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.
I’m new to these Canadian preferreds.
On the face of it, they seem to be much better deals than the US preferreds at the moment. Is this always the case?
No
ALA.PR.E (Reset 12-31-2023) prob called with bond issue being floated.
I sold at just below par today, up 12+% on news, total on hold of 25.2%, bot 01-20. A long hold thru ZIRP, but collected 6.8% while waiting for the reset announcement end Nov 23. That account has just been for compounding anyway.
I have liked the more formulaic method of fixed income investing rather than the Cult of the Equity which I was lucky to survive with capital in tact. Probably mostly LUCK!! I wish I had turned to the No Drama Income approach a long time ago. This site helped me learn and unlearn alot. Cheers to One and All!
Nice to have decent gains to balance some cumulative repositioning losses this year.
Very interesting situation with TRP, IG rating 2L (DBRS), prefs:
Series 1 and 2, Series 3 and 4, Series 5 and 6: Odd numbered the reset (FRR) and eved numbered the floating. in the pair. Yes these are paired for conversion, “The conversion right entitles holders to elect periodically which of the two series they wish to hold and does not entitle holders to receive a different class or type of securities.”
Even if rates revert to ZERO over time, the current prices are reflecting quite a decent return, esp on the buy the floating issue now and wait to convert to FRR on the dates stated in the prospectus. If rates stay up, then all the better. Don’t miss the conversion window in the future.
Please DYODD and you may be very surprised at how much these are ignored.
A bit of a puzzle for those with access to CAD accounts.
Enbridge Provides Notice of Series N Preferred Shares Conversion Right and Announces Reset Dividend Rates
CALGARY, AB, Nov. 1, 2023 /CNW/ – 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 N (Series N Shares) (TSX: ENB.PR.N) on December 1, 2023. As a result, subject to certain conditions, the holders of the Series N Shares have the right to convert all or part of their Series N Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series O of Enbridge (Series O Shares) on December 1, 2023. Holders who do not exercise their right to convert their Series N Shares into Series O Shares will retain their Series N 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 N Shares outstanding after December 1, 2023, then all remaining Series N Shares will automatically be converted into Series O Shares on a one-for-one basis on December 1, 2023; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series O Shares outstanding after December 1, 2023, no Series N Shares will be converted into Series O Shares. There are currently 18,000,000 Series N Shares outstanding.
With respect to any Series N Shares that remain outstanding after December 1, 2023, 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 N Shares for the five-year period commencing on December 1, 2023 to, but excluding, December 1, 2028 will be 6.696 percent, being equal to the five-year Government of Canada bond yield of 4.046 percent determined as of today plus 2.65 percent in accordance with the terms of the Series N Shares.
With respect to any Series O Shares that may be issued on December 1, 2023, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series O Shares for the three-month floating rate period commencing on December 1, 2023 to, but excluding, March 1, 2024 will be 1.94183 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 5.16 percent plus 2.65 percent in accordance with the terms of the Series O Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.
Beneficial holders of Series N Shares who wish to exercise their right of conversion during the conversion period, which runs from November 1, 2023 until 5:00 p.m. (EST) on November 16, 2023, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary time to complete the necessary steps. Any notices received after this deadline will not be valid.
2WR I don’t own this, but right now I am satisfied with locking in 5yr resets.
Gives us plenty of time to see what happens with rates in the future.
Do not convert, the minimum will prob not be met anyway. FRRs have done their job by adjusting for inflation = 31% increase in this case. Even at today’s price !!!!!! 9+%.
See link in this tweet for candian Preferreds sorted by category.
https://x.com/konekoresearch/status/1716608987972448727?s=46&t=3Y9i1Va5ZzPQa4_CnI-nfg
Thank you Maine,
How do I get updates on this list?
Hey Charles.
Unfortunately, I think that was a one time freebie link.
I’ll let you know if I find a way to get updates.
It’s a great list Maine to work off. Lot of insurance companies.
ENB.PR.N will reset rate tomorrow…still at CAD18.19, looking at 9.2% . Why hold the common? They just added a few million utility customers and are vertically integrated to supply them. A nice, boring yawn play.
Joel, I like your approach here, but are you sure about the reset date? Prospectus says “The dividend rate in respect of the Series N Shares will reset on December 1, 2018 and every five years thereafter.”
The effective date is 12/1 but it’s determined a month in advance
Many thanks for the clarification. I am fairly new to Canadian prefereds with a recently started position in ENB.PR.V …
What have people been nibbling on?
I have been buying Emera C, EMA.PR.C
It is a $1.61 annual dividend until its next reset on august 2028.
It resets at the Canadian 5 year + 2.65%.
