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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Do you like Fortis and if so which do you prefer:
Series F Perpetual
Series G Rate Reset
Series H Rate Reset
Series J Perpetual
Series K Rate Reset
Series M Rate Reset

Read Answer Asked by Gary on September 20, 2021

Q: hello
regarding preferred ENB.pr.U
I see it matures June 2022 and if renewed, will pay 3.05% + the yield of the 5-year BOC bond. Where can I find the current real time yield of the 5-year BOC bond?
Knowing where rates are today, and what they will likely be in June 2022, is this a good time to buy or is it safer to wait? What's your PRO vs CON on it?
Thanks

Read Answer Asked by Carlo on September 14, 2021

Q: Brookfield Office was taken in by Property Partners and now both have been taken private by Brookfield Asset Mgt.

You once wrote these shares are not the best choice as the office market was in difficult times....not unlike today as Covid Delta comes on.

If BAM has taken the real estate private, does the risk of default not get reduced? Making these prefs a reasonable buy below $25, Min Reset ( 5.10%) with a current yield above 5.10%?

How likely is it that Brookfield parent would let a Sub default on payments?

Dave

Read Answer Asked by Dave on September 03, 2021

Q: I hold Canaccord series A 5 year rate reset prefs which will reset in September at 5yr GOC + 3.21%. They also have a voluntary conversion privilege into series B floating rate prefs which pay 3 month GOC T-Bill + the same 3.21%. With the likelihood that interest rates are likely to go up from here, would you agree that it makes sense to opt for the conversion? The series A prefs have been on a tear over the past 9 months from a low near $12 to their current price close to $19. Is it likely that a large driver of the price increase is related to excitement over the upcoming conversion privilege?

Read Answer Asked by Steven on August 23, 2021

Q: These debentures are being called. If it's the intent to convert to the common shares, is it better to sell the debentures and buy the common shares. If held until Sep 9, the company converting to shares at 95% on the 20 day avg sounds like ending up with less common shares. Which way would work best?

Read Answer Asked by Ian on August 19, 2021

Q: These units are down > 60% today after an announcement that the company is doing a debt exchange and suspending cash distributions on preferred shares. I find this very surprising as the units have been steadily going up and were trading at above par prior to the announcement. Doesn't the market typically anticipate such things (i.e. if there was any reason to believe the distribution would be cut or suspended, the units would not be trading anywhere close to par). Any thoughts on this, especially given that Brookfield owns the common shares and the debt but not the preferred? Where does that leave preferred unit holders? Would it be prudent to simply take my loss and exit the position? Thanks.

Read Answer Asked by Nick on July 30, 2021

Q: Peter,

What research source or service would provide a full listing of Cdn pref shares including credit rating, type of preferred, dividend plus any redemption terms? Sedar is too cumbersome for this.

Thanks

Paul

Read Answer Asked by paul on June 18, 2021

Q: Peter,

Yesterday you answered my question on the Loblaws preferred stock. You gave different redemption dates. Where do you get this info? Where is the best place for a DIY person to find it?

Thank you,

Paul

Read Answer Asked by paul on June 16, 2021

Q: Peter,

Is SEDAR the only sure fire source for call dates on pref shares? I find the company's own website does not always make it clear. I find L.Pr.B a bit of an oddity. It is yielding 5% with a call date of June 2024 from what I can see. Most p/s are now yielding less than 5%. Is this with this issue because of the duration of time to call?

Thank you

Paul

Read Answer Asked by paul on June 15, 2021

Q: I'm not really a preferred share investor because I don't really understand the various nuances of them. I understand the difference between perpetual, reset, etc but not the finer points.... And I only bought them because no one knew what was going to happen with the Covid crash and I happened to be 30% in cash ..... My reasoning was if the blue chips can't cover their preferred dividends it's the end of the world and I may as well head down to the harbour, steal a tugboat { I'm a retired tugboater } a barge full of beer and head north with a fishing pole ..... My preferreds have returned 70% plus dividends for me and I am thinking of exiting . My problem is they keep rising and I don't understand why . BAM.PR.B was over $18 in 2018 and currently yields 3.1% at a considerably lower price ..... ENB.PR.H is not nearly as far off of it's 2018 price so I'm guessing there are differences between the two in spite of the fact they are both " resets " ..... I'm planning on selling both but there is no rush . So the question is why the rise ? Is there current potential to for BAM.PR.B to return to 2018 prices or even rise more at all ? ......And why is there so much of a difference in 2018 to today's prices between the two preferreds ?

Read Answer Asked by Garth on June 08, 2021

Q: in a follow up to my question on the above which i asked yesterday and you quickly responded to there was an announcement last night regarding the dividend rate for the next 5 years...my question today is the news release says "If declared "...does this mean that they may still redeem the preferreds or am I to assume the prefs will live for another 5 years....and assuming BAM is successful in taking over BPY then these shares would become a liability of BAM providing a credit rating boost...Correct ??...please deduct whatever credits are applicable and thanking you in advance for your response...Cheers

Read Answer Asked by Cam on June 02, 2021

Q: I am looking for some insight to help me understand how the market is currently pricing preferred shares. I had a position in CPD from 2015 to 2020 when I dumped it out of frustration. During that period it seemed that when interest rates were forecast to go up the preferreds would go down because investors would focus on the lower relative yields. If rates were forecast to drop the preferreds would still go down because then investors would focus on the reset aspect. It was an investment that provided the worst of both worlds!

I still hold a couple of preferreds including some fixed perpetuals such as POW.PR.D and RY.PR.P which despite everyoneís expectation of rising interest rates are both hitting new all-time highs now. Itís all just too perplexing for me. Any explanation?

Read Answer Asked by Steven on June 02, 2021

Q: Hello 5i Team
Further to Camís question on June 01 regarding BPO.PR.C and related BPO.PR.N
Brookfield Office Properties announced (see Brookfield Property Partners website) at days end on June 01 the new reset dividend rate.
For the readers information, the reset rate is usually stipulated in the prospectus as being set at end of business day 30 days before the reset date. Some companies are very prompt in issuing news releases for preferred reset issues and some are not!
Why do you think Brookfield did not redeem the BPO.PR.C issue? At the new reset rate of 6.117 %, I would have thought BAM/BPY would have been able to raise debt at much lower rate, considering BAM raised debt at sub 3 % in April 2021. Or was this a case of in-opportune timing, with the preferred share issue being available for redemption prior to the closing of the BAM/BPY takeover?
Thanks

Read Answer Asked by Stephen on June 02, 2021