Q: Hi. Am I right to think that the option of switching to the floating rate series 45 is not a good deal since with the current pref there is the minimum yield and the possibility of a higher yield if rates rise in 5 years? Is it likely to be forced to convert to series 45 in your opinion? Thank you.
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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.
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Fairfax Financial Holdings Limited Cumulative 5-Year Rate Reset Preferred Shares Series M (FFH.PR.M $25.00)
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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 Asset Management Inc. Class A Preference Shares Series 44 (BAM.PF.H)
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TransAlta Corporation cumulative redeemable rate reset first preferred shares series G (TA.PR.J $25.21)
Q: Question on minimum rate reset and simple rate reset Preferred shares:
Minimum rate reset preferred shares lists distribution rate as higher of Minimum and the BOC 5 year rate +x%. The questions are:
1. Can they change distribution rate before the next reset date?
2. can they change distribution rate formula at the time of the next reset date
3. At the reset date, can they swap with other preferred with lower distribution?
4. I suppose they can recall and pay the face value at the next reset date
5. I understand company can not reduce or stop distribution on preferred shares until they cancel dividend on their common shares, correct?
6. is it possible to have any other fine prints on the prospectus that makes them more riskier investment?
Minimum rate reset preferred shares lists distribution rate as higher of Minimum and the BOC 5 year rate +x%. The questions are:
1. Can they change distribution rate before the next reset date?
2. can they change distribution rate formula at the time of the next reset date
3. At the reset date, can they swap with other preferred with lower distribution?
4. I suppose they can recall and pay the face value at the next reset date
5. I understand company can not reduce or stop distribution on preferred shares until they cancel dividend on their common shares, correct?
6. is it possible to have any other fine prints on the prospectus that makes them more riskier investment?