Q: I have held this fund for years and have enjoyed a dividend payment of 7 dollars each month for each 100 shares I hold. Since mid-November The price of shares/units have been falling. Am I missing something that is causing this decrease in value.
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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: Is eif.db.i a safe bond and do you like it?
Q: Hi, I was planning to buy floating rates preferred shares to profit from future rates increases. Many preferred reset shares have a floating rate counterpart. At reset, the 3months floating rate shares may, under some conditions, be converted to the 5-years fixed reset and vice versa. Sometimes the floating shares are forced to convert if the float is too small. (Example : Enb.pb and Enb.pc which have a reset date in May 2022). First question: In general can a company redeem only one and not both « linked » shares. Can they redeem the floating shares any time or only at the fixed reset date?.
For strategy, would you choose a cheap low coupon floating share (some lower than 1.5%), giving up on a higher short-term yield, but with more leverage when rates increase, thus good capital gain. In this case, would a 2 years time frame be a good one or too short? Or would you choose a higher coupon (many between 2-3%) and a longer time frame?
All rate-reset preferred shares I hold had already a nice move in 2021, I do not think there is much to be gained right now. Many are being redeemed. The banks’preferred will disappear in the next years and are priced accordingly, too expansive. That’s why I’m interested in floating-rate shares. Some perpetual preferred (BCE, BAM, ..) have floating rates linked to the prime rate, also very successful in 2021. Easier to bet on ? (I own already BCE.pr.b and BCE.pr.d)
Best Wishes for 2022 to the team.
For strategy, would you choose a cheap low coupon floating share (some lower than 1.5%), giving up on a higher short-term yield, but with more leverage when rates increase, thus good capital gain. In this case, would a 2 years time frame be a good one or too short? Or would you choose a higher coupon (many between 2-3%) and a longer time frame?
All rate-reset preferred shares I hold had already a nice move in 2021, I do not think there is much to be gained right now. Many are being redeemed. The banks’preferred will disappear in the next years and are priced accordingly, too expansive. That’s why I’m interested in floating-rate shares. Some perpetual preferred (BCE, BAM, ..) have floating rates linked to the prime rate, also very successful in 2021. Easier to bet on ? (I own already BCE.pr.b and BCE.pr.d)
Best Wishes for 2022 to the team.
Q: Can you provide a recommendation for the the equivalent to PFFA in Canada. i am heading into retirement so looking for dividends.
Thank you and merry Christmas
Thank you and merry Christmas
Q: I owned ECN.PR.A in my RRSP. I bought it primarily for income purposes. They were redeemed on December 31. I am thinking of reinvesting in ECN.PR.C with the funds that I received at redemption. What is the chance that it will be redeemed? What is the earliest that ECN can redeem these preferred shares?
Q: More of an educational question on Convertable Bonds, e.g. NFI conv bonds issued 2 Dec 2020 at $1000 per bond paying 5% interest convertable to common shares at $33.15 anytime before or on maturity in 15 Jan 2027. These trade on the TSX under NFI.DB currently at $99.00. How does the price go from 1000 to 99. Would I be buying the "bond" or something else. What price would I get on maturity. Is it common for convertable debentures to trade on the TSX.
Thanks in advance. Ken
Thanks in advance. Ken
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iShares S&P/TSX Canadian Preferred Share Index ETF (CPD $13.78)
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BMO Laddered Preferred Share Index ETF (ZPR $12.44)
Q: Hi All at 5i!!! Is there a significant difference between CPD and ZPR??? Would one be better than the other for income and security??
Cheers, Tamara
Cheers, Tamara
Q: Any idea why preferreds are collapsing the last few weeks? Some to below their recall rates of $25. I only own rate reset preferreds and the BMO fund ZPR. With the prospect of higher rates I can see why perpetuals would drop, but rate reset preferreds should benefit from higher rates. Even those with minimum resets of 5% are on the decline. Thanks.
Q: Not sure that I completely understand what a variable dividend is and how it works. Is the same as a variable mortgage rate?
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AltaGas Ltd. cumulative redeemable 5-year rate reset preferred shares series K (ALA.PR.K $24.99)
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Brookfield Infrastructure Partners L.P. Class A Preferred Limited Partnership Units Series 7 (BIP.PR.D $24.99)
Q: Good morning,
I have noticed that my holdings in the above shares have declined to about the issue price of $25 in the last couple of weeks. I understand that BIP.PR.D is due to reset in January 2022 and ALA.PR.K in February. The price movement suggests to me that the companies plan to recall these shares but I haven't found any statements that they intend do so. It would make sense if they did as they will otherwise have to continue to pay a 5% dividend for the next five years. Do you have any information on this? I'm thinking that if I can buy more shares at $25 or less I will get one dividend and then a return of my $25 or I will continue to get 5% on those shares for the next 5 years.
