Q: I believeI that this rate reset will reset on February 28 2024 at the five year Government of Canada rate +3.96% with a minimum reset of 5.85% . If that happened today it would be approximately 8.1%.. Is that correct? Assuming the 8.1% at the reset what would the probability be that these preferreds are redeemed at $25 per share (currently 22.2)?
5i Research Answer:
Yes, close enough; though at yesterday's BoC rate of 3.96% it would be 8.06%. Much is going to depend on where rates are next year. Currently, we are not so sure the company could refinance these at cheaper rates. So, we would put low odds, perhaps in the 25% range.