable in the monthly rate calculation?
    I have just spent a half hour with BAM-E as a model and on BAM’s webpage where the term is defined in words. Easy navigation: Using the link on your page then the pdf for Pref E.
    I’m good with math and of course can look it up on TSX, but I can not rationalize why these floaters have moved up so far when Prime has NOT moved at all. Can’t rationalize the 50 – 100% clause. Trying to see what the underlying factor driving these is. May come to US soon too?
    Could it be the conversion feature to the five year reset ‘dragging’ it higher?
    Signed, Perplexed, but usually pretty good at math. JA
    You may want to ignore this small universe, I would understand, but I had found good plow ground looking deeply into the splits and retractables.

    1. “I can not rationalize why these floaters have moved up so far when Prime has NOT moved at all. ”

      Expectations for Prime to move higher in the future. Market has priced in several Fed rate hikes by 2025 and BoC usually follows the Fed, or could actually lead the Fed if energy prices go higher.

    2. Floaters are either tied to 5yr GOC or prime rate. My favourites are the monthly payers two bce issues and the one bam issues.

      Have only bought them at the 10yr lows when everyone thinks yields are going to zero.

  61. TRP.PR..J to be called. Would this be considered a surprise? I just happened to notice because I own a small amount of TCANF.
    https://www.sec.gov/Archives/edgar/data/1232384/000123238421000031/exhibit991tcehybridredempt.htm

    TC Energy announces closing of $500 million subordinated notes offering by TransCanada Trust

    CALGARY, Alberta – March 4, 2021 – News Release – TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced that TransCanada Trust (the Trust), a wholly-owned financing trust subsidiary of TransCanada PipeLines Limited (TCPL), has closed an offering of $500 million of 4.20% subordinated Trust Notes, Series 2021-A due March 4, 2081 (Trust Notes), guaranteed on a subordinated basis by TCPL. The Trust Notes were offered through a syndicate of underwriters, co-led by BMO Capital Markets and Scotiabank, under the Trust’s short form base shelf prospectus dated February 26, 2021, as supplemented by a prospectus supplement dated March 1, 2021.

    The Company intends to use the proceeds to redeem its issued and outstanding Cumulative Redeemable Minimum Rate Reset First Preferred Shares, Series 13 (TSX:TRP.PR.J) pursuant to their terms, and pending such redemption, to reduce short-term indebtedness as well as for general corporate purposes.

    1. Sad but expected. This is one of the min rate issues that issuers have a strong incentive to be rid of. 5.5% MINIMUM (no upside limit) for an IG issue.

  62. More news from Canadia:
    Brookfield obviously pursuing their hostile takeover of IPL.
    Got Tender Offer letter and vote by email this AM.
    NO…go away…pursue a position on the board if that make sense to your management expertise or maybe a minority partner in Heartland. Fantastic. Step up.
    The robber is usually someone in your own neighborhood.

    1. I’ve owned IPL for a very long time and what a disaster it has been. Finally starting to see some light at the end of the tunnel. No reason for IPL to accept this offer now that Heartland is close to being finished. I would not be surprised if IPL finds another partner or sells out in a bidding war. I’ll be delighted to come out with a small loss or, if I’m lucky, break even.

  63. Here’s a CN common traded on US exchange (yes there are preferred too): PBA. IG, rock steady history of MONTHLY payouts, more entrenched in some ways than ENB, options selling available on US exchanges, at a low still, management that is TOUGH and experienced.
    Minimally, worth a put sell for a return on short term cash with very high expectation of expiration or a roll out, but get no divys. I bot common and will sell OTM calls instead. Take me out…please.
    Tee up that DD, that Ye See!