I have noticed that my holdings in the above shares have declined to about the issue price of $25 in the last couple of weeks. I understand that BIP.PR.D is due to reset in January 2022 and ALA.PR.K in February. The price movement suggests to me that the companies plan to recall these shares but I haven't found any statements that they intend do so. It would make sense if they did as they will otherwise have to continue to pay a 5% dividend for the next five years. Do you have any information on this? I'm thinking that if I can buy more shares at $25 or less I will get one dividend and then a return of my $25 or I will continue to get 5% on those shares for the next 5 years.
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iShares S&P/TSX Canadian Preferred Share Index ETF (CPD $13.78)
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Sun Life Financial Inc. Class A Non-Cumulative Rate Reset Preferred Shares Series 12R (SLF.PR.I $24.99)
Q: This preferred is being redeemed. Is CPD a suitable replacement?
Q: Good Morning 5i
What are your views on the need, terms and quality of a $25M Senior Convertible Note announced yesterday? The market reaction appears to be negative. Is this a short term reaction in your view?
Thanks for any comments.
What are your views on the need, terms and quality of a $25M Senior Convertible Note announced yesterday? The market reaction appears to be negative. Is this a short term reaction in your view?
Thanks for any comments.
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BCE Inc. (BCE $35.06)
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Emera Incorporated (EMA $71.69)
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Brookfield Property Partners L.P. (BPY.UN $23.29)
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Constellation Software Inc. Unsecured Subordinated Floating Rate Debentures Series 1 (CSU.DB $117.25)
Q: Hi 5i.
Looking to boost the dividends in my Canadian equity portfolio by peppering in some preferred shares, Can you recommend 5 companies preferred shares that are buyable with an eye on safety, I currently have CSU.DB
Many thanks!
Looking to boost the dividends in my Canadian equity portfolio by peppering in some preferred shares, Can you recommend 5 companies preferred shares that are buyable with an eye on safety, I currently have CSU.DB
Many thanks!
Q: Hi, could you please comment (and briefly explain) AFRM latest news on selling $1.25B (now 1.5B ?) of convertible senior notes in a private offering ? What is your opinion on that move and how this could affect latest stock momentum ?
Thank you,
Thank you,
Q: Hi Peter and 5i,
Thank you for all the valuable advice and insight over the years. It is much appreciated.
I’ve been slowly buying a few convertible debentures as a small part of my fixed income portfolio. Mainly interested in the enhanced coupon rate the convertible debentures pay with the potential of the conversion into common shares.
I just have a few questions to ensure that I am understanding all the terms associated with the convertible debentures. Most of the issues seem to have relatively all the same terms regarding Conversion, Maturity Date Structure and Share Payment Option on Redemption or Maturity.
I’ll use the November 16th issue from EIF as an example.
Maturity Date – January 15, 2029
Coupon Rate – 5.25%
Conversion - The Debentures will be convertible at the holder’s option into fully-paid common shares of the Company (“Shares”) at any time prior to the earlier of 5:00pm (ET) on January 15, 2029 and the business day immediately preceding the date fixed for redemption at a conversion price of $60.00 per Share (the “Conversion Price”), representing a 30% premium, being a ratio of 16.6667 Shares per $1,000 principal amount of Debentures.
Redemption Scenarios:
1. The debentures will not be redeemable by the Co. at any time on or before January 12, 2025.
2. After January 15, 2025 and prior to January 15, 2027, the debentures will be redeemable by the company on not more than 60 days and not less then 30 days prior notice at a price payable equal to $1,000 per debenture plus accrued and unpaid interest, provided that the Current Market Price (CMP is defined as the volume weighted average trading price of the shares on the TSX for the 20 consecutive trading days ending 5 trading days prior to the applicable date) of the shares on the date on which the notice of redemption is given exceeds 125% of the Conversion price.
3. On or after January 15, 2027, and prior to the Maturity date, the debentures will be redeemable by the company on not more than 60 days and not less than 30 days prior notice at par value plus accrued and unpaid interest.
Share Payment Option on Redemption or Maturity – Payment will be satisfied by delivering for each $1,000 due, that number of freely tradeable shares obtained by dividing $1,000 by 95% of the Current Market Price (CMP)
Questions:
1. Do you see any downsides to have a % of fixed income portion of a portfolio in convertible debentures?
2. Redemption Scenario #2. This seems like the critical 2 years.
a. Am I understanding it correctly in that the Company can only redeem during these two years if the price of the common stock is above $75 (Conversion Price $60 x 1.25)?
b. If the company gives a Notice of Redemption during this period, you better take it (provided my understanding of a. was correct). It seems they would really want to pay in shares versus cash.
c. Do the discount brokerages (in this case iTRADE) normally notify you of a Notice of Redemption?
