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.
Yield? What can do well in this environment? Some ideas, good safety.
– BN.PF.B? (CN)
– TRP.PR.D? (CN), lower on the recent spin-off news which is inconsequential.
– FBRT-E Yes it is STILL a preferred with a large divy on the common, been trending well. Great management.
– BHK, an leveraged ETF holding duration long for an interest rate reversion. Use a Stop?
SAJ, 8% short term notes, BBB/BBB+
– AIC still below par on a 1.5 year note.
– XFLT-A still below par on a 6.25 coupon, short term, one of the best coverages of a CEF
– BEPH at 7.4 yield, a perp
Diggin’ and scrounging, now I’m doin’ the chicken scratch…JA
Below is pasted from my spreadsheet which is difficult to read but basically the Preferreds are sorted lowest to highest yield as of Aug 2, 2023:
Canada 5 Year 8/2/2023 = 403
Data has the following headings
“Ticker Price Current Annual Dividend Cash Yield Until Reset Date
Reset Date Reset Spread (bps) Current 5-year yield BPS Cash Yield at Reset Date Using Current 5- Year Yield % Weighted based on reset date Factor prior + After/2 Effective Reset Spread Notes
CM.Q 18.10 0.59 3.25% 31-Jul-25 279 403.00 9.42% 7.67% 6.34% 5.39%
GWO.N 12.50 0.44 3.50% 31-Dec-25 130 403.00 10.66% 8.34% 7.08% 6.63%
FTS.H 12.99 0.46 3.53% 1-Jun-25 145 403.00 10.55% 8.68% 7.04% 6.52%
PWF.PR.P 12.67 0.50 3.94% No reset 3.94% 3.94% Perpetual
TRP.B 10.59 0.42 4.00% 30-Jun-25 128 403.00 12.54% 10.19% 8.27% 8.51%
BMO.Y 17.97 0.76 4.25% 24-Aug-25 271 403.00 9.38% 7.89% 6.81% 5.35%
SLF.G 13.02 0.57 4.37% 1-Jul-24 141 403.00 10.45% 9.52% 7.41% 6.42%
TRP.C 11.10 0.49 4.39% 30-Jan-26 154 403.00 12.55% 9.84% 8.47% 8.52%
SLF.H 15.20 0.71 4.67% 30-Sep-26 217 403.00 10.20% 8.06% 7.43% 6.17%
BCE.m 14.94 0.73 4.92% 31-Mar-26 209 403.00 10.24% 8.40% 7.58% 6.21%
CU.I 22.37 1.13 5.03% 1-Dec-25 369 403.00 8.63% 7.49% 6.83% 4.60% Floor 4.5%
CM.O 18.15 0.93 5.12% 31-Jul-24 232 403.00 8.75% 8.15% 6.93% 4.72%
ffh.g-t 14.20 0.74 5.21% 30-Sep-25 256 403.00 11.60% 9.68% 8.41% 7.57%
TRP.G 15.88 0.84 5.28% 28-Nov-25 296 403.00 11.00% 9.19% 8.14% 6.97%
BN.PF.G 15.39 0.81 5.29% 30-Jun-25 284 403.00 11.16% 9.55% 8.22% 7.13%
bmo.s-t 18.19 0.96 5.29% 25-May-24 233 403.00 8.74% 8.27% 7.02% 4.71%
TD.PF.K 22.33 1.19 5.32% 31-Oct-23 259 403.00 7.41% 7.32% 6.36% 3.38%
CM.Y 24.15 1.29 5.33% 31-Jul-24 362 403.00 7.92% 7.49% 6.63% 3.89%
MFC.L 17.50 0.95 5.41% 19-Jun-24 216 403.00 8.84% 8.34% 7.13% 4.81%
FFH.I 15.35 0.83 5.42% 31-Dec-25 285 403.00 11.21% 9.33% 8.31% 7.18%
PWF.PR.T 19.00 1.05 5.55% 31-Jan-24 237 403.00 8.42% 8.17% 6.98% 4.39%
MFC.K 19.85 1.10 5.56% 19-Sep-23 222 403.00 7.87% 7.82% 6.72% 3.84%
RY.N 21.99 1.23 5.57% 24-Nov-25 225 403.00 7.14% 6.65% 6.36% 3.11%
NA.S 18.03 1.01 5.58% 15-May-24 240 403.00 8.92% 8.47% 7.25% 4.89%
BMO.E 21.64 1.21 5.60% 25-Nov-23 268 403.00 7.75% 7.63% 6.68% 3.72%
BMO.W 17.08 0.96 5.64% 25-Nov-24 222 403.00 9.15% 8.42% 7.39% 5.12%
MFC.M 16.85 0.95 5.64% 19-Dec-24 255 403.00 9.76% 8.88% 7.70% 5.73%
CM.T 22.95 1.30 5.66% 30-Apr-24 331 403.00 8.00% 7.70% 6.83% 3.97%