At the current price of $18.7 Canadian, it yields 8.6%, and that doesn’t factor in the accrued divvy. Ex div is Oct 31st.
Just to clarify, it has 4 quarterly dividends that add up to a total annual dividend of $1.61.
😉
Maine,
Very nice suggestion and I’ve begun a small position.
I think BIPI is worth a look.
I have a GTC order to add to my position. It’s a perpetual for BIP that pays 8.25% QDI.
Greg,
Well, the sellers won’t stop.
That’s ok.
I’ll take their offerings 🙂
Maine, I rentered Canadian Utilities Series DD at $11.69 USD today. Right at 7% plus going exD in a couple days. This is a fixed rate issuance though.
With sudden drop in price of EBBGF, it could be an attractive time to buy. However, does anyone know why the sudden drop? It could be because the preferred recently reset and people project much higher interest rates over the next few years, but the drop seems overdone.
Eugene, These large movements may cause your stomach to drop, buy if you have confidence in the company it might be an opportunity to add to your position or go overweight to hold some for flipping.
Eugene, Picked some up yesterday at 18.67 for almost a 9% yield. Today FTRSF is on sale at 13.24, gonna try to scoop some of that up. With a 5 year fixed rate that works out to about 8.4%
Does EBBNF have a provision for payment deferrals? I can’t find prospectus and I want to compare to recently issued ENB preferred (8.5% and 8.25%) that are traded as bonds.
https://www.enbridge.com/-/media/Enb/Documents/Investor-Relations/2012/2012_ENB_ProspectusPrefSeriesL_Eng.pdf?rev=042bbd6a3a174b7fbca06329c5d3ac0c&hash=250C5573F926D5B0DED6C47550226EA2
TSE:BN.pf.k (Brookfield)
Picked up a full boat for me anyways of this issue. Monthly payer, Floats @ PRIME Rate (7.2%), Large discount $14.76 ($22 redemption). DBRS Rating P-2L.
Other than disenfranchised Brookfield take out / over victims is their something wrong with this issue?
BN may be doing OK, but you might want to take a look at this analysis of BIP:
https://dfresearch.substack.com/api/v1/file/66530f7b-22e2-40df-bf90-d20701e3dbcc.pdf
The Enbridge 5 Year resets are on sale today.
I’ve been adding to my current position in Enbridge Series 1 Preferred shares (EBBGF on the OTC and ENB.PR.V on the TMX) at a price of $19.71 and a yield of 8.5%. This one is priced in US currency and is a perpetual that just reset for five years.
it is either perpetual or 5 y. reset. Perpetuals NEVER “reset”
Art,
The Canadian issues from ENB are based on the 5 Yr treasury and reset every five years. They do not have a maturity date established (so I see them as a perpetual).
ENB has three of these 5 year resets that are in US currency and EBBGF in particular is worth a look.
DYODD
Greg, I had an open bid hit yesterday and picked up 250 shares from 19.31 to 19.40 range. I believe there is still a future for oil and ENB seems to be moving more and more into the utility sector.
moved my GTC down and picked up another 250 shares of EBBNF at 17.75 Fri.
Charles
Excellent.
I also added to my Enbridge preferred this week. EBBGF @ $19.43
and a yield of 8.63%
One up on that, 19.31 to 19 .40 going to have to grit my teeth on both of these as I think they are going lower over investors fears of the deal with Dominion.
Sometimes you have to hold your nose and dive into the pool.
I am confident things will go well with the Dominion acquisition as they are very successful with a similar business in Ontario. They paid a fair price for an excellent business.
Greg, who’s afraid of the boogeyman? I tee’d up a bunch of low ball GTC bids today. Everything from some going x-dividend this coming Friday all the way out to Nov.
If they don’t hit 3 days before x-dividend I’ll review to see how strong the demand is for that stock. Some I will probably cancel the order especially if they don’t hit. If the stock is in a downtrend it could drop farther after x-dividend date. If I feel good about the stock I’ll watch the trend and see if it forms a bottom and put in another GTC before the next dividend date.
What’s the relationship between EBBx preferred issues and the preferred issues listed at
https://www.enbridge.com/investment-center/stock-and-dividend-information/preferred-hybrid-shares?
For example, is EBBGF an OTC equivalent of some ENB.PR.x traded on TSX?
You probably mean EBGEF, right? The ENB site lists only the symbols as they trade on Toronto Stock Exchange… So what they show as SERIES 5 and ENB.PF.V. The symbol is the identical vehicle as EBGEF as described on quantumonline for example….. Paying attention to the tsx price is a good idea even if you don’t have access to it because it’s the more actively traded issue.
