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.
True North, TNT.UN, getting hit pretty hard today. Anyone know the reason? Thank you, 287.
Dividend cut in half
https://canadianpreferredshares.ca/
I posted this in the wrong section
RE: SVB
America’s second largest export: Financial Crises.
I hope Canada and Canadians take note. Scale matters, the size of financial institutions matter, concentration in an industry where a few well capitalized banks dominate is not a bad thing and that Crypto, Fintech illusionary banks and regulators as always, asleep at the wheel are a danger to all of us.
Picked up TRP below $40 for 6.7% yield. Held in 401k to avoid 15% tax withholding.
MFC ‘low rate floater” debs off CORRA (CA overnight repo rate, currently 4.5%)..
https://www.prnewswire.com/news-releases/manulife-announces-subordinated-debenture-issue-301765051.html
Instead of refi at 6.34%/par, IAF.PR.C will be redeemed. High IG, now to try to find a replacement.
These shares could have been bot YESTERDAY at CN$ 23.80/6.6 yield at the new reset. The new coupon would have been 33.19% higher for the next five years.
I had accumulated in lots since 2020, up to 7-22-22, actually averaging UP.
I like situations where there is a win no matter what.
I think opps lurk with the Am Resets too, esp if we go into a pivot at some point. That can help the Loonie too.
HSBC Canada 5.1% 12 month GIC special until the end of March. Its curious that Canadian interest rates seem to be more reactive to US inflation numbers and how often Jerome Powell clears his throat then to the BOC.
AQN receives a stable assessment from DBRS REGARDLESS of any purchase from AEP of KY utility. Good news. DBRS Morningstar views this acquisition as a positive development from a business risk perspective…
Sentiment may overhang though.
https://prefblog.com/?p=44815
BOC Day today. I’d love to see a 50bps hike and a strong anti-inflation statement to go along with it. But mostly, I’m hoping for a 5%+ 5 year GIC from a major bank.
Though 25bps seems more likely unfortunately.
hubert financial has a two year gic 5.25 cost you 5 dollars to join the credit union very easy to setup online been with them 10 years always have good rates
Is anyone in $EBBNF in their Roth/Trad IRA or 401k with FIDELITY (FIDELITY)
who has had them correctly not withhold anything from the dividend on it??? They are usually pretty good about proper tax w/h on CA issues but wanted to be sure. Thank you Bea
Read on the internet yesterday couple things. Canadian Imperial bank lost judgement in NY court against Cerberus Capitol
https://www.reuters.com/legal/cibc-ordered-pay-848-mln-damages-cerberus-will-appeal-2023-01-04/
With the raise in Dec by Canada’s banking regulator of reserves that banks are required to have another Canadian bank has issued a stock sale to bolster their reserves. CIBC said at this time they are not doing the same.
Hope this doesn’t become an issue with banks due to their real estate market and higher rates. Would hope it doesn’t spread south of border.
Just woke out of a yield induced coma. All 10 handle floaters. Am I insane or is the world broken.
TSE:CVE-B
TSE:TRP-H
TSE:BPO-W
TSE:ALA-B
TSE:BRF-B
TSE:TRP-F
TSE:BPO-Y
TSE:BPO-X
TSE:TRP-I
BN.PF.K (Brookfield Asset) – Updated Redemption value of $22.50 due to new issuance under share transition.
monthly paying Floater with a yield north of 9%.
NPI.PR.C To Be Redeemed on January 3, 2023
can someone double check my math.
IFC.PR.A will reset to 4.841% on Dec 31. Meaning 1.21025 dividend payment.
Last traded price $16.80 = 7.2% yield for AA- rated company till 2027.
Must be all the tears on my glassing fogging them up.
I’m holding this pref so would be nice if price stays the same this week. I’ve attached a site which has a number of CDN pref shares from larger issuers. I’m no expert but checking your other post with the high yielders the first 4 that I checked are all based on 3 month rate not 5 yr rate on reset. So maybe current high yield is due to likelihood of yield going down before next reset? Just a thought.
https://canadianpreferredshares.ca/
Smart money thinks in the next 3 months the central bankers will pump the brakes. floaters will cause capital losses for client accounts.
Math correct! Reset 12-27 (just reset). 5yr+1.72, 4.841% currently for five more years = $1.21
I started tranching in 1-20 again, 2-20 (part of my original ladder) and finally 6-22 (at $19.51! in anticipation of this high IG getting called, was wrong on that, but…) average cost = $15.47 The low numbers made it good patient trade. Could sell that last 300 tranche for loss and retain the others.
Good model for flexible planning AND maybe a mis-step along the way.
Get paid to sit on the tracks and wait for the trend train!
wishing all the followers on the Canadian Content site a wonderful Christmas and much better things in 2023. I really appreciate all the info provided by everyone on CDN stocks/bonds etc.
SW Ontario got the ‘weather bomb’ around 3 am and has been snowing since so definitely will be a very white Christmas here. Been out shoveling for exercise as my normal 2 hr bike ride won’t be happening for a few days.
the old Yield Hunter site was my intro to CA stocks..miss that as there are a lot of opp’s in CA always..
thanx for your posts. I still dabble in and out..currently long MRC.TO w basis under 80US..big disc to realistic market NAV and some miners. None of the pfds or resets tho I see the attraction. Morguard a ‘keeper’ for me.