NA.W 16.89 0.96 5.68% 25-Feb-25 225 403.00 9.30% 8.44% 7.49% 5.27%
EMA.C 20.73 1.18 5.69% 15-Aug-23 265 403.00 8.06% 8.05% 6.88% 4.03%
CM.P 17.09 0.98 5.72% 31-Jan-25 224 403.00 9.17% 8.38% 7.44% 5.14%
fts.g-t 19.19 1.10 5.72% 1-Sep-23 213 403.00 8.03% 8.00% 6.87% 4.00%
fts.g-t 19.19 1.10 5.72% 1-Sep-23 213 403.00 8.03% 8.00% 6.87% 4.00%
fts.m-t 17.02 0.98 5.75% 1-Dec-24 248 403.00 9.56% 8.77% 7.66% 5.53%
BCE.k 14.36 0.83 5.76% 31-Dec-26 188 403.00 10.29% 8.45% 8.02% 6.26%
BN.PF.E 15.47 0.89 5.77% 31-Mar-25 255 403.00 10.63% 9.43% 8.20% 6.60%
MFC.N 16.42 0.95 5.79% 19-Mar-25 230 403.00 9.64% 8.70% 7.71% 5.61%
fts.k-t 16.94 0.98 5.80% 1-Dec-24 205 403.00 8.97% 8.31% 7.39% 4.94%
BIP.A 17.06 0.99 5.80% 30-Jun-25 356 403.00 11.12% 9.66% 8.46% 7.09%
BNS.I 20.30 1.21 5.96% 27-Jan-24 243 403.00 7.96% 7.78% 6.96% 3.93%
POW.PR.G 20.90 1.25 5.98% No reset 5.98% 5.98% Perpetual
BN.PF.A 20.73 1.27 6.10% 30-Sep-23 290 403.00 8.36% 8.29% 7.23% 4.33% Was BAM
enb.y-t 15.05 0.93 6.21% 1-Sep-24 238 403.00 10.65% 9.87% 8.43% 6.62%
cpx.c-t 21.48 1.36 6.35% 31-Dec-23 323 403.00 8.45% 8.29% 7.40% 4.42%
PWF.PR.G 22.00 1.40 6.36% No reset 6.36% 6.36% Perpetual
TRP.D 15.28 0.98 6.39% 30-Apr-24 238 403.00 10.49% 9.97% 8.44% 6.46%
FFH.C 18.38 1.18 6.40% 31-Dec-24 315 403.00 9.77% 9.03% 8.09% 5.74%
TRP.E 14.62 0.94 6.43% 30-Oct-24 235 403.00 10.91% 10.03% 8.67% 6.88%
TRP.A 13.50 0.87 6.44% 31-Dec-24 192 403.00 11.02% 10.02% 8.73% 6.99%
ENB.PR.A 21.26 1.38 6.47% No reset 403.00 6.47% 6.47%
MFC.B 17.81 1.16 6.54% No reset 6.54% 6.54% Perpetual
MFC.C 17.20 1.13 6.57% No reset 6.57% 6.57% Perpetual
POW.PR.C 22.06 1.45 6.57% No reset 6.57% 6.57% Perpetual
POW.PR.D 19.01 1.25 6.58% No reset 6.58% 6.58% Perpetual
POW.PR.A 21.12 1.40 6.63% No reset 6.63% 6.63% Perpetual
GWO.M 21.80 1.45 6.65% No reset 6.65% 6.65% Perpetual
GWO.H 18.12 1.21 6.68% No reset 6.68% 6.68% Perpetual
NA.G 21.75 1.45 6.69% 15-Nov-28 277 403.00 7.82% 7.24% 7.25% 3.79%
POW.PR.B 19.99 1.34 6.69% No reset 6.69% 6.69% Perpetual
PWF.PR.L 19.04 1.28 6.70% No reset 6.70% 6.70% Perpetual
GWO.S 19.55 1.31 6.70% No reset 6.70% 6.70% Perpetual
GWO.L 21.05 1.41 6.71% No reset 6.71% 6.71% Perpetual
PWF.PR.K 18.42 1.24 6.72% No reset 6.72% 6.72% Perpetual
PWF.PR.S 17.77 1.20 6.75% No reset 6.75% 6.75% Perpetual
GWO.P 19.97 1.35 6.76% No reset 6.76% 6.76% Perpetual
PWF.PR.H 21.25 1.44 6.76% No reset 6.76% 6.76% Perpetual
PWF.PR.O 21.40 1.45 6.78% No reset 6.78% 6.78% Perpetual
PWF.PR.F 19.30 1.31 6.80% No reset 6.80% 6.80% Perpetual
PWF.PR.E 20.20 1.38 6.81% No reset 6.81% 6.81% Perpetual
PWF.PR.R 20.20 1.38 6.81% No reset 6.81% 6.81% Perpetual
PPL.PR.A 18.00 1.23 6.81% 1-Dec-23 247 403.00 9.03% 8.90% 7.92% 5.00%
PWF.PR.Z 18.88 1.29 6.82% No reset 6.82% 6.82% Perpetual
FFH.K-t 18.19 1.26 6.93% 31-Mar-27 351 403.00 10.36% 8.92% 8.65% 6.33%
NA.C 25.16 1.76 6.98% 15-Nov-27 343 403.00 7.41% 7.21% 7.20% 3.38%
NA.E 20.51 1.45 7.09% 15-May-28 258 403.00 8.06% 7.59% 7.57% 4.03%
MFC.I 21.06 1.49 7.10% 19-Sep-27 286 403.00 8.18% 7.69% 7.64% 4.15% T Bill rate?