3. Redemption Scenario #3. If you get a Notice of Redemption in the last two years, does the holder have the option to convert into common shares (say the shares were trading at $80) before the redemption date.
4. Is there a general rule as to when you should convert?
5. Is it common for companies to use the Share Payment Option on redemption or maturity?
6. Have I missed anything that you would suggest to watch for?
Thank you so much for helping me understand my small adventure into convertible debentures.
Thank you for all the valuable advice and insight over the years. It is much appreciated.
I’ve been slowly buying a few convertible debentures as a small part of my fixed income portfolio. Mainly interested in the enhanced coupon rate the convertible debentures pay with the potential of the conversion into common shares.
I just have a few questions to ensure that I am understanding all the terms associated with the convertible debentures. Most of the issues seem to have relatively all the same terms regarding Conversion, Maturity Date Structure and Share Payment Option on Redemption or Maturity.
I’ll use the November 16th issue from EIF as an example.
Maturity Date – January 15, 2029
Coupon Rate – 5.25%
Conversion - The Debentures will be convertible at the holder’s option into fully-paid common shares of the Company (“Shares”) at any time prior to the earlier of 5:00pm (ET) on January 15, 2029 and the business day immediately preceding the date fixed for redemption at a conversion price of $60.00 per Share (the “Conversion Price”), representing a 30% premium, being a ratio of 16.6667 Shares per $1,000 principal amount of Debentures.
Redemption Scenarios:
1. The debentures will not be redeemable by the Co. at any time on or before January 12, 2025.
2. After January 15, 2025 and prior to January 15, 2027, the debentures will be redeemable by the company on not more than 60 days and not less then 30 days prior notice at a price payable equal to $1,000 per debenture plus accrued and unpaid interest, provided that the Current Market Price (CMP is defined as the volume weighted average trading price of the shares on the TSX for the 20 consecutive trading days ending 5 trading days prior to the applicable date) of the shares on the date on which the notice of redemption is given exceeds 125% of the Conversion price.
3. On or after January 15, 2027, and prior to the Maturity date, the debentures will be redeemable by the company on not more than 60 days and not less than 30 days prior notice at par value plus accrued and unpaid interest.
Share Payment Option on Redemption or Maturity – Payment will be satisfied by delivering for each $1,000 due, that number of freely tradeable shares obtained by dividing $1,000 by 95% of the Current Market Price (CMP)
Questions:
1. Do you see any downsides to have a % of fixed income portion of a portfolio in convertible debentures?
2. Redemption Scenario #2. This seems like the critical 2 years.
a. Am I understanding it correctly in that the Company can only redeem during these two years if the price of the common stock is above $75 (Conversion Price $60 x 1.25)?
b. If the company gives a Notice of Redemption during this period, you better take it (provided my understanding of a. was correct). It seems they would really want to pay in shares versus cash.
c. Do the discount brokerages (in this case iTRADE) normally notify you of a Notice of Redemption?
3. Redemption Scenario #3. If you get a Notice of Redemption in the last two years, does the holder have the option to convert into common shares (say the shares were trading at $80) before the redemption date.
4. Is there a general rule as to when you should convert?
5. Is it common for companies to use the Share Payment Option on redemption or maturity?
6. Have I missed anything that you would suggest to watch for?
Thank you so much for helping me understand my small adventure into convertible debentures.
Q: I am wondering if the recent $65M debenture deal is significant.
Is well looking at another significant acquisition or is it simply to meet the request of a major investor ?
Thank You
Is well looking at another significant acquisition or is it simply to meet the request of a major investor ?
Thank You
Q: My question is about convertible debenture. What are they? What is the difference between a good one or a bad one? For instance, exchange income corp. Just put one out at 5.25%
Thx
Thx
Q: Hello,
There was a question this morning about U convertible senior notes. What are they exactly and is that a positive for the stock? Your insight is appreciated.
Thank you very much!
Marc
There was a question this morning about U convertible senior notes. What are they exactly and is that a positive for the stock? Your insight is appreciated.
Thank you very much!
Marc
Q: Hi! Could you comment on Unity Proposed $1.5 Billion Offering of Convertible Senior Notes. Thanks.
Q: Given higher inflation, is it a given my fixed rate reset preferreds will decline in price? How much does term to maturity impact price? Am I correct in presuming a short term to rate reset date would benefit price inasmuch as the reset rate would be higher if the B of C rate has risen in an inflationary scenario? Thank you.