Looking at Bur’s Chart which is showing dividend’s only I see the Preferred G had one payment in the chart at .43 since the G just rolled over to a new rate for the next 5yrs I am going to say that is the EBBGF
I have started to change my strategy. Rates can stay lower for a lot longer then anyone would expect them to as we have seen the last 20 yrs, but higher rates don’t last for longer like lower rates do. At least to my thinking.
Playing the long game, I am looking at floating to fixed that are locked into a higher rate for longer and fixed to floating with higher reset rates like HTLFP
The risk I run there is these will probably be the first ones the issuing company will call
Hello Bur
I focus on the three Enbridge preferreds that are priced and pay in US currency. They are perpetual and the dividend resets every five years.
OTC TMX Terms Reset date
EBGEF ENB.PF.V US 5 YR +2.82% 3/1/24
EBBGF ENB.PR.V US 5 YR+3.14% 3/1/25
EBBNF ENB.PF.U US 5 YR+3.15% 3/2/24
I have positions in the EBBGF and EBBNF currently and I strongly suggest logging into the TMX site as they have current trade prices. I purchase them in the OTC and pay ~7 to TD Ameritrade (Schwab) for the transaction.
These are great investments as you have investment grade debt paying ~8% QDI interest. Note, the income is Canadian and there is a witholding of 15% in taxable accounts.
Greg – I think your reset dates are wrong on EBBGF and EBBNF EBBNF = 9/1/27 and currently is 5.8579% and EBBGF = 6/1/28 with current coupon 6.7037%. EBGEF’s current coupon = 5.3753%.
My point was: the terminology was wrong and irreconcilable. “perpetual” (in context of pref. stock) is a Term of Art; namely, it has a specific meaning- those are shares which pay a set dividend rate in perpetuity (the issuer can redeem for $25 with a [usually] 90 day notice). In contrast to “Perpetual” there are “Reset” Pref. Stock, mostly for 5 y. term based on 5y. Gov. Bond (there are also 3m. Floating, etc). :))) Here is the list of current CAD perpetuals https://canadianpreferredshares.ca/rank-perpetual-preferred-shares-by-yield/
I dont believe your assessment is correct.
Just within seconds of an admitted weak memory here are two I recall that directly refute that.
https://www.sec.gov/Archives/edgar/data/1323468/000104746918005363/a2236383z424b5.htm
https://www.sec.gov/Archives/edgar/data/1110805/000119312516771874/d292922d424b5.htm
In fact on CAD side one can see an example as the fixed “perpetuals” are actually addressed in title as “cumulative redeemable”.
https://www.canadianutilities.com/content/dam/web/canadian-utilities/investors/cu-inc-prospectus-cumulative-redeemable-preferred-shares-series-1.pdf
Here is another.
https://www.fortisinc.com/docs/default-source/finance-regulatory-reports/prospectuses/2006-09-20-prefseriesf_prospectus_english.pdf?sfvrsn=710a6a98_2
While looking on US side, one can see DUK-A titled as a “redeemable perpetual”
https://www.sec.gov/Archives/edgar/data/1326160/000104746919001620/a2238219z424b5.htm
While you will have to dig deeper than I can to ever find the perpetual word mentioned in fixed ETI-, however.
https://www.sec.gov/Archives/edgar/data/1427437/000006598419000277/d752489d424b21.htm
There is no uniform consistency to the use of the term. As a couple prospectus shown above indicate, perpetual can be redeemable. A floating can be perpetual yet redeemable. And a fixed can be redeemable without any mention of the word perpetual.
Also my experiences indicate redemption notices are typically 30-60 day windows, not 90. This applies to US and Canadian ones I have viewed anyways.
Now issues such as SOCGM, SOCGP, PCG-A etc. may be presented as perpetuals, since they are flat out noncallables. But I am not digging into something 70 years ago to find the prospectus of those issues.
Art, I tried to post a long detailed explanation showing how you are not correct. However it disappeared for some unexplained reason. Im too lazy to repeat it all so I will just give you two examples that clearly refute there being any sort of “correct” “terminologies”.
Here are two examples off the top of my heading that show redeemable fix to floats as being officially described as “perpetuals” per prospectus.
https://www.sec.gov/Archives/edgar/data/1323468/000104746918005363/a2236383z424b5.htm
https://www.sec.gov/Archives/edgar/data/1110805/000119312516771874/d292922d424b5.htm
DUK-A mentions “perpetual” in its fixed rate prospectus. But I failed to find the word mentioned at all in fixed rate ETI-, instead the just the word “redeemable”. Also several of the fixed rate Canadian preferreds I am familiar with don’t ever mention “perpetual”, just redeemable.