CM.S 20.69 1.47 7.10% 31-Jan-28 245 403.00 7.83% 7.49% 7.47% 3.80%
CU.C 18.09 1.30 7.19% 1-Jun-27 240 403.00 8.89% 8.15% 8.04% 4.86%
BCE.C 17.50 1.27 7.26% 31-Mar-26 209 403.00 8.74% 8.23% 8.00% 4.71% Reset not clear 80% of Gov 5 year?
MFC.Q 20.45 1.49 7.26% 19-Jun-28 255 403.00 8.04% 7.66% 7.65% 4.01%
MFC.J 20.86 1.54 7.38% 19-Mar-28 261 403.00 7.96% 7.68% 7.67% 3.93% T Bill rate?
BN.X 14.81 1.15 7.78% 30-Jun-27 180 403.00 9.84% 8.94% 8.81% 5.81%
ENB.PR.B 16.30 1.30 7.98% 1-Jun-27 240 403.00 9.86% 9.05% 8.92% 5.83%
Tony,
Thanks for the post, what are ‘% Weighted based on reset date Factor prior + After/2 Effective Reset Spread ‘ columns? It seems they are 3 column names in there, and I am just trying to understand what they are.
Thanks for all the data!
Columns are:
Ticker
Price
Current Annual Dividend
Cash Yield Until Reset Date
Reset Date
Reset Spread (bps)
Current 5-year yield BPS
Cash Yield at Reset Date Using Current 5- Year Yield
% Weighted based on reset date – a factor I came up with complicated
Factor prior + After/2
Effective Reset Spread
Notes
Yesterday Canada’s 9th largest bank (Laurentian – LB) confirmed they were exploring “strategic alternatives” – ie. looking to be bought out by one of the big 6. LB has been in a turn around situation since new CEO took over about 18 months ago by the first BNS). Lots of speculation as to LB decision but likely their small size and years of under performance plus rapidly rising interest rates eating into their margins finally made board realize there was no prospect of a turn around. Share prize jumped up by over 25% to a level likely to be fair value. There is only one pref issue and it was up over 7% yesterday likely due to a higher credit rating regardless of which bank is successful. Still yields over 6% today and resets in June 2024 at 5 yr rate + 2.55% (if I read details properly – but Grid would know might better than I ).
Will be interesting to see what happens as RBC take over of HSBC is still in the works, LB CEO came from BNS so that could be interesting but who knows what terms she left on. LB is very much Quebec centered (especially Montreal) so QB govt may not care as much about losing a head office compared to Bombardier. LB also at one time was the only union bank but it was decertified a few years back as employees didn’t see much benefit to their dues. Also questions about LB being heavy into commercial real estate which could be causing risk issues for them. Anyway caught the Cdn market by surprise and will be interesting to see how it plays out.
Had a discussion come up at work about Canadian Eligible dividends. Is this something that comes up with mis-classifying them where the investor has to contact the broker to correct their T-Slip?
I know next to nothing about this, so any insight from Canadians on how this works in practice would be really helpful.
I have owned them off and on for 5 years and they are always QDI for me with TD.
Eligible dividends is Canadian tax feature, so it would only apply to Canadian shareholders and not US ones.
Here is Enbridge’s page on it.
https://www.enbridge.com/Investment-Center/Stock-and-Dividend-Information/Dividend-Tax-Info
It’s back to a is what it is. I get QDI until they change it. Just like all sorts of delisted old preferreds that remain QDI and don’t meet all the criteria that you have posted before. It is very informative and I appreciate it. But I don’t fight City Hall. I get screwed on some too.
