Q: Hi - Back in 2009 I bought a number of Corporate Bonds (all at a discount) which have done quite well. Unfortunately, a good chunk of them are coming due and I would like to replace them. Finding decent yields is alot tougher. I am looking at Preferred Shares as a potential replacement both for the yield and the dividend tax credit which makes them look even better than corporate or gov bonds. In my view the Prefs - particularly for banks and utilities have risk closer to bonds than equities. Do you agree? Many thanks
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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: I set up a 5 year preffered ladder on the advice of a local adviser. Most of these investments are rate reset types. This ladder is has lost me a lot of money. I note that I'm not the only one in this sinking boat. My question is straight forward. Do I hold these shares or sell them?
Q: I am down 25% after today on cpx.pr. I must admit I did not understand how much it could go down in a reset rates. If interest rates go up later in the year, will those shares go up again? Though it pays a 7% yield, when you are down 25% it is not much comfort. I am thinking of selling and putting the money I have in something with growth and try to recoup the money that way, something like exco or evertz. Your thoughts please. Thanks.
Q: Hello,
ZPR is now down over 5% ytd. This seems to be more than interest rates concerns. Has the credit risk increased? Any ideas why the preferred market is being hit so hard?
BTW, I noticed that the credit ratings of CPD holdings has been removed from their website. I called Blackrock about it: they said they would find out and call me back, but they never did.
Thanks, Greg
ZPR is now down over 5% ytd. This seems to be more than interest rates concerns. Has the credit risk increased? Any ideas why the preferred market is being hit so hard?
BTW, I noticed that the credit ratings of CPD holdings has been removed from their website. I called Blackrock about it: they said they would find out and call me back, but they never did.
Thanks, Greg
Q: The 5 year yield on Canadas is 0.69%. ENB.PR B has dropped from $24.86 to $20.97 since November 17. Do you think now would be a good time to start taking positions in preferreds rather than 5 year GICs @1.25%? Or is an ENB problem causing the decline?
thanks for the ongoing quality replies. I should note that, if today was the 2017 reset, the yield would be 3.09% based on the 240 plus .69
thanks for the ongoing quality replies. I should note that, if today was the 2017 reset, the yield would be 3.09% based on the 240 plus .69
Q: Good Morning
Can you please tell me as to why the RATE RESET PREFERRED SHARES are being hammered since January 19, 2015 when at the same time the PERPETUAL PREFERRED SHARES ARE RISING????????????
Examples of Falling Rate Reset Preferred Shares:
VSN.PR.A down 8%
ENB.PF.C down 4.3%
PPL.PR.G down 5.4%
BRF.PR.A down 5.7%
TA.PR.H down 3.7%
SLF.PR.I down 3%
Examples of Rising Perpetual Preferred Shares:
BRF.PR.E up 3.4%
SLF.PR.D up 1%
I own several rate reset preferred shares and I will appreciate your response as to why the rate reset preferred shares are being hammered when at the same time the perpetual preferred shares are either maintaning their value or rising.
Thank you.
Can you please tell me as to why the RATE RESET PREFERRED SHARES are being hammered since January 19, 2015 when at the same time the PERPETUAL PREFERRED SHARES ARE RISING????????????
Examples of Falling Rate Reset Preferred Shares:
VSN.PR.A down 8%
ENB.PF.C down 4.3%
PPL.PR.G down 5.4%
BRF.PR.A down 5.7%
TA.PR.H down 3.7%
SLF.PR.I down 3%
Examples of Rising Perpetual Preferred Shares:
BRF.PR.E up 3.4%
SLF.PR.D up 1%
I own several rate reset preferred shares and I will appreciate your response as to why the rate reset preferred shares are being hammered when at the same time the perpetual preferred shares are either maintaning their value or rising.
Thank you.
Q: Good morning,
Looking for your insights on a number of preferred shares that are nearing reset in the next year or so and whose prices have been driven down given the recent bank of Canada rate cut and decline in 5 year Canada's. Do you feel these declines represent a buying opportunity in these shares? Also in terms of reset options, the 5 year canada and 90 day bill rates are maybe 20 bps apart, does this make the floater rate the more logical choice, given the redcent compression/ flattening of the yield curve?
With thanks,
Thank yo for your insights.
Looking for your insights on a number of preferred shares that are nearing reset in the next year or so and whose prices have been driven down given the recent bank of Canada rate cut and decline in 5 year Canada's. Do you feel these declines represent a buying opportunity in these shares? Also in terms of reset options, the 5 year canada and 90 day bill rates are maybe 20 bps apart, does this make the floater rate the more logical choice, given the redcent compression/ flattening of the yield curve?
With thanks,
Thank yo for your insights.
Q: Hi Team,
I was considering buying this ETF for yield and relative safety for the next couple of years. Can you share your thoughts. I am assuming that it has declined because the recent BOC rate cut?
Thanks as always for your reply.
I was considering buying this ETF for yield and relative safety for the next couple of years. Can you share your thoughts. I am assuming that it has declined because the recent BOC rate cut?