2belowF here in Pittsburgh..wind is crazy..so far so good on the power my biggest concern w mom at 89 here at home. She is a nervous wreck w the wind howling..my CA friends are in SE FL for holidays..they will be the ones in summer clothes while the locals have coats on I am sure! Best to all our Canadian friends!
For Canadian investors –FYI — this message came up when I signed into my brokerage account this morning and could certainly impact CDN holding US partnerships in 2023. Brookfield is trying to get exempted for non-US investors. It impacted me as I own Icahn Enterprises (IEP) which I sold this morning to avoid 10% withholding tax. I’m going to check with my brokerage firm re: W9 being on file
Changes to Withholding Tax on Publicly Traded Partnerships (PTPs)
As a result of recent U.S. legislation, effective January 1, 2023, gross proceeds from the sale of and distributions from PTPs held by non-US tax residents (accounts which do not file W9 declarations) may be subject to 10% U.S. withholding tax.
Here is the impact to you if you hold a PTP position that has income effectively connected with a U.S. trade or business: If you sell the PTP after December 31, 2022, there will be a 10% withholding tax applied to the gross proceeds from the sale. Further details about this rule can be found on the IRS site this link,.
Impacted PTPs can typically be identified if:
They withhold 37% on distributions (21% on distributions to corporations) or
They report income in Box 1 of their K-1 reporting slip this link, or
They are on a list of American PTPs this link, and
They do not publish a declaration on their tax info web page that they are exempt from withholding on dispositions.
Brookfield Infrastructure Partners this link,, Brookfield Renewable Partners this link, and Brookfield Business Partners this link, have published an FAQ on their websites, stating they do not expect non-US investors to be subject to US withholding tax under IRC section 1446(f) on the disposition of their units. More information is available on their
Brookfield, BAM, changes symbol to BN beginning Mon.
Also, Let’s all root for the Loonie if the USD goes into the crapper at some point in ’23 with some panic rate reversal!
checked my BAM out on my account this afternoon all hell has broke loose, but i’ll set tight. every time brookfield pulls these stunts I make money.
If any here held Bam check your accounts I won’t bore anyone with details but as usual Edward Jones got everything screwed up. alerted my local office first thing this morning
Gotta reenter your orders. BN is the new symbol.
PS: IMHO, avoid Jones.
Looks like this ticker change affects at least one of their preferred issues as well: my position in BAMI at E*TRADE is now showing zero and volume for BAMI is show as zero beginning Monday this week. Anyone know what the new ticker is?
Bur, BAMI is Brookfield FINANCE. Prob staying with BAM?
Disclosure: I did actually NO work whatsoever and just guessed (then I posted it all over social media).
‘then posted it all over social media’ … lol
The position went to zero, then re-emerged as ‘BNJ’ yesterday.
I decided to pick up a final 5 year 5% GIC before the BOC’s meeting on Thursday. I’m pretty sure that at minimum we’ll get another 50bps hike but I’m less certain about what their forward guidance will be and if the December hike will take “big bank” GICs above 5%.
Any thoughts?
Human nature is funny Richard. When rates were basically zero I kept thinking if I could get a 5% low risk fixed income product I could liquidate all my higher risk equities or lower quality bonds and with the 5% I could generate the annual cashflow I need to fund our retirement. The capital would remain relatively intact for passing on to our kids and grandkids. Now that I can get 5% GICs (big FI or smaller FI not worried with $100K CDIC coverage) I’m looking at companies like ENB, CM , BCE all paying around 6% dividends and not likely to cut them and now thinking – hmmm- 6% plus chance for longer term capital gains do I really want to lock in at 5%?? Like I said – human nature is funny
Very funny….I had both the same thought and same reaction. But I would say, if all my Corporate Bonds, US Preferreds and Canadian Rate Resets suddenly hit par again and GICs were still paying 5%. I would liquidate at least 30% of my investment holdings. As of yesterday the 10 year GIC at RBC was paying 4.75%. That’s what I’d pile into. No risk/Reasonably High Return has been my post-2008 financial crises dream for a long time.
I hear you Richard. I retired end of 2016 and after going thru 2008 I thought I had positioned myself well with pref shares and convertible debentures being a fair portion of my overall holdings. The 2020 covid crash was brutal to everything I had not just the common dividend paying stocks. Luckily it all recovered by 2021 but I too have been loading up on GIC’s & IG bonds the past 6 months (learned my lesson)
You mentioned BCE which I also hold. I have one of their rate resets and their common stock. Below is a quote from a Yahoo Finance article about the sustainability of their dividend. I know utilities and big telecom often have metrics that differ from other industries and Telus which I think has a pretty solid balance sheet, has a dividend payout ratio of 91%. But I was still kind of surprised at the BCE numbers.
“ BCE paid out 118% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year, it paid out dividends equivalent to 236% of what it generated in free cash flow, a disturbingly high percentage”
Sometimes I wonder which has a greater downside, having a government entity as a majority stockholder; Hydro One. Or a Teachers Union?
Any comments on EBBNF …. recent reset to $1.4644 …. last at $19.66
Resets off the 5yr Tsy , next reset Sept 2027.
Thanks for input.
Jim
I have a position in EBBNF and am holding on to it. I’ve had it for a while in a taxable account and have a significant capital gain.