Justin, I was thinking, your Enbridge link actually supports the idea that they can be qualified. Its just not their problem. As its not Canada’s or Enbridges decision to determine what is qualified in US or not. From your link…. Enbridge Inc. is considered to be “a qualified foreign corporation” and the dividends paid on its common shares are considered to be “qualified dividends” as those terms are defined in the U.S. Internal Revenue Code”. If you have any questions regarding the taxation of Canadian dividends in your local jurisdiction, please contact your local tax advisor.
To be qualified foreign corporations must hit on of the three criteria…
. Dividends from foreign corporations are eligible for the lower rates if the foreign corporation:
Is incorporated in a U.S. possession;
Is eligible for benefits of an income tax treaty with the U.S.; or Stock is traded on an established U.S. securities market..
The fact that Canada is part of tax treaty takes care of that issue. This is likely why they all are treated QDI. Or at least that meets the initial floor basis to be QDI. Many of the corps common are exchange listed also. This could be considered additional leeway.
If one is more suited with IG QDI utility preferreds but want yield over 6% and significantly under par, you may consider CDNUF (CAD.PR.D $18.90 CAD) It is Canadian Utilities Second Series AA 4.9% fixed $25 issuance. It just hit 6.5% and $14.28 USD. I sold my 2 CAD resets as they quickly popped, now been recently toeing in here. I will “back up the truck” buy “hand over fist” etc etc. if it broaches 7%.
That would be CU.PR.D
Yes, thanks, Jack. That definitely was a fake news ticker I trotted out from where; I have no idea.
thanks for another idea Grid – I checked out the websites you mentioned but prefer your astute ideas over my random guessing. Suspect your recommendations of the past issues caused the jump up as doesn’t take much to move CDN prefs. Happy 4th of July!
Hey Buck, Ha, I doubt that. A misconception is Canadian preferreds are illiquid on OTC. That just isnt true. They are as liquid as the Toronto market is. Its just no one rarely buys them OTC. The only quirk is you typically are going to have to pay “ask” bid. So one needs to wait until an ask price is fair to buy. And when selling you will get bid. I have never had a problem selling or buying OTC listed Canadian preferreds, but the process is what it is via OTC as the intermediary is going to need a cut to justify sending the shares over to OTC from TSX.
The resets especially the ones to reset soon obviously will offer more yield, but they dont correspondently trade in a manner that reflects that. That is why I prefer the fixed at a good deal even if yield is lower. And 6.5% and 20% plus under par with BBB type rated quality is significantly better value to me than any US ute preferred is.
Buck, have you looked at any of the SLF preferred?
Grid: Any particular reason why ser. AA as opposed to any of the other fixed series (BB, CC, DD, EE, HH)? They all seem to be dialed in around 6.5%, w BB (CU-E) the highest at 6.582% (4.9% coupon, last price CAD18.61 per https://money.tmx.com/en/quote/CU.PR.E)?
But, nothing other than it gets too deep into the weeds for me to try to type all the CAD tickers then convert to OTC tickers and then written explanations of the series’s. Plus as you know all issues from CAD U like most companies are not all available on OTC. Only about 5 are, and BB for example is not one of them to the best of my knowledge. Plus what one can get on TSX may not be possible on OTC especially if B/A is wide on TSX that day. As one typically has to pay ask to get a trade on OTC.
Thanks, just double-checking I wasn’t missing something obvious.
Bur, FWIW, I nibbled some more recently on the Series DD from Canadian Utilities. I has peaked over 6.7% and goes exD in less than a month. CNUTF, OTC ticker if your scoring from home. Series DD is a 4.5% par issue, that closed today at $16.74 CAD.
thx for the update Grid
Bur, the DD creeped up to 7% the other day exD, and I bought a little bit more.
I doubt I can get lucky enough to buy more at 7.25% but I will watch. I still dont have a full position, but I will monitor for more price sagging.
I was wondering if anyone was aware of a US version that’s similar to this Canadian ETF. Its Horizons High Interest Savings ETF. (CASH-T) It invests in high interest bank savings accounts in Canada. Its yield is 5.17% with virtually no risk. I haven’t ever seen anything like this in the US and of course, I can’t own Canadian ETFs or other Passive Income Investments there.
US Version or USD version?
The TSX has a few (USD version)….HISU.U, ….PSU.U
According to a new note on Quantum Online, EBBGF floated on June 1 2023, and the “Rate declared for period 06/01/2023 to 06/01/2028 is 6.7037%”, which is 3.14% plus the 5-year US treasury. At the price today of $21.19, the yield is 7.9%. I apologize if this was previously posted, but I did not see it with a search.