So the word “perpetual” isnt an official terminology word in terms of defining what type of issue it is. As the listed above examples show.
Here is a Canadian fixed issue. I fail to see the word perpetual anywhere. Just redemption and redeemable.
https://www.fortisinc.com/docs/default-source/finance-regulatory-reports/prospectuses/2006-09-20-prefseriesf_prospectus_english.pdf?sfvrsn=710a6a98_2
Sorry Grid – it went into ‘moderation’ for some reason–I just approved it.
Just to stir the pot a little:
Decades ago when I handled these kinds of docs (for US issues – I didn’t do Canucks), our standard was that “perpetual” meant that an issue didn’t have a fixed call date (as opposed to a “term” issue). An issue could be redeemable and still be perpetual (the issuer could redeem it, but didn’t have to). the term had nothing to do with payments.
However, that was just in our tiny corner where I had a pedantic boss.
Private, I believe that is the customary interpretation most share.
In simple terms Art, perpetual means no maturity date. It does not take on a different meaning if it is CAD, or a reset, or preferred, or a BB, or a …
do i even want to wade in here?…/s
perpetual/fixed/floating and reset all mean different things, and especially with the word perpetual, it can mean different things to different people, as other countries allow perpetual debt, but the US doesn’t, so there are a few securities issued by entities in other countries that are considered debt in that country but considered equity to a US investor
But the terms perpetual and reset/floating are used to describe different things.
One is the term, and one is the determination of the payment.
It definitely doesnt mean what Art thinks it does. Its not the word to fall on ones Pedantic sword over. You clearly can find the word perpetual in words with different payment methods (fixed, floating…DUK-A, GLP-A). There is no fomal preferred word salad ettique that “perpetual” resides under. As most fixed rate issues are distinctly describes as “redeemable” . Also FWIW, I would suggest Art is also incorrect on the 90 day redemption notice based on my readings anyways over the years. Most I see are pretty standard 30-60 days notice window. But another largely pedantic issue being most of us dont own any of our issues anyways and never recieve the direct notices to begin with.
I had to look up “Pedantic”
Its a cool word isnt it, Alpha. Now for the next month be pedantic non stop to your wife and see how far that gets ya!
Ha! We tend to get to the point, so I’d probably be able to pull it off for 90 seconds.
I was once on a time-sensitive project in our home office when she came by and started telling me a longish tale about something. I interrupted and asked her in guy-talk to bullet point the conversation. You know what happened next.
She’s since re-retold the story many times to friends and family with hands in the air and an incredulous expression. We laugh harder every time.
The male and female of the species. We both have our quirks. I have never figured out how a person can spend so much time on the phone and talk about trivial things for an hour.
Are Enbridge preferred dividends qualified? Quantum says no, but brokerages (I think) report as qualified. Thanks for comments
Eugene, My issue right now is with one of my brokers who keeps withholding Canadian taxes on my Enbridge holdings that are dollar denominated like the EBBGF not sure if I pick up my sword to joust with them that I can win the fight. This has been discussed here before although the broker I use hasn’t been one discussed.
Charles, the dollar denominated ones will still have the withholding. It is still a CAD issued preferred. Your only legitimate beef would be if it is being withheld in a tax free account.
Eugene, these issues are QDI.
On an unrelated note, do you know if AQNA is considered a foreign issuer for reporting purposes subject to withholding? They seem to report using foreign forms such as 6-k on EDGAR as if they’re considered foreign but I don’t see Fido charging any foreign stock commission on trades…… Also has there been any official word on what they’re doing regarding adoption of SOFR for floating beginning 10/17? I’m getting nowhere with IR…
Schwab did not withhold from my accounts back in 2020 when I last owned it.
AQNA is NYSE listed and debt, so no withholding and no foreign commission.
My thoughts mirror Steve and Justin’s. I loaded up on it around par a couple weeks before you bought. Another lazy way to collect above market yield with less capital risk near term…Along with little cap gain potential. But that’s fine by me. I’m still largely waiting to enter roached out perpetuals that still may need a bit more roaching….The only real risk here is your concern. I have heard no info about AQN declaring their official intent on its upcoming floating yield.
Just left a Lambeau Field tour up in Green Bay. Pretty cool experience. Though my main NFL concerns are the Patriots covering 6.5 season win total over and Saints 9.5.
Thank you. I bought AQNA under the assumption AQN would transition to the CME 3moSOFR + adjustment + the specified offset.