I suggest looking at EBBGF or ENB.PR.V on the TMX. It’s the Series 1 preferred and will be resetting early next year. The terms are very similar to EBBNF and you’ll get a bump with next year’s reset. I’m guessing the yield will go from 6.6 to ~7.5 But DYODD.
https://money.tmx.com/en/quote/ENB.PR.V
Don’t forget ENBA…. It will start floating (not a 5 year reset off of 5 yr US Trreas, but a quarterly float off of 3 Month Libor) beginning 4/15. What’s interesting now is 3 month Libor is so much higher than 5 yr Treas, (4.73% v 3.74%) and the Plus number is higher on ENBA (+3.593 v 3.14) as well…. you do have to pay up for ENBA (24.20 v 22.24) but if both reset today, ENBA would be 8.323% coupon and EBBGF would be 6.88%. So current yield on ENBA at today’s prices would be 8.59% v 7.73% on EBBGF. Hopefully I didn’t mix up my numbers somewhere along the line here…….
2WH
Great point (and I’m long both of them).
Seems like it’s a bet on the forward curve, and I use this graph for my guesses.
https://www.chathamfinancial.com/technology/us-forward-curves
Dusting off this thread….
For US holders of EBBGF – are there any issues with them being considered “illiquid” ? It trades OTC. I don’t know if it’s meeting reporting requirements that might trigger an issue. Thanks in advance.
Proto
Wouldn’t expect the Enbridge preferreds to go to the Expert market.
As the prefereds trade in Canada, I suggest tracking their real price on the TMX at this link. It’s easy to create a watchlist here.
https://money.tmx.com/en/watchlist/349707
Early Christmas:
The first of a trio of Resets, NPI.C will be reset instead of rolling for another five years at 6.57%. Jumped from $23 to $25.19 on the news. Why did everybody wait?
Two more coming this week:
BAM.Z still at 21.15 NOW! I’ll bet on a reset too at my cost of around 1.66/21.15=7.2% What?! IG.
IFC.A strill at $17.64 NOW! If reset will be near 6.9%, but lets hope for a call from this highly rated company.
Three coming at end of Feb: MFC.J, PPL.F (end Jan) and IAF.I. I dare you to find ANYTHING like this quality in the US not protected and slurped up by Private Greed Hounds.
Do you know where I could find a list of Canadian stocks and TSE symbols with corresponding OTC symbols? Thanks.
well.. for the heck of it I did a search and came up with one! lol. so here is what I found.. not sure how accurate seems ok.. you can actually sort by symbol or name by clicking onto the header of each column too.. https://stockmarketmba.com/canadiancompaniesthattradeotc.php
Bea
It doesnt appear to show the CAD preferreds. I never do anything easy, but I have to use the OTC preferred stock screener under Canada only. And then type in the actual preferred series name into google search engine and it generates the actual CAD ticker with present price.
IFC.PR.A reset at 4.841% on par = CN$1.21. Not called, Boohoo.
I began buying the bulk at low prices in Jan and Feb ’20 and added at $19.51 as the reset got close this last June. Bad timing! Price today = CN$17.76.
Still, my average price on three lots = CN$15.47 or now a 7.82% lock for five years, (this IS an NVCC too). Without the June ’22 add on lot my yield would have been 8.5%.
Moral of the story with these resets for me is buy when the PRICE for these IGs are right and just collect the div = 6.0% since early 2020. Lean into a reversion to the mean by way of a ladder over time. It’s too hard to be a fortune teller. Even with the miscue buy this June my AVERAGE price was good. The US market is starting to get a number of good prospect FRRs too with some resets coming up in 2024.
I prefer this sort of patient game and setting up a win-win-win situation, even if I get in my own way a bit, THAT is inevitable.
In theory, I could cherry pick that last 300 lot in June and sell that lot for a short term loss, or the early ones for a long term gain. I’ll see price action tomorrow AM. By the way, tax lot designation is very easy to do at IBKR after the trade and before T+3 settlement, just go in and designate which shares after the trade executes.
Next up BAM.PR. Z, BAM.PF.J, CM.S, PPL.PF.E(betting on a call here, jumped $0.46 today).
Attached below is article from yesterday’s Globe & Mail – Globe interviewed the #1 advisor from recent poll who indicated he is seeing rate resets as the best opportunity right now for his clients. He can use his independence to look for the best opportunity for his clients which is exactly what we are trying to do too.
Mr. LePoidevin has been recognized as the No.1 advisor in The Globe and Mail and SHOOK Research’s second annual Canada’s Top Wealth Advisors ranking.
Globe Advisor recently spoke to Mr. LePoidevin about his current investment strategy and some of the qualities he believes make a good advisor.
What’s your investing strategy at the moment?
Our most exciting trade right now is the reset, fixed-floating preferred shares, which we’re buying at an average price of about 60 cents on the dollar.
The dividends were reset about three years ago when rates were 0.5 per cent. The five-year is above 3.5 per cent, so the dividend increases are stunning. Not enough people are doing the math, but you can buy something that looks like it’s unattractive today, but in two years, you’re going to have a yield that might be approaching 9 or 10 per cent.
Opp in near term resets? Check these out, a Thanksgiving side dish for you:
PPL.PR.O already reset and trading LOWER. yield around 7.4% for five years! We’ll see whee it is trading tom morn.
Other near term resets: The IGs: BAM.PR.Z, NPI.PR.C, IAF.PR.C, IFC.PR.A, for you pink sheet fans, ENB.PR.V (USD) resets 6-23, while you’re there look over D and F resets in 2023.
NonIG: Ax.PR.E.
Don’t know why people still do not get what resets mean by watching their actions. I sit and wait like a bishop for the late game.
Even the Canadians who follow this stuff are talking about the investor disconnect. So it makes one question their own actions…okay!
