Q: I notice that lately, the Premium of stock price vs NAV has shrunk considerably to the level of .09 at this time. Is this because of lower Canadian interest rates and what is the likelihood of its trading below NAV if rates continue to decline from here? Thanks
5i Research Answer:
It could be rate-related, but it might also be related to the capital gains changes, which make it less attractive than before to investors seeking to avoid interest income. We have also heard anecdotes about brokers and investors avoiding it in the short term because of the premium. We would not really expect it to trade at a discount, though, as the tax structure is still worth something.