Thanks, everyone… I’ve been a little late to the party on this oen, but the only downside risk for this one from this level would seem to be if they say they are required to stay at 6.875%. If they were going to do that, you would think they would have already announced it…. So we either get a call announcement no later than Monday or AQNA will go to something in the range of 9.35% if it were to begin floating today.. Either one of those events should make this worth more. No call announcement and AQNA remains outstanding until at least 1/17/24.
Worst case it stayed fixed, it’s sister AQNB a bit further from floating would indicate little current price degradation if it stayed fixed. Plus other ute baby bond current long duration debt would indicate it still would have firm pricing.
From the AQNA prospectus:
“If the Issuer determines on the relevant LIBOR Determination Date that the LIBOR rate has been discontinued, then it will appoint a Calculation Agent and the Calculation Agent will use a substitute or successor base rate that it has determined in its sole discretion is most comparable to the LIBOR rate, provided that if the Calculation Agent determines there is an industry-accepted substitute or successor base rate, then the Calculation Agent shall use such substitute or successor base rate. ”
IMO, this means transition to SOFR should occur.
Yes, that was the assumption from purchase, but unfortunately not verification.
I own a full position on this assumption, but am not declaring victory. As there have been a few others people bought assumed they would float but didn’t.
If they get their renewable business sold, I suspecting this issue won’t be long for the world. As the intent to sell it was to deleverage. And a 9% note seems like a good place to start for them.
401k yes
Don’t forget about Enbridge smaller cousin from a different mother RMMBF (Pembina Pipeline).
To Sailing posted way down the line Re: FTRSF (pink US OTC)/ FTS.PR.G (TSX) and IBKR: (No Reply button available)
IBKR will allow you to trade directly on the TSX. You must:
– Deposit funds in your account denomination, typically USD.
– To buy on TSX, must exchange USD for CAD, so funds are available in CAD to settle on TSX. To do this set up the symbol in your Watchlist: USD.CAD. Click on it to get FOREX QUOTE onto trade ticket. The FIRST one is the one you are buying or selling…SO…Sell amount of USD on the trade ticket, expedite Forex trade and it will settle in one day to CAD.
– Now you can place TSX trade with settled CAD. so place order on trade ticket, just choose symbol FTS. PR.G, it will show a symbol TSX.
– If traded it will be held in CAD, pay divs in CAD, and build cash in CAD.
– There are a few maneuvers to learn here, so call up a rep and tell them what you want to do. 1) Forex exchange of currency, 2) find correct symbol by using look up tool, 3) Checking available CAD cash balance to place a trade on TSX.
I learned it and it’s actually easier on IBKR. The tools are very good, but gotta know where to go to find it. I use TWS Trader WorkStation.
What I have learned is do not place an order except after the open has gone by about 20 minutes since BidAsk is way wide on these issues. Look at last few days trading as a more reliable indicator, and place your order and just let it sit there, maybe for many days, esp after dividend dates.
I built out a very large position and keep all my Canadians in one IBKR account. The cash flow from these issues is just compounding and I am still finding opps in Canada with diversification and IG.
I buy USD and CAD bonds over there too. I REALLY like their bond platform and can place and leave an order just stand GTC.
PS: Trades average about $1.
If you are ever in StL I can show you directly! JA
Joel, thanks for all the info. I like the idea to set up a separate account for Canadian issues, so far I am watching a few USD based ones. For US preferreds, I use III, QOL, and yahoo finance daily to get all the information I need. But I haven’t found a great site for Canadian issues other than https://canadianpreferredshares.ca/, I’d like to learn more about Canadian preferreds so I can diversify from US issues. Comparing with volatile US market, Canadian market looks a lot more chill…
CDN denominated Enbridge preferreds:
Does anyone follow these as a group? What would you say the prevailing current yield on the group might be? What caught my eye was the Aug 2 press release https://www.enbridge.com/media-center/news/details?id=123776&lang=en regarding the reset rate on Ser H… Beginning Sept 1, 2023, it resets at 6.112% and its TSX close today was at $17.35 CDN [ENB.PR.H] which makes the current yield = 8.80%….. That seems terribly cheap for Enbridge’s quality, but is it representative of the other ENB CDN preferreds? I’ve only been following the 3 USD denominated ones and I thought they were cheap. However, if this is where CDN denominated ENB preferreds trade, then maybe I should start thinking Canadian, eh?
Also FWIW, it was interesting to see about 17% of shareholders elected to convert their H shares to I and go floating instead of reset. https://www.enbridge.com/media-center/news/details?id=123778&lang=en
Ser I will begin floating for its first quarter @ 7.19%.
Has anyone looked at these BPO cum prefs? I know all the pos and negs. Just a look? Anyone holding a sliver? Dhaaamm!
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!