Happy Hunting and TG in Canadialand!
Joel, Im stretching the time out to August next year reset, so I am gambling a bit here. But I have been small ball chasing down the Fortis Series G reset.
https://money.tmx.com/en/quote/FTS.PR.G
Under the banner FTRSF OTC, chased 400 more today down to $12.03 ish and $11.98 USD. Thats about 6.6% present, and 8.62% if one wanted to dream of reset at present 5 year CAD yield.
This is the company if one hasnt heard of it.
https://www.fortisinc.com/our-companies
A pitiful 2.13% adjustment but well below par price mitigates that to a degree. And of course its a bit of a playof King Dollar receding at some point down the road.
Grid, Likewise, I own 690 FTS.PR.G in anticipation.
Not related to Canadian Issues:
Dipped into your Impalco Bond lead too after doing my own dd, of course.
Interesting study and practical experience to work an account of laddered type bonds in this climate where so many coupons are so low. The cashflow will be minimal until maturity. At least prices are sub-par, some at crater levels compared to even 6 months ago. Staying with the curve of 2-4 year on the hump on this build out of a ladder. At some point SOMETHING will happen on other maturities. Maybe a slow approach that the Fed could consider over time may even the risk-playing field for Joe Investor.
Joel, probably 6 months ago, I pulled the reigns back on many issues. Started toeing in very short duration up to 2 years. Good thing as I was early, ha. But I have my love floaters and resets. And since the future is unknowable I have been attacking more the long end lately. And likely too early also! But I bought a little more of my A1 senior secured Union Electric 2039 bond at 6.31% this morning. It was 160 earlier this year and bought around 121.
Hi Gridbird, though I own a fair number of Rate Resets I tend not to pay much attention to them anymore. I own FTS.PR.F and FTS.PR.J but not G. I was just on Prefblog and it looks like the current reset rate is 4.393% ( 5 year Canadian Govt Bond Yield + 2.13%). Current price $CAD 16.59. I’d buy them on the TSX. I’m curious, is this more of an income play or a capital gains play for you?
I have some $CAD in my US Brokerage account and thought about buying more BCE until I saw your post.
Richard, Seems like you have an interest. Do you have the link to Yuriy’s Canadian Preferred Sheets in Google docs? It has been a god send to me.
Also, the rationale for ME is screened this way:
– Stay IG and high IG, always collect a decent div while you wait.
– As the general insight, I have seen by price action is that investors look directly at CURRENT YIELD and do NOT do much imputing of the potential reset value until two dividends before the reset so about 5-8 months, watching Grid’s FTS.PR.G will be a good test of this. Only buy below par. If it gets called okay, collect a few divs and cash out with a CG, in the case of PPL it was about 10+% on my cost basis. Create a win (divs)-win (potential CG) -win (long term hold). Once you buy, and buy right, you should not have to do much but watch the circus unfold.
– In this market the prices have stayed depressed and price action has not been true, look at the recent PPL.PR.O reset, higher yield but an even with a 32% increase of div to 7+% from 5.2%, the price went DOWN after the announcement., it’s at CN$19.92 today. Last I looked it is still hanging there. So price action is keeping resets OFF the radar of most lookers. DYODD.
– IF I am willing to wait and see, then I allow the decision to make itself after the reset announcement since the Central Bankers are in attack mode and the reset can move rapidly, up or down within that 5-8 month window.
– I always have a worst case and that is simple: If it is IG and the reset is puny say only a basic bump say 5.2% to 6.2% (20% jump), “Am I willing to stay and just collect the income?” THAT is what I am really after since retiring. I can spend or reallocate the divs as I watch the landscape.
Let me know if you want the link to the sheets I mentioned above.
All Ways the Best! JA
Hi Joel….yes I’d like to get that link to Yuriy’s Canadian Preferred Sheets. I’ve only used prefblog and prefinfo.com as resources on resets. I’m still a novice but a bit smarter then I used to be and have learned to focus on the reset rate not the current yield.
With both GIC and brokered CD rates so high now or should I say finally returning to normal, most of my attention and investments have been focused there. With the CPI numbers out today I suspect that absent any signs of major weakness in the labor market we could have 5% GICs and CDs before the end of the year.
Richard: Take time and absorb these, good fun, , verify the details, save as Google Docs: The prices and change % update thru a feed, pay attention to color coding too. You’ll get it.
– Resets Five year:
https://docs.google.com/spreadsheets/d/1UB3TVsCo_bPDD4tkYu88tQxEO1KrybbY429PoObEYS0/edit#gid=0
– Fixed:
https://docs.google.com/spreadsheets/d/1nJTjD1H3PKvqcuntO7hL3rwI2p5-7AIBa5bplxKky-U/edit#gid=0
– Fix to Float Three month:
https://docs.google.com/spreadsheets/d/11vDz_swj2Z8-VQjl7nKgnlSRURz3k8Y8YLqCDMwC-II/edit#gid=0
They are not updated with new issues of which there have been few,
The resets may not be current either, but just look at the reset dates. It’s easy to go to the company’s site or first div, three months after reset. Pay attention to tabs at the bottom too.
FYI — am now able to find a number of BBB rated bonds from 18 months+ onward all paying over 5%. Took advantage of this with some $$ just made available from redemption of BIR pref shares.
Just got a very interesting written reply from TD (below) regarding the foreign security fees on the OTC. It differs from what we’ve thought and makes me think we can continue to invest in Canadian securities on their site.
