This issue was announced May 7. It seemed reasonable – if aggressive – at the time … but the credit ratings aren’t all that great AND it’s a perp.
The HIMI PerpetualDiscount index is down 0.66% since the announcement date AND credit spreads have widened.
The curvePrice of this issue, measured against the taxable curve, is now $24.34.
Price due to base-rate : 23.52
Price due to short-term : -0.50
Price due to long-term : 1.63
Price due to Interest Income : 0.00
Price to to Cumulative Dividends : 0.00
Price due to SplitShareCorp : 0.00
Price due to Retractibility : 0.00
Price due to Credit Spread (2) : 0.00
Price due to Liquidity : 1.21
Price due to Floating Rate : 0.00
Price due to Credit Spread (3) : -1.69
Price due to error : 0.17
Price due to Credit Spread (High) : 0.00
Price due to Credit Spread (Low) : 0.00
Now, Pfd-3 issues are very hard to analyze … they behave less like fixed-income instruments than higher rated issues. And this issue has a “split rating” – S&P rates them P-2(low), higher than does DBRS (Pfd-3(high)) – which makes things even more difficult.
When the issue was announced, the curve price was $24.66:
Price due to base-rate : 23.43
Price due to short-term : -0.24
Price due to long-term : 1.42
Price due to Interest Income : 0.00
Price to to Cumulative Dividends : 0.00
Price due to SplitShareCorp : 0.00
Price due to Retractibility : 0.00
Price due to Credit Spread (2) : 0.00
Price due to Liquidity : 1.48
Price due to Floating Rate : 0.00
Price due to Credit Spread (3) : -1.57
Price due to error : 0.14
Price due to Credit Spread (High) : 0.00
Price due to Credit Spread (Low) : 0.00
I will be glued to my screen on the projected closing date of May 25, eager to see how this one plays out!
Update, 2007-5-22: Curve Price now 24.22.
Update, 2007-5-23: Curve Price now 24.08.
Update, 2007-5-24: Will commence trading tomorrow, with the symbol EPP.PR.A. Curve Price now 23.81. We shall see!
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