CU Inc. has announced:
that it will issue $200,000,000 of 3.857% Debentures maturing on November 14, 2052, at a price of $100.00 to yield 3.857%. This issue was sold by RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., TD Securities Inc. and Scotia Capital Inc. Proceeds from the issue will be used to finance capital expenditures, to repay existing indebtedness, and for other general corporate purposes of ATCO Electric Ltd. and ATCO Gas and Pipelines Ltd.
The bonds are rated “A” by S&P.
This is interesting because CIU.PR.A closed at 25.16-20 today to yield 4.57-56% to its limit maturity (although this issue is a PerpetualPremium, it doesn’t quite trigger a YTW scenario of a call in the HIMIPref™ analysis. The bid-YTW of 4.57% is equivalent to 5.94% interest at the standard conversion factor of 1.3x, so the pre-tax interest equivalent spread (in this context, the “Seniority Spread”) of the Straight Perpetual over the debenture is about 210bp – very close to the 220bp for long corporates vs. PerpetualDiscounts reported November 14.
So it would appear that despite all the problems with the lack of PerpetualDiscount issues and their poor quality (relative to what the index was before all the banks and insurers transformed into DeemedRetractibles), the Seniority Spread as calculted is still meaningful – at least as far as a single test is concerned!
This entry was posted on Friday, November 16th, 2012 at 1:03 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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CIU Issues 40-Year Debs At 3.857%
CU Inc. has announced:
The bonds are rated “A” by S&P.
This is interesting because CIU.PR.A closed at 25.16-20 today to yield 4.57-56% to its limit maturity (although this issue is a PerpetualPremium, it doesn’t quite trigger a YTW scenario of a call in the HIMIPref™ analysis. The bid-YTW of 4.57% is equivalent to 5.94% interest at the standard conversion factor of 1.3x, so the pre-tax interest equivalent spread (in this context, the “Seniority Spread”) of the Straight Perpetual over the debenture is about 210bp – very close to the 220bp for long corporates vs. PerpetualDiscounts reported November 14.
So it would appear that despite all the problems with the lack of PerpetualDiscount issues and their poor quality (relative to what the index was before all the banks and insurers transformed into DeemedRetractibles), the Seniority Spread as calculted is still meaningful – at least as far as a single test is concerned!
This entry was posted on Friday, November 16th, 2012 at 1:03 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.