Thanks as always for your reply.
Q: Comment to David's question this morning:
Assuming that the 5-yr BoC rate (used to determine the reset rate of the preferred shares) at the reset date of March 2016 remains at today's (historically-very-low) value of 0.82%, a discounted cash flow analysis indicates, that at the current bid price of $14.10,the long-term yield of FN.PR.A is 5.3%. This is OK but perhaps a bit on the low side for a sub-investment grade preferred ("Pfd-3").
On the other hand, if you believe that the 5yr-GoC will rise to 1.10% (still low by historical standards) by March 2016, the yield-to-perpetuity increases to 5.8%.
Assuming that the 5-yr BoC rate (used to determine the reset rate of the preferred shares) at the reset date of March 2016 remains at today's (historically-very-low) value of 0.82%, a discounted cash flow analysis indicates, that at the current bid price of $14.10,the long-term yield of FN.PR.A is 5.3%. This is OK but perhaps a bit on the low side for a sub-investment grade preferred ("Pfd-3").
On the other hand, if you believe that the 5yr-GoC will rise to 1.10% (still low by historical standards) by March 2016, the yield-to-perpetuity increases to 5.8%.
Q: Hi There
You seem comfortable with the common stock, based on a couple of recent questions. I'm wondering, before I buy some, why the pref has been on such a steady long term decline . Am I missing something with the generous pref yield?
Thanks
David
You seem comfortable with the common stock, based on a couple of recent questions. I'm wondering, before I buy some, why the pref has been on such a steady long term decline . Am I missing something with the generous pref yield?
Thanks
David
Q: follow up dumb question, then i'll go away...does a company ever chose to redeem preferred shares if the price falls below the issue price? or put another way, in most cases what is the motivation for a company to redeem its preferred issues?
Q: the BNS.PR.C has fallen sharply in the past couple days, is this due to the BOC cut? i was told to also expect share price declines in other rate reset pref's when the US starts to raise their rates...do pref's only move one way? thanks as always...
Q: Are the dividends on these preferred shares still safe with Bombardier's recent financial problems?
Q: Would you consider the new IPO for NPI convertible debentures 4.75% to be an acceptable investment for aTFSA?
Thanks Guys
Thanks Guys
Q: I have relatively balanced portfolio and have some GICs coming due soon, which I’m considering replacing with preferred shares. What do think of ENB.PR.B ? It’s down quite a bit recently. Do you know why it’s dropped so much and are there any preferred share that you like better?
Q: I currently own some M.PR.A preferred shares in my TFSA (since they are interest-bearing and hence not eligible for the dividend tax credit). They appear to be true perpetual prefs (i.e. no issuer redemption or shareholder retraction provisions) offering $1.00 in annual interest. At their current price of $10.05, this is nearly 10% p.a.
Given their attractive interest rate and "seniority" to the common shares, as well as the seemingly diversified nature of Mosaic's underlying business, I am considering purchasing more. Can you provide me with any indication as to the risks associated with Mosaic and these preferred shares?
Thank you!
Given their attractive interest rate and "seniority" to the common shares, as well as the seemingly diversified nature of Mosaic's underlying business, I am considering purchasing more. Can you provide me with any indication as to the risks associated with Mosaic and these preferred shares?
Thank you!
Q: Hi Peter and team
Today, Jan 2, Rob asked for information sources re: preferred stock. I would recommend prefinfo.com published by Hymas Investments It lists all Canadian preferreds by ticker symbol with dividend information, redemption dates, retraction dates (if applicable),type(perpetual, retractable , etc) and misc info such as whether the dividend is cumulative or not. Also in the comments, there is sometimes information on the rating. I hope this helps. Note the symbol is a place holder as your format requires a symbol.
Ross
Today, Jan 2, Rob asked for information sources re: preferred stock. I would recommend prefinfo.com published by Hymas Investments It lists all Canadian preferreds by ticker symbol with dividend information, redemption dates, retraction dates (if applicable),type(perpetual, retractable , etc) and misc info such as whether the dividend is cumulative or not. Also in the comments, there is sometimes information on the rating. I hope this helps. Note the symbol is a place holder as your format requires a symbol.
Ross
Q: Happy New Year to All
Would EIF's improved status as a company justify an inclusion of any or all of the E,F,G convertible debentures as this years TFSA contribution?
Thanks
Would EIF's improved status as a company justify an inclusion of any or all of the E,F,G convertible debentures as this years TFSA contribution?
Thanks
Q: With regards to Rob's question about preferred information, he might consider http://www.prefinfo.com/ by James Hymas as a useful source.
Q: Hello,
I am learning about Preferreds and am wondering if you know of any websites or books that are a good starting point. Does anyone compile a lot of real-time data on the features of various issues, brand new issues, etc? Thanks.
I am learning about Preferreds and am wondering if you know of any websites or books that are a good starting point. Does anyone compile a lot of real-time data on the features of various issues, brand new issues, etc? Thanks.