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%.