Thank you for writing to TD Ameritrade. My name is Isela and I’ll be happy to assist you today!
Great question! The increased foreign security fee only applies to non-Canadian foreign securities on the U.S. OTC markets.
Note there are no changes to fees or commissions on the following:
Any security listed on a U.S. exchange: Remains at $0
ADRs listed on a U.S. exchange: Remains at $0
Domestic OTCs: Remains at $6.95
Canadian securities: Remains at $6.95
Not quite sure what to make of this, but Farifax is having a tender for just about every thing.. https://seekingalpha.com/news/3886685-fairfax-financial-to-commence-normal-course-issuer-bid?mailingid=29196478&messageid=2900&serial=29196478.598&source=email_2900&utm_campaign=rta-stock-news&utm_content=link-3&utm_medium=email&utm_source=seeking_alpha&utm_term=29196478.598
I think it includes all quantumonline listed issues
Having an issue with TD today with a perpetual from Brookfield Environmental (BEP).
I have a position in BEP.PR.G a/k/a BRENF in the OTC market and they zeroed out my value.
Hard to believe that the T in TD stands for Toronto….
Greg,
I was just notified TDA will charge an additional $44 commission on foreign stock trades as of Nov 3. This is in addition to its $6.95 commission.
Dang George, I guess I wont be dabbling in Canadian OTC soon. Just been lately reestablishing positions in the Fortis Series F and G lately.
Grid,
I’m looking at adding to Enbridge Series 5 (EBGEF) which resets in March of next year at a spread of the US 5 year plus 2.82. Looks like I have a short window of time to pull the trigger.
FWIW, the security has an attractive yield, at today’s 5 year, the coupon yield is 8.13%.
8% from an outfit like Enbridge would be a pretty sweet yield isnt it Greg. I had one of those US yield resets that jumped over $2 bucks earlier this summer when market bounced it on a sister ENB preferred call notice, and then I sold over $24. Im just playing around on the side with a longer term “King Dollar” anti trade being CAD has dropped so much against it. Mostly have more of the fixed 4.9% par series as its yield crept up to 6.2% so I bought a nice little slug for me.
for CEO news past few days — Enbridge CEO announced his retirement today which will be effective end of the year. New CEO looks like a very good fit to carry on success of Enbridge. Last week the Bank of Nova Scotia retired and new CEO (already on the board) is not being well received. Was CEO for Finning which is an equipment dealer and company definitely underperformed under his decade of leadership. Globe and Mail has lots of coverage on both
Greg – A couple of problems here: EBGEF won’t reset until 3/1/24 I believe so not next year… Also if it reset today it would be 5 yr Treas of 3.88 approx. +2.82 or 6.70% coupon.. So by coupon yield you mean the current yield at today’s price of 20.50, yes?
2WH
Yes, I was thinking of the coupon yield at today’s price and not the par or liquidation price.
Your math on the date is correct (and mine is not). The original date was 2019, and that means a reset in 2024 not 2023 as I hoped.
I’m not quite sure what to make of it, but just using last prices on the US markets, not checking tsx.com, it’s interesting to see how EBGEF, EBBGF and EBBNF all seem to fall in line on a current yield perspective…. EBBNF already reset on 9/1 @ 5 Yr UST +3.15 and now has a coupon of 5.8579% (a reminder of just how fast interest rates rose since then). At trade today of 19.72 its current = 7.42%, EBBGF has coupon of 5.949% and will be next to reset on 6/1/23 @ 5Yr UST + 3.14. At 22.53 it has a current yield now of 6.66% but if it reset today, its coupon would be 7.02% and its current would be 7.79%. EBGEF currently has 5.3753% coupon and the 3/1/24 reset date. At 20.50 EBGEF has a current yield of 6.55% now but if it reset today its coupon would be 6.70% and its current yield would be 8.17%. I’m not quite sure what this says, but which one do you think is the most attractive??? Good arguments could be made for each one I suppose. I’m long EBGEF and EBBGF, but I think maybe EBGEF is the least attractive of the 3 right now..
2WH
I’m long EBBNF and EBGEF currently. I also have a position in the common (ENB).
I was hopeful for a higher coupon with the recent EBBNF reset but the 5 year yield dropped just as the reset happened. The position is in my after tax account and has a significant capital gain, so I’ll just continue to hold it and collect the 7.4% QDI.
The EBGEF position is in an IRA and with the new pricing from TD I feel like I need to make a decision on my holding very soon. Given the helpful information you provided above, I’m thinking of swapping (at least some) of the EBGEF for EBBGF as I like that the reset happens a year earlier (and at a higher spread) than EBGEF.
This is a great site.
I’ve been slowly moving money out of TDA since they don’t pay competitive rates for idle cash or sweep accounts. If the ENB preferreds are going to be subject to $44 addiitonal, I may just try to transfer those out without liquidating.. Trouble is my only other account is Fidelity and they won’t allow trading on any of them anyway…. I’ve got an empty account at ETrade… Maybe this will give me a reason to revisit them and see what’s new…. I own EBGEF in a jtwros account, not IRA
2WR, May have this wrong, but didn’t Joel’s post indicate the charge applies to “non-Canadian” foreign issues?
alpha – yes it looks as though the charge is designed to NOT impact any Canadian issues be they OTC or not…. I had to stop and read it carefully to figure that out, but I didn’t the first time…. eyes aren’t as they should be, and maybe brain too.
2wr, haha. On some level I’m sure you’re speaking for all of us!