  64. Look at that bond yield jump! Wow, one helluva percentage one day move. Got one reset based on end of Feb, but like everything…got a few days to go…

  65. As a reply to MA in Sandbox on 2-20:
    MA: If you are going to research Canadians here is a link to Yuriy’s Sheets on Fixed Preferreds there, where he has included the five retractable issues labeled there. Three are IG.
    Also, research these four issues which are found on this sheet too: BPS, PR A,B,C,U. They are older (past call where there was company only retraction) hence, gone past the date where holders can now retract at par with a short notice to the company. They are not labeled as retractables on his sheet.
    Yuriy’s glorious and generous work here also links over to the prospectuses! ZAM! https://docs.google.com/spreadsheets/d/1nJTjD1H3PKvqcuntO7hL3rwI2p5-7AIBa5bplxKky-U/edit#gid=0
    If you get into it, he has produced sheets for Resets, Floats and a all inclusive comprehensive sheets too.
    I am still wondering where the fine print is buried in the ‘ACCEPT ALL TERMS’ for Yuriy’s fee? Just kidding. It has helped me ALOT!

  66. Fidelity has classified all of my 2020 Canadian preferred stock dividends as ordinary income and none of them as qualified dividend income. Based on IRS holding period rules at least a good percentage of my dividends should have qualified! I moved my accounts from Schwab to Fidelity having heard from others here that they did it right. I am very puzzled by this situation given feedback on this issue last March/April.

    Interested in hearing how others succeeded in getting this fixed for themselves! Appreciate any help anyone has to offer. I hate the idea of moving these accounts again!

    1. Tim – I cannot address the Fidelity question because I don’t have an account. I have 4 US brokerages and I have held Canadian and other foreign (“F” suffix) issues in all 4. The results as far as Canadian preferred go:

      Vanguard won’t let you buy many Canadian preferred (maybe about a third of those with OTC tickers) but once you own them they classify the dividends correctly 100% of the time.

      TDA will let you buy darn near anything and they classify dividends correctly but they didn’t do right by me with a Canadian issue that was redeemed, charging me a $50 fee and skimming about 1% on the exchange rate. I had the same issue redeemed out of 3 accounts and no other brokerage pulled this one me. So I’m done with TDA except for a few issues that only they will trade.

      Schwab misclassifies 100% of the dividends and deliberately so, so your chances of getting them to correct the classification is zero. I’ve been done with Schwab for some time.

      IBKR get the classification right without fail. But you have to buy off the TSX (an advantage to me) as they won’t trade any OTC issues with an “F”.

      If I was constrained to buying OTC I would go with Vanguard and live with the limited issue selection. Otherwise, IBKR is the clear choice, especially if you have a significant commitment to Canadian preferred. Just remember to exchange your US$ for CA$ before you buy or else you are taking out CA$ margin loans every time you use US$ to buy CA$ denominated issues. Currency exchange on the IBKR platform takes about 5 seconds once you have it figured out. If you are buying the US$ denominated ENB issues you can do that with US$.

  67. ENB offering $500 Mil US denominated Senior Floating Rate Notes due 2023 NOT to be sold to Canadians… Will be SOFR + 40 basis pts… interestingly it will pay quarterly like a baby bond but funny thing is on a quick scan, I don’t see where they mention what par will actually be… it’s gotta be there somewhere and I’m betting 1k but I don’t see it spelled out. Proceeds to refinance existing indebtedness of the Corporation or its subsidiaries and for general corp purposes. I also noticed they are rated BBB+ by Fitch – don’t know about the other majors.

    https://www.sec.gov/Archives/edgar/data/880285/000110465921024859/tm216594d1_424b2.htm#a_008

        1. Very punny, good laugh! Reminiscent of the old financial shows on PBS in the 70s and 80s when people used ‘Lampoons’.
          ENB has more offerings to consider. I am not an insurance or annuity company with short term annual IG cash set-aside liabilities to compute. I am terminal. That feat is getting more and more interesting (in a Chinese meaning).
          Suppose the Am market looked ripe for this sort of issuance.

    1. ENB new notes …..

      I wasn’t going to mention them but since you did …… these are short term notes, investment grade, at SOFR + 40. SOFR is 6 bps now so a coupon of 46 bps. No bottom stop on SOFR so coupon could, in theory, go to zero. Or negative. Do you mail ENB a check each month or do they take it off the principle? Not sure.