For the record, the announcement on EBBGF was made on their website on May 2, – https://www.enbridge.com/media-center/news/details?id=123764&lang=en I believe the next up for reset on the USD denominated issues would be EBGEF on 3/1/24 but they have a few CDN issues that will reset (or they will elect to call) prior to that date… Summary page for all ENB preferreds = https://www.enbridge.com/-/media/Enb/Documents/Investor-Relations/DividendandShare/ENB_Securities_Prefs_Summary.pdf?rev=3ef2cace72c84a408558966a93d6032c&hash=09DA21655701061B759CF834744F5F97
Its been hard for me to get excited about preferreds this year as percentage wise I am scraping near my bottom percentage wise if you back out the ALL-B/NSS types that really arent true preferreds. Anyhow, I am sticking my toe back into a Canadian reset. OTC ticker ERRAF which is a preferred from big hold co ute Emera which owns several US utilities. Taking a reset flyer trade. Its present $18.72 pricing nets to a pedestrian 6.3%. But come end of July it resets to, of course, 5 year CAD plus 2.65% adjustment effective starting mid August going forward. Of course rates could be anywhere north or south by then, but if present yield and pricing held one would get a relative juicy 8.23% at 5 year reset. The Series C preferred is a BB/BB+ ish rating.
Grid what do you think about the big drop in EBBNF today? Kinda took me by surprise
Charles, I have noticed a lot of the Canadian resets have dropped recently. Including ones resetting in a couple months. Which is interesting since this helps possibly increase the next reset yield.
Part of the large percentage drop on EBBNF had to do with playing catchup with actual trading on TSX.com under ENB.PF.U . Its actual percentage drop should have been more in the 2% range similar to EBBGF today were EBBNF more actively traded….. But here’s what I wonder – on a current yield basis, these two are trading in the same 7.70% range…. Given these are IG with both Moody’s and S&P, what makes these so cheap? Is it because of the oil pipeline company aspect? Is it because they’re Canadian? It certainly can’t be because of the 5 year reset type could it since both have so recently reset? And it’s not because of them being CDN dollar as these are both USD denominated. So what other non/bank IG perpetuals offer such a huge current yield? Are there more in Canadian Land? I don’t pay attention to CDN dollar denominated issues at all so maybe these are easier to understand cheapness wise within the larger universe of CDN issues or maybe even if merely compared just to the CDN Enbridge issues, I don’t know.
As you know, 2WR, you have to live with Canadian reset trading goofiness if you want to own. Having said that it certainly isnt surprising its dropping considering a couple I track such as an Emera and Fortis reset. As at present yield they would reset over 8% in a couple months.
Another Enbridge reset, ENB.PR.H will be resetting in about 6 weeks to about 8.75% if current rates hold. So that gives you another reason why this one has dropped.
You mean that at current price ENB.PR.H would give holders an 8.75% current yield right? Reset = 5 yr CDN Treas + 2.12, right? And ENB.PR.F just reset @ 5.538% and is trading now at 17.03 for a 7.98% current yield, so I guess, H looks cheap. Still, this is the input I was wondering about – where the CDN ENB resets are trading so thanks….. Yes I guess that makes sense why the USD issues have fallen too because of where the CDN issues trade, but in isolation vs the US market alone, they all (EBGEF, EBBNF, EBBGF) seem to be cheap, don’t they?
Keep in mind their value will be anchored from north of the border since that is their stock registered home. So I really doubt you can compare them since the US market doesnt seem to value/trade them like CAD ones do. As the US reset market matures further down the road they may trade more like the more mature CAD market…or not, who knows.
As a newbie to Canadian resets, I am just wondering: is there foreign tax holding when purchasing EBGEF, EBBNF, EBBGF?
Yes there is Sailing. For me this means I always buy in taxable accounts so I can fully claim it back tax time on Foreign Tax Credit Form 116. Its braindead easy on Turbo. If you purchase in a tax free account legally there is not supposed to be a withholding. But a few get screwed up and withhold anyways. And then you are screwed as you have no recourse other than to yell at a brick wall to try and get problem fixed. It happened to me a couple times, others were ok. Now, I just buy and file the tax credit and get it then.
Great insight, thanks, Grid!
Sailing also keep in mind some Enbridge issues like what 2WR has do not have currency risk. Most CAD issues that will be part of what you are dealing with. Just a minute ago, I toed into Fortis Series G which will also reset over 8% possibly in coming 2 months. I bought those at $12.30 USD through ticker FTRSF. Its 5 year CAD plus 2.13% adjustment.
https://markets.ft.com/data/equities/tearsheet/summary?s=FTS.PR.G:TOR
Grid, I use IB and Fido, but FTRSF can’t be found in IB and it seems Fido charges $50 foreign settlement fee per transaction. Which brokerage do you use?
Sailing, I use TD. They are pretty good with CAD OTC issues. Of course TD used to be a Canadian outfit. They do charge 6.95 a trade though for OTC.
Sailing, can’t you just use the CAD ticker with IB?
