Investment Q&A

Q: I have recently been picking away at these preferred shares in the $14-15 range. This particular issue is a rate-reset which is going to reset on June 30th at Gov't 5yr + 1.28%, but there also is an opportunity to convert to a floating series prior to the reset date. So, the question is: Should I convert to the floating series in light of a market that seems to be indicating higher future rates? Canada should eventually follow the US in raising rates, correct? Thanks.

Q: Does it make sense from a tax point of view to put Preferred shares - rate reset in a RRIF to get a higher yield. My brokerage cash account has common shares and no additional cash available.
Thanks to all

Q: With the recent drop in the Bank of Canada interest rate, a lot of rate reset preferreds have dropped in price. Those with reset dates coming up soon have been hit particularly hard. One example which I hold already is Canaccord Genuity series A (CF.PR.A) which resets Sept 2016 (BoC + 3.21%). It currently trades at a steep discount ($16.14) for a current yield of 8.5%. In my opinion given the credit quality and price discount, the selling of this one and a lot of other rate reset preferreds (coming due for reset) has been overdone and all things considered offer very attractive yields even with the low reset rate. I have room for more preferreds in my fixed income allocation. Do you have any recommendations for similar rate reset preferreds from companies with good credit quality that have fallen well below the $25 issue price and now look attractive?

Q: On the previous question regarding reset prefs, the 5 year BOC, from their website is 1.5% yet the reset used was .79%. I am confused. Is .79% the YTM? and should that be used to calculate the "new" yield till the next reset? Thank You

Q: Hi There

Fairfax has just announced the reset rate on the above at 2.91%.
My reading of the prospectus was that the reset rate was to be equal to 2.66% plus 5yr GOC rate(~0.79%) = 3.45%.
what am I missing here.
Thanks
David

Q: what is your opinion of the Enbridge preferred shares A B D and F? How often do they pay the dividend and why are they at 52 week lows? thanks Chet

Q: The price dropped significantly yesterday. Should I hold it until maturity? Will I receive the issue price at maturity?

Q: Your thoughts on the new TransCanada Corporation 3.80% 5.8-yr Rate Reset Preferred Shares.

Thank you,

Bob

Q: Hi - in an answer to a question on Friday re BCE prefs - you referred to Benchmark 5 yr Gov bond yields of 1.75%. Here is what you said:

"The benchmark 5 year bond yield right now is 1.75% (from the BoC site), but yields are much lower now."

I read the latest benchmark 5 year yield as .80% - from the BOC website. Am I missing something. I am looking at rate reset prefs so would like to be clear on the benchmark for the reset.

Thanks

Q: SJR.PR.A now trades at $17.50 or there abouts and it will be going to a floating rate next June 30, 2016 using the 5 year BOC +200 basis points. What do you think might happen to the price of this preferred when it goes to the floating rate?

Q: Which vehicle do you prefer, CPD or ZPR, and why? Thanks!

Q: My debentures with CHE.UN mature in March 2017 should I hold till then and if yes
do I cash out or stay with them, I like the dividend. Suppose it would depend on the deal at that time.
What are my options?
Mel

Q: Good Morning
BCE.PR.G is a fixed-reset preferred share. Almost all fixed reset preferred shares are reset by taking into account the 5 years Government of Canada Bond plus a fixed reset rate.
The terms of reset for BCE.PR.G are quite different and are being described by various brokers as ">80% of 5 YR Government of Canada Yield".
Can you please explain as to HOW the rate will be reset for BCE.PR.G on May 1, 2016?
Thanks

Q: I hold some conv debentures, all trading above par and yielding around 4.5%, all maturing in 3-5 years. Recognizing that I would give up any conversion advantages should a stock take off, what do you see as the pros and cons of selling all these and replacing with CVD with a higher yield and probably better liquidity (I would be buying about 3,500 shares). Does CVD move more with the bond market, or the stock market?
thank you

Q: Recent weakness in ENB preferreds is caused not only by the shift of assets to ENF and the common dividend increase, as 5i pointed out, but also a downgrade of the company from stable to negative by Standard and Poors last Nov.22, which you may have missed and caused a significant weakening of the issues in Dec. They state in part "We view Enbridge’s financial risk profile as “significant.” The continuing large capital program to expand existing and build new liquids pipelines will continue to pressure financial metrics for the next several years."

The whole article in prefblog is here http://prefblog.com/?cat=31

Q: Bombardier announced that it has suspended its dividend. Is that just for the common shares or does that include the preferred shares?

Q: Dear Sirs,

Looking for your thoughts on Primero - it recently came to market with a 5 year US pay debenture(5.75%)and subsequently has traded down from the $5.80 area, where the debenture has begun trading in the low 90's. Any reason for the steep decline and do the debentures represent value at these levels?

With thanks,
B

Q: Hi Peter and Team

I am a 70 year old retiree and currently have 90 percent of my savings in Equities and 10 percent in cash. I am concerned that I should have some fixed income for safety in event of a significant market pullback. Can you recommend either a bond etf or bond mutual fund that would offer some protection and a modest return. What percentage would you recommend.

Ray

Q: Hi Peter,

Could I have your opinion on Bombardier Pref B ? I have about a 50 % loss if I sold today, don't mind the income but concerned about future down side. Would you sell and move on ?

Thx
Dave

Q: I am confused re value received on call / reset date and would appreciate if u could clarify
Example : perpetual BRF.PR.F trading now at $22.40 and bought at par @$25.00 with a call date 31 July 2018 at $26.00. Can you explain why it would be called at this price and how likely is this ?

Example : RESET. AQN.PR.A trading now at$18.40 and bought at par at $25.00 with a reset date 31dec 2018 for $25.00 Does this mean that on 31/12/2018 the investor has the choice (or is it the company's choice ) to cash in the shares ? Secondly does the investor get the par value $25 or the current market value on that date for the shares?