      These are notes, not preferred, so “par” not relevant. They are $1,000 face notes. Non exchange traded.

      Much better places for short term cash for the individual investor. For long term, I’ll take ENB common at 8%.

      1. Bob – I certainly agree there are better places for short term cash for individuals but thought it was relevant ENB chose to issue $500mil US floaters denominated with terms such as these at this time. Seems pretty opportunistic of them…
        However, I don’t understand you saying , “so ‘par’ not relevant” because ‘these are notes…. Of course it’s relevant, yes? As long as they’re callable, and these are callable, or as long as they have a maturity date, and these do, “par” is most definitely relevant. If you put an order in for 100, it sure need to know if you’re buying $100,000 or $2500 and you don’t know the answer if you don’t know what par is. Mysteriously, it seemed difficult to easily figure out from a quick looksee at the language what par is but as mentioned, I thought it had to be 1k as well….. For that matter, technically speaking, its “par” that’s not relevant for a preferred, not a note, isn’t it? Preferreda have “liquididation preferences” not “par.” Am I misunderstanding you? All no more than semantics actually I guess, but still…

        1. Question of proper terminology. They have no “Par” value. They are not equities. They are notes. They have a principal amount. No redemption except for tax event and then you get principal + accrued. No make whole.

          1. Bob, I have to take the other side of the fence here based on my understandings. Its the opposite. Bonds have a par value, as that is the redemption price.
            Preferreds are the ones that the word “par” is totally misused and misunderstood. Par is only a book value accounting term for preferreds. It has basically no meaning to a preferred buyer. This is the where “redemption price” comes in. Preferreds have a “par”, “redemption”, “issue price”, and “liquidation value”. Most times the above 4 are not the same.
            Most preferreds today are issued with a $0.01 or $0.00 par value.. Some old preferreds were issued at $100 and have an official $100 par value, but redemption price wasnt always par either. Many have redemption prices several dollars higher. But liquidation value would not be the same as redemption value either.

              1. Lol, Tim, yes the term has “morphed” into a total unrelated meaning. Most of the time its understood in its intentions but words can have meaning. I generally use it, too, but try if Im not lazy at that moment to wrap quotations around the word though.
                Take MNR-C… Par value is $0.01….Liquidation and Redemption price is $25.
                Take NSARO.. Par value is $100 …Liquidation is $100…Redemption price is $102.80

                1. Grid: What’s the difference between Liquidation and Redemption in this context? I had been using them synonymously and from your exchange above I clearly am wrong.

                  1. Scooting around how the language might change officially were you talking about a bond vs a preferred, I think what Grid’s saying is that not all preferreds (or bonds) a callable (aka redeemable) only at 100% of their liquidation preference amount (par amount) … Some are callable always at a premium such as NSARO while others might be first callable at a premium and eventually find themselves callable at the liquidation preference amount after a given period of time… Ignoring for the sake of this post that it’s a note, not a preferred, the first examples of sliding scale “redemption” prices that come to my mind are many of the Rily issues such as RILYH that begin as being redeemable at 25.75 then eventually decline to 25. Simple stuff I’m sure you already know..

                  2. Bur, I dont think 2WR, hit your question on what you meant. Redemption value is when the company publicly announces they are terminating the preferred at the contractually agreed upon price.
                    Liquidation value is when the company ceases to be an operating entity and closes up shop and sells everything off. Notice this is not meaning being acquired by another company.
                    Liquidation value could also in bankruptcy. I wouldnt hold my breath getting liquidation value in a bankruptcy event. Usually in this situation a thanks for playing pat on the back is most likely than any proceeds.

                    1. The whole issue of nomenclature needs addressing at some point. “Par” should be abandoned as a term.

                      To pick an nit, one should speak of “liquidation preference” not value with preferred. LP is relevant on almost every single preferred as the dividend paid is a stated percentage of the LP (not redemption price, not “par”). Common language from prospectus ….