Strang day on my canadiain equities all are up between 2-5 % today?
George
Saw that news and have asked for clarification on their definition of ‘foreign’ stock trades. I guess it will impact the OTC trades of securities o the TMX (like Enbridge Series L (EBBNF)) but am unsure about ADR’s on the big board (like Telefonica (TEF)).
I will post their response here when I get it.
Very dumb move on their part.
Will not apply to big board securities, only OTC.
Received internal message in TD Am account conveying the same information – as of Nov 3 foreign security pricing will be increasing to $44 +$6.95.
Note that $44 fee is now shown under “Exception Fees” tab at:
https://www.tdameritrade.com/pricing/brokerage-fees.html
Called TD Am; rep reached out to others to find out specifics.
According to info relayed to TD Rep:
– fee is only applicable to “sale transactions” of OTC foreign symbols
– stems from Schwab
Best regards, Green-n-Gold
The Schwab takeover of TD stinks.
TC Energy vs Enbridge. I own Rate Resets of both but common stock of neither. Have been very reluctant to touch anything in Energy with two of the Three Stooges in power, Biden and Trudeau. Both companies seem to have their share of political problems in both the US and Canada. I’m not sure which common stock is the best investment in terms of long term support for their share price and safety of their dividend? Any thoughts?
Richard
I’m happily long ENB and I think it’s the better choice between the two you’ve mentioned. I suggest checking out their web site for the presentations as they have some great expansions in their future.
Mention Pembina, common pays monthly.
All three trade on US Exchange.
PPL.PR.O and MFC.PR.I being reset. 6.17% and 6.16%.
Here’s the crux of the interest rate arbitrage: Both offer convertibility at the same reset amount;
-one on 5yrGOC fixed, five years
-other on 3moGOC, adjust every divy pmt for five years.
My choice answers the question and speaks about my demeanor as an investor. Should I speculate on short term rate spikes which everyone expects to go on forever AND do I know that the prices will follow the spike if I convert to the 3 mo?
OR do I stick with the increase of 38% in the divy for 5 years and chalk it up to automatic inflation adjustment?
Looking in the mirror for myself.
Go with the 5yrGOC sure bet vs gambling on future rate hikes.
In Gambling the only winner is the house.
Any guesses on what the BOC will do on Sept 8th? And whether that will get us across the line to 5% GICs from the major banks?
If you are gold leaf customer (Age 57+) you can already receive 5% GIC rates on 5yr term @ Canadian Western Bank. https://www.cwbank.com/en/investing/gic-rates
CDIC insurance coverage is more critical. Not all GIC are guaranteed up to ($100,000) per institution. So you will need to spread the stash around if you are a high roller.
Have already rolled the majority of my GIC stash to 1yr monthly paying @ 4%. Expecting next years rates to be spicy.
Richard – from my recent readings of Globe and Mail articles can comment on a couple items. CIBC Economics latest read on BOC is another 75 bps increase and that’s it for quite a while. Certainly the increases so far this year have brought the real estate market to a standstill. With regards to 5% GICs we may have seen the peak in GIC rates as they are funded from mortgages and the longer term mortgage (bond rates) may have peaked as a recession is a likely scenario which would leak to a gradual drop in interest rates. Of course this is just the current reading of economic data and can change with new data. Not sure who said it but love the quote “economists make sheep look like rugged individualists”
Recent CN Pref actions:
ALA.PR.U a USD denominated issue that I believe was on the US OTC called.
BIR.PR.A , oil/gas issue called.
CPX.PR.I called.
MFC.PR.I very good IG, reset at 5.978 an increase of div from 1.09 > 1.49 annually or +36%.
The market get thinner and thinner as the privateers slurp up the public float.
Conversions to Float Series are meager and not worth it compared to a new fixed rate.
Comment: A very orderly and slower moving concept for fixed income strategy, BUT…if the REAL RATES for inflation we in the REAL world….
yes pickings are getting slimmer and slimmer Birchcliff also has a series C they are redeeming (along with the A’s). Only good thing is the common which I also hold are really well with all their surplus cashflow. Similar situation for most Cdn small to mid cap oil and gas companies
Much like CDs in the US since the Fed’s July 27th meeting, GIC rates in Canada seem to have plateaued out or taken a pause for the moment. The next Fed meeting is Sept. 21 and Bank of Canada Sept. 7th. As far as the US Fed Funds rate, its predicting a pause or rate cut by mid 2023. If the Market really takes that seriously in spite of the pushback by Fed officials, CD rates in the US have peaked….as counter intuitive as that sounds.
Any thoughts out there on trying to hit peak rates before things slam into reverse? My focus is 5 year durations and non-callable.
Richard, Just about all of us could answer your question with great conviction about what we think SHOULD happen with rates; maybe even when it will occur. However, sincerity, good intentions, intelligently-worded prognostications, models, trend lines and latest news blurb from some “inside” quant are simply no match for the randomness of the stock market, the wider economic market, the domestic and international news cycle etc. None of these tools of prediction are directly correlated with what WILL happen on a recurring basis. We’ve seen this over and over and over – even from the very many fabulous people on these pages over the years.