I guess I could use CAD ticker in IB, just never done that. I will give it a try, I am using IB Lite though, I bet it won’t be 0 commission for CAD tickers
Form “1116″
Thanks Alpha. I was missing a 1! I actually never see the form as Turbo does all the work for me!
😎
thanks Grid – finally a place to put some of my CDN money mkt $$
Buck, I bought a couple hundred more of FTRSF today. I like the risk reward set up now as economy seems to be holding up which should prop CAD rates up also until reset time for both these two issues in July. But who knows, as one needs to put on their big boy pants when owning CAD resets as they have shown to be volatile over the years and sometimes confounding trading pattern wise. Such as….now? The preferreds traded down a buck or so past month all while CAD 5 yr is up close to 50 bps the same time.
Grid my humble uneducated opinion from reading Globe & Mail is the pref market in Canada is a sick decaying market (similar to Leafs fans) and there is little interest in it by institutions nor professional investors anymore as institutions are now using the Limited Recourse Capital Notes (which of course puny investors like me cannot buy). Consequently very strange trading patterns can happen with the remaining pref shares and if a CDN PREF ETF has to liquidate some holdings due to redemptions even stranger things can happen. There is little if any info especially on the rate reset market due to such limited trading. So your tips are TRULY appreciated as I try to eke out more returns to pay for my wife’s ongoing Amazon purchases for the grandkids.
Buck, Interesting, I havent followed macro dealings of CAD preferred market. Have you ever seen this link before? It has some good info on it CAD reset wise.
https://canadianpreferredshares.ca/
This has some good info too on it.
https://prefblog.com/
Leafs cost me $300 on their season ending loss. But they did earn me $500 on first round series win.
thanks a lot for your ideas and symbols Grid ! (much appreciated!) I have taken a look at pref website and truthfully I’m a bit overwhelmed by all their data. Mind you I dropped high school algebra when I kept getting my X’s and Y’s confused with my X’s and O’s from my football play book. As Jethro Boudine would say on the Hillbilly’s “I’m going put my ciphering hat on” and take another look at the site. Hope you enjoy your long weekend and have great weather like we are in SW Ont. Had two late frosts this week and next 7 days we are going to be getting mid to high 80’s (go figure).
Buck, the main thing is it shows various companies resets and tickers with their reset adjustment that is tacked onto the 5 year. Also if you look their are a couple of fixed Canadian preferreds. I believe Fortis and Canadian Utilities have fixed ones with yields over 6% now. That isnt the worst thing in the world either.
Most of the other info is just gaining knowledge about something we dont have control over anyways.
For me, I look at relative pricing deals, the spread at purchase and best guess on the 5 year at reset. For example the Emera issue. I know the adjustment spread is 2.65% and the current price is $18.75. If 5 year is 0% worst case, then the yield would be a yield of 3.53%. But if 5 year CAD hangs in around current yield this will reset over 8% for 5 years which is very good for a utility. Fortis Series G would actually be even higher at reset at present 5 year. Though its spread is just 2.13%, its price is lower too. Some try to plan the angle of hoping for a call. These two for example, in my opinion are at the very back of the bus in terms of getting a call do to low adjustment yield. But the current pricing also has baked that in to some degree. Who knows the future, but one thing is certain. They are quite a bit cheaper now than a month ago. Anything else is a guessing game.
CB, You said, “there is little interest in it by institutions nor professional investors anymore”
Excellent.
Alpha, there is always an interest in anything…at the right price, ha. Just look at the “experts” who suddenly become interested in issues on the expert market at certain price fleecing levels.
The relative value is definitely there. Will it be extracted is another issue. But consider this. NiSource, Emera, and Fortis have basically same credit rating. If they all reset today NI-B would reset to a nice ~7.5% while the Fortis G at my purchase price yesterday would be about ~8.5%. Of course other variables come into play that effect ultimate outcomes such as currency conversion.
I read the article Buck referred to. Very good article. However, I dont consider the CAD preferred market “dying” as they referenced. I think the correct term would be “more limited”. This would be the same case if US financials could issue LRCNs as financials comprise about 75% of the US preferred market. The US market would become more limited too. If we step back (and remove the tiny niche ones you and I focus on) and look at US preferred market in total sans the financials we would largely see this…. A couple of fair quality REITS and a tiny handful of ute issues surrounded in mass by crap quality issuances. So the US would be considered a dying market too without the financials.
Grid, Love the superior yield/risk profiles of CNs.
The article appears useful for those of us that largely ignore the media as it will melt some from the buy side.
Alpha, The LRCN has chewed up a part of the CAD subordinated market quickly. In 2017 before they existed Reset preferreds were 70% of the market and Fixed coupons 22%. Today, resets are 41% and fixed 14% and LCRNs are 25%. But LCRNs are different beasts. Largely institutional with a $100,000 minimum buy in for an issue.