                      “Dividends on the Series C Preferred Stock, when, as and if declared by our board of directors or a duly authorized committee of the board, will accrue and be payable on the liquidation preference amount of $25.00 per share …”

                      LP in the context of liquidation is rarely relevant. If a company does liquidate there is rarely anything for the preferred.

                      These days, most preferred have the same redemption price as liquidation preference. But many exceptions, especially among older issues. Often, the redemption price declines with time. Almost all Canadian fixed rate preferred are structured this way. As always, read the prospectus. I generally go to the FWPs rather than the 424s linked in QO as they are a much faster read.

                    2. I grok (I think):

                      – ‘Liquidation preference’ is a price set in the prospectus (it’s what many of us mean when we use the term ‘par’). The dividend is expressed as a percentage of this price.
                      – ‘Redemption price’ is what’s actually paid when the issue is called (redeemed). It may or may not equal the liquidation preference, due to further terms set in the prospectus.
                      – And if the company ever had to liquidate, ‘Liquidation price’ (price, not preference) would be what the company would pay when they liquidated the issue (if indeed they paid anything at all).

                      ?

                    3. Bur, I wont debate your knowledge! :). There is an entire underworld of misspeaks we all do in terms of terminology. Its more academic as long as we misspeak in same language, Technically I dont remember off hand seeing a preferred with an “issue price” just the liquidation preference.. As most are shoveled out at different prices anyways.
                      MLP K-1 preferreds dont issue dividends, they distribute “distributions”. All sorts of lingo like that…And dont think the brokerages are up to snuff completely either. Anytime I go hunting in my account to see if interest payments showed up, more times than not with my brokerages its not in the “interest” section where it should be, but in the dividend section.
                      For us, yes Bob, par is not a relevant or correctly used word. But accounting wise for the balance sheet Par MUST be used. Some states regulatory require a par value in the financials. Some allow $0.00, but some (last time I read anyways) require some value, thus companies choose a penny to minimize possible issues and potential litigation stemming from a higher par value.
                      One can see some unusual par values over time. For example Hecla Mining has its common and its convertible preferred as $0.25 par values.
                      Ameren has its par value at the more typical penny. But they own all the common stock of both Ameren MO and Ameren Ill. The former has a $5 par value while the latter has a zero par value.
                      The use of par and researching it several years ago was interesting, but irrelevant.

                    4. Bur – no such thing as liquidation price. In liquidation you are guaranteed NOTHING. You get in line behind all proceeding claims and when they get to your tranche you get a pro rata share of remaining assets based on LP. That could be 100 cents on the dollar, nothing or any number in between. As a practical matter, in most liquidation scenarios, the preferred get little if anything. If you have to actually look at and consider LP you are probably buying one of HDO’s recommended securities and should reconsider. Really.

                      Redemption price (or amount) is exactly as you state.

                      Liquidation preference is set in the prospectus and the dividend is usually expressed as a percent of LP, correct. LP is often often called “par” which it should not be. Despite being the most commonly used term for both preferred and bonds the term “par” is problematic as it leads to misunderstandings.

  68. I had posted my thoughts regarding IPL/BIP yesterday. I mentioned that the responsible and wider governance in Canada is reflected into corporate, even if it is just a polite and business like procedure while being steamrolled:
    Hi Joel,
    Thank you for your email and feedback. It will be passed along directly to our Management team and Board of Directors, who are committed to acting in the best interest of Inter Pipeline and all of its shareholders. Please note that Inter Pipeline did release a news release this morning that can be found on our website at the following link: https://www.interpipeline.com/news/news-releases.cfm?newsReleaseAction=view&releaseId=1376
    At this stage, the Board has concluded that accepting and recommending Brookfield’s confidential and conditional proposals would not be in the best interest of shareholders:
    Inter Pipeline is open to engaging with shareholders and others to explore opportunities to create value and the Board gives due consideration to any credible proposals for the Company. The Board is reminding shareholders that no formal offer has been made by Brookfield, and as such there is no need for shareholders to take action at this time. When a formal offer is made, it will be reviewed by the Board with its legal and financial advisors, and a formal recommendation by the Board will be made to shareholders in due course.