Just a suggestion worth about a penny…don’t try to time the market. Instead, set your buy parameters, establish your bids then execute them spread over a period of time which works with your personal calendar. Counter-intuitively, if the preferred/fixed-income market shows price weakness/higher yields, celebrate and buy more. Further weakness, buy more again. You’ll be averaging down/increasing yield the whole way. My absolute best buys in preferreds, equities, real estate or other assets over the years have ALWAYS (that’s 100%) been when the exit doors are jammed. The April-June market swoon was one such opportunity. Bought small add-on amounts every single day. I mean – they were the best returns we’d seen in years. Heck even bought piles of the much frowned-upon PSA preferreds. They’re up near 15% in 60 days and carry an A3 rating.
Another penny’s worth (that’s 2 cents total): Ignore the news, stick with investment grade (the risk/reward curve evidences that higher risk means lower return over time), start right-away (today) and remember none of knows with certainty what will happen tomorrow much less next quarter or next year.
Best wishes.
Thanks…I totally agree with everything you said….Canada has already exceeded my expectations with 4.5% GICs. I would have never guessed that they would be ahead of not just the US Banks but New Zealand, Australia and China. Its trying to see through the fog of mass media monotony in the US that has me tied in knots. But as you suggest even if one could see through that, there might be nothing to actually see.
What used to be useable/actionable news has been so degraded it borders on tragic, whether its the destroyed WSJ, the nothing but opinionated Bloomberg News and TV and the once wonderful Financial Times.
EBBNF NOT being called – https://finance.yahoo.com/news/enbridge-provides-notice-series-l-220000602.html
Enbridge Provides Notice of Series L Preferred Shares Conversion Right and Announces Reset Dividend Rates
CALGARY, AB, Aug. 2, 2022 /PRNewswire/ – Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge or the Company) announced today that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series L (Series L Shares) (TSX: ENB.PF.U) on September 1, 2022. As a result, subject to certain conditions, the holders of the Series L Shares have the right to convert all or part of their Series L Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series M of Enbridge (Series M Shares) on September 1, 2022. Holders who do not exercise their right to convert their Series L Shares into Series M Shares will retain their Series L Shares.
The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series L Shares outstanding after September 1, 2022, then all remaining Series L Shares will automatically be converted into Series M Shares on a one-for-one basis on September 1, 2022; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series M Shares outstanding after September 1, 2022, no Series L Shares will be converted into Series M Shares. There are currently 16,000,000 Series L Shares outstanding.
With respect to any Series L Shares that remain outstanding after September 1, 2022, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series L Shares for the five-year period commencing on September 1, 2022 to, but excluding, September 1, 2027 will be 5.85790 percent, being equal to the five-year United States Government treasury bond yield of 2.70790 percent determined as of today plus 3.15 percent in accordance with the terms of the Series L Shares.
2WH
Thanks for keeping us posted on EBBNF.
Looks like ENB was able to target this to the recent drop in the 5 year interest rate. Looking over the past month, it’s been as low as 2.7 and as high as 3.5
Greg:
Somewhat torn between the conversion, as I will be getting a 6.5% yield on my EBBNF holding for the next 5 years based on my average cost for the position, even after ENB “cherry-picked” the 2.7079% rate for the reset.
Might be able to boost my yield even further if sellers show up that were in EBBNF only for the potential redemption at month-end (which has now crashed and burned).
I assume you plan on not converting due to your low cost basis on EBBNF? If enough holders convert (93.75%), looks like we won’t have a choice.
Thanks!
Rob
I’m going to hang on to EBBNF for a while. It’s in an after tax account and I have a large LT capital gain ($10 per share) and 6+% is pretty good for a high quality issue.
The reset did its job, an increase of about 17% in income. Goes to show: getting the trend right and buy price matters! For me, it becomes a slow game. I think the Reset rate securities are truly hybrid securities.
Greg below, Enbridge got LUCKY with the drop in USGov5 over the last six weeks, maybe there is a trend that can be seen five years in advance? I’ve never been able to see the trend, but it may have gotten called IF it had been higher? Some internal cashflow guru at ENB is earning his pay nonetheless.
PS: for anyone using Yuriy’s CN Pref Sheets, the US denominated Enbridge Reset rate securities have the Month/Day info inverted. Minutia. IT’s ALWAYS the last few entries! Use the Issue column to link to the prospectus. How handy!
EBBNF – Enbridge has up until Aug 2nd or 3rd to announce whether or not they will call EBBNF on 9/1 rather than reset… Last quarter, On 5/4/22, ENB announced a call instead of choosing to reset SERIES J on 6/1/22 that had identical reset terms of + 3.15 over the 5 year US Treas as EBBNF. I’m not sure what exact day the next reset coupon would be determined but the 5 year was at 2.90% on day of announcement on Ser J, so right now with 5 year at 2.85% it’s touch and go whether the conditions for reset will be better or worse than when they chose to call in May… Mr. Market seems to be unsure what to expect with EBBNF closing at 23.71 on tsx.com as ENB.PF.U (last trade as EBBNF on Wed at 24.10). but if they call, it should be a nice quick 1 point plus jump up in price.. If it reset today, EBBNF would be @ 6% and I would suspect EBBNF would drop in price slightly, so EBBNF seems to be set up for a “Do you feel lucky, Punk?” kind of a week. Next in line for reset with almost identical terms would be EBBGF which will reset June 2023.
2WH
Thanks for the post.
I’m long both EBBNF and EBGEF and was thinking that the decision was a month later. I’ve been long both names for years (thanks Bob in DE) and have a large gain at these prices.
While I’m expecting them to be called, I’m OK if they are not as the payments are quite secure.