Its not really surprising though as prior to LCRN, the “Big 6” CAD banks comprised almost 30% of the market based on what I read. So if they are using LCRNs now, the preferred market would have to shrink…I might a little more, basically gambling 5 year stays up a few months longer.
Buck, file this under “nobody knows nuttin”. This Globe article was from 10 weeks ago. Yet yields are significantly higher since then and yet Emera and Fortis reset prices are actually lower now than then. And resets are less than 7 and 10 weeks away now for the two.
Globe Advisor spoke recently with Nicolas Normandeau, vice-president and portfolio manager for fixed income at Fiera Capital Corp. in Montreal, about the preferred share market.
What’s your outlook for preferreds this year?
It has been a good start to the year. Spreads are tightening and rates are increasing a little bit from December levels. The average yield is getting more attractive, and there’s a huge potential upside on your average coupon. If the five-year rate stays high, investors can reset with a much better coupon. The real reason to buy preferreds is for the upside – if rates stay high or go higher – which isn’t impossible.
Im not going real deep here myself. I got 800 of the Emera C and 400 of the Fortis G. I really wished I had it reversed though. But Fortis B/A spread really narrowed after I bought Emera. But if you chart watch, they like the other CAD utes will largely rise and fall in tandem anyways. I just persoanlly like Fortis’s credit profile better, but whatever. I really cant do anymore being I have intentionally boxed myself in with CDs, TBills, IBonds, and some 10 yearish ute bonds bought last fall at higher yields oddly.
And most of my “preferreds” are now issues I dont want to sell such as NSS, ALL-B, GJT until rate hike mania subsides. Though being with sin, I have gotten to a max full position of PCG preferreds pushing to max when I was able to get a lot near 7.5% while the Series A still languishes below 7% for some reason.
Grid,
I’m interested in the Emera issue. What’s the corresponding reference on the TSX?
Thanks in advance.
Greg, the TSX ticker symbol is EMA.PR.C
https://markets.ft.com/data/equities/tearsheet/summary?s=EMA.PR.C:TOR
Greg, Its a bit harder having to use OTC being I dont have direct access to CAD issues. But today, I decided to try to buy 200 additional shares. Current bid/ask I seen $18.55/$19.12 CAD. I put a USD bid in at $13.77 and it transacted within a few minutes.
Gridbird…you ol’flipper,
I can see from Taos how you’re jawboning that ENB-H up about 18% since the last dividend. I’ve had 10 resets this year out to 2028 and personally, I’ll be holding the IG until next reset.
No one wants to pay me for whatever I don’t really want to do anymore, so I’m in for the income. Either that or panhandle at the traffic light. The sign may read, “Lost Pension in the Market” , I’ll wear a dusty three piece.
I have the capability, but not the patience to do a dollar cost averaging, on yield increase, but collected the whole time at what seemed like good rates at purchase. Some of these I bot on my original ladder 3 years ago, price (denominator) prevails on reset now. Was surprised not to see a few called.
I think the CN FRRs window is much narrower, but still a few more than fair plays in a few cases like you point out. I’m holding that entire account sacrosanct and compounding from original capital. I’d like to see the Looney take off now!
Happy Summer to All III’ers!
PS: Special thanks to BobDE and Yuriy…oh yeah…and Tim!!
Buenos Dias!
Joel, I hate say it but the flipper came out in me. I dumped my CAD resets today. Got quick double digit gains on both in a month so I departed. Actually have also been using same playbook as Mr. Conservative just posted.
thanks for the comments everyone. Nice to get feedback. I guess one smart thing I did was buy most of the US funds back about 10/11 yrs ago when the CDN $ was at par and slightly above the US$. So for me I have a nice 30% cushion . Now to get ready for the Leafs “final” game of the season unless they can play a full 60 minutes.
Canuck, Same answers as above. I set up and maintain a SEGREGATED Canadian dollar account at IBKR. It’s easier that way. Actually, it is a USD account by titling and I purposefully started with all funds in CAD and all divs received/maintained as CAD. That is ALL I will keep in there, then what Fryman is saying is accurate.
That account has done very well and bloated with reinvestments back into CAD issues that pay out in CAD (altho there are a few issues from Canada that pay out in USD, but must be bot with USD also, but you don’t have to go thru US OTC-pink ) The currency, FOREX, tool is a breeze to use just like a normal trade. Remember that the first currency in the pairing, ie: USD:CAD is the one you are buying or selling>convert to/from the second.
Nicely, all the details are reported in a very organized 1099 with detail spreadsheets at tax time.
If the USD really gets smashed at some point I am hoping that the commodity country floats the entire portfolio as a general tide UP, it happened historically, but right now I am not using that account for any spending, just compounding.