I’ve still got EBGEF thanks to Bob as well and recently took a small flyer on EBBGF which seems to be out of line low imho…. As opposed to EBBNF’s 4.96% coupon which will reset to 5 year Treas + 3.15 on 9/1/22 if not called, EBBGF already has a 5.949% coupon and will adjust to 5 year Treas + 3.14% beginning 6/1/23, yet its last trade on tsx.com was $23 vs EBBNF’s $23.71 So EBBGF has a considerably higher current yield now than EBBNF with almost identical terms for resetting only 9 months later….EBGEF resets another 6 months later than EBBGF. So what’s to happen regarding future calls will boil down to ENB’s view of future interest rate levels longer term and whether or not that view has changed from May when they announced the call on Ser J. .
I do miss Bob in DE (sigh) — Just my luck I’m holding on US side ENBA which is basically flat but at least my CDN ENB pref is up as well as the common
ENB just declared their quarterly dividends on all their 9/1 due preferreds – https://finance.yahoo.com/news/enbridge-declares-quarterly-dividends-213000432.html including EBBNF Ser L….. Last quarter, they made the declaration on May 4 and simultaneously made an announcement calling Ser. J….. I see no second announcemnt for L right now… Don’t know if that means for sure they’ve decided not to call.. They still have a few days left to decide before the window closes for 5 years…
2WR:
Question – why does ENB only have a few days to decide on whether to call EBBNF? Can they not wait right up until the reset day of 9/1/22 and then give 30 days notice with the final preferred dividend at the higher rate?
Based on today’s 5-year Treasury yield of 2.85%, interest costs on EBBNF for ENB would jump to $2.4M per year from $1.983M – or $417K per year. $2.1M more in payments over the next 5 years. They would be foolish not to redeem it if they have the available funds ($400 million USD)?
If the Fed does a surprise interest rate hike in August, ENB’s interest costs might really shoot higher on this thing.
The call feature on their resets is a little bit different than a normal preferred…It is not continuously callable after the specified date – it is callable on a single day every 5 years…. That day is 9/1 of this year. They have to give a minimum of 30 days advanced notice if they’re to call, so that means they would have to give notice by no later than PROBABLY 8/2, though it could be 8/3 depending on how they figure..
2WR:
Understood…ENB published the following in their 3/31/22 10Q:
“On May 2, 2022, we notified holders of our outstanding Cumulative Redeemable Preference Shares, Series J (Series J Shares) (TSX: ENB.PR.U) of our intention to redeem all US$200 million outstanding Series J Shares on June 1, 2022.”
EBBNF is twice the size of that $200M issue. Maybe that is the issue here for them. ENB had $413 million of cash on their balance sheet as of 3/31/22, but they have close to $5 Billion available on their various credit facilities, including $1.5 Billion on their US-based line.
There has been a 30 basis point drop in the 5-year Treasury yield in the last month, so I can see why they are wavering a bit. But they are still rolling the dice here if rates shoot up between now and 9/1/22. The original dividend on EBBNF was only $.25/quarter for the first 5 years.
I’m actually hoping they don’t call it, as I have too much cash to put to work already. UMH+C was my second largest position. Shed a tear when that one was redeemed today as that was a tough good-bye.
Greg, Usually the announcement is 30 days before the reset (final x-div date for the last period of the term), keep an eye on the parent’s site for announcement from Board.
Once Again Canada shows the way. And of course is totally ignored by US Media.
“The Bank of Canada hiked interest rates by a full percentage point, a surprise move that supercharges efforts to withdraw stimulus amid fears four-decade-high inflation is becoming entrenched.
Governor Tiff Macklem raised the central bank’s policy rate to 2.5 per cent in a decision announced Wednesday in Ottawa that warned of more hikes to come. The 100-basis-point move is the largest increase since 1998. Markets and economists were anticipating 75 basis points.”
Was in Canadian Western Bank today. Took a look at the posted GIC. Posted 5yr 5% monthly paying on offer for us 57 and over crowd.
https://www.cwbank.com/en/investing/gic-rates
Was deeply tempted but would have to unwind all my 1yr/2yr recent GIC lockups.
Re GICs: Please be aware that the issuers of GICs are managing an investment pool. GICs are not segregated into a ‘hold to maturity’ which pays off that pool. The good thing is that the NVCC rules in Canada prob protect the GIC, but try to get an answer from a regulator!
The investment pool will be managed to throw off capital gains and income spread…in other words you have to trust the manager to skim gains and incremental income from some OTHER investment instrument SOMEWHERE. That’s the same thing a self managed account tries to do, but keep it all. That’s why I always refer to my accounts as My Personal Annuity. Think like those external managers. Here’s an example since we are on a sharing investment site: GWO.PR.Y, nine years of call coverage, step down in 2025 beginning at CN$26, 4.5 coupon, currently being thrown away at under CN$19, yield = 6%, very high IG.
Just another idea! Happy Investing.
Joel – completely agree the investment manager will not be offering higher GIC rates without maintaining a spread.
Spicier GIC offerings from Alterna Bank / EQ Bank / Oaken Financial (Home Trust Company) that are tier 2/3 mortgage lenders are available.
and with CDIC (ie. Govt) insurance covering $100K from any member bank even more reason to go for the highest rate possible. My bank discount brokerage service just raised their 1 yr (cashable after 30 day) GIC rate to 3% from 2% this week so rolling over all my cashable GIC’s . Will just keep rolling them up as rates continue to rise this year
I had to read in Canadian news about the Forward Party which has consolidated other parties into the third largest. WHY would THAT be broadcast in the US?