I have a math question and just wanted to run it by others for their thoughts. As a retiree I’m looking to maximize income for living expenses and have appx 25% of retirement portfolio in US$$. If I use an ave 30% exchange rate and a 4% coupon on US$ prefs or bonds (assuming the funds will eventually be converted to CDN$ for income purposes) to me this is equivalent to a 5.2% after the exchange rate gain. On the flipside for US investors a 4% yield on a CDN pref or bond would only be 2.8% when converted back to US$ under same scenario. Am I missing something? thanks for any comments on my musing
CB – Why would this not be just a simple dollar exchange rate question, nothing more? Wouldn’t the answer be readily available by simply putting the numbers into something like https://www.xe.com/currencyconverter/convert/?Amount=1&From=CAD&To=USD? 4% is going to be $1 paid on a $25 par either way. so isn’t that essentially all you need to figure out the answer? Personally, dealing with exchange rates is always confusing to me… As a US guy, I never know what I’m supposed to be rooting for in exchange rate variations…. ha
Canuck – I think you need to keep both the investment and dividend in the same currency for apples to apples comparison. A $US 25 pref paying 4% is $1 US. However, that $US 25 stock cost you $C 32.50 and is paying you $C 1.30- same 4%. One Canuck to another, but I have to bring my lowly $C to the $US!
Hope this helps!
EBBGF/ENB.PR.V Conversion from Series 1 to Series 2
Is anyone familiar with how these ENB conversions work? MY question is, based on the language of this Tuesday announcement, WHAT WILL BE THE PAYMENT MADE ON SER 1 AND/OR SERIES 2 ON SEPTEMBER 1, 2023?
https://www.enbridge.com/media-center/news/details?id=123764&lang=en
… “The new annual dividend rate applicable to the Series 1 Shares for the five-year period commencing on June 1, 2023 to, but excluding, June 1, 2028 will be 6.7037 percent, being equal to the five-year United States Treasury bond yield of 3.5637 percent determined as of today plus 3.14 percent in accordance with the terms of the Series 1 Shares.” seems pretty straight forward.
BUT …”The dividend rate applicable to the Series 2 Shares for the three-month floating rate period commencing on June 1, 2023 to, but excluding, September 1, 2023 will be 2.11474 percent, based on the annual rate on three month United States Government treasury bills for the most recent treasury bills auction of 5.25 percent plus 3.14 percent in accordance with the terms of the Series 2 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.” DOES NOT. What amount in dollars and cents, will SERIES 2 pay on 9/1/23 if one chooses to convert and conversion occurs? This implies to me that Ser 2 if chosen will receive .13217 / share while Ser 1 will receive .41896. That can’t be a correct interpretation can it? If so , choosing NOT to convert is a no brainer.
Following up, I believe this press release is written incorrectly……. What is written as 2.11474 PER CENT is actually an annualized first quarter DOLLAR AMOUNT OF $2.11474 which would translate into a quarterly payment of $0.52868/share…. If this is right, then there is a tremendous short term advantage to voting to convert to Series 2….. First quarter payment on Ser 1 on 9/1/23 would only be approx $0.42306 while Ser 2 will be paying $0.5268. Anyone agree or disagree???
I can get the math to work as follows: 5,25% + 3.14 = 8.39%. 25 x .0839 = 2.0975. 2.0975 divided by 365 = .00575. .00575 x 92 (the actual number of days in the quarter) = .52868. .5268 x 4 = $2.11474 DOLLARS, NOT “PER CENT,” AS WRITTEN. So shouldn’t the first quarterly dividend amount be $0.52868 per share? NOTE: This one does calculate dividend based on a 365 (or 366) day year, not the more normal in the US 360 day year.
Any Opinions? For the last two-three months RBC has been offering a continuous stream of these Corporate Bonds in the US. This is an example of one on Fidelity right now:
ROYAL BK CDA SUSTAINABL SER I MTN
5.55000% 04/18/2033
(callable in 2026)
Looking over the prospectus they are similar to identical to NVCC rate resets at least as far as the trigger provisions that allow the bonds to be converted into (near worthless) common stock.
And while Canadian Banks and the Canadian Financial Industry overall seems to be much healthier than the US. And RBC is no SVB. I was wondering if there were any thoughts by blog readers here on these hybrid investments and how much risk is inherent in them.
hi Richard
I suspect RBC is pricing bonds higher as they are “sustainable” (ie. green energy focused) and offering a higher coupon to make them more attractive. I took a look at existing RBC bonds thru my online brokerage a/c and by comparison a RBC bond (cusip 780086TM6) which matures May 4/26 has a yield of 4.24% (coupon only 1.59% so buying below par). So yield pick up is appx 1.25% with the new issue (quite the inducement)
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