Q: Thank you for your answer the other day with respect to these pref shares. Could you outline what may happen to the price of the shares depending on the reset rates. For example could the price fall to maintain a certain yield? Thanks again
5i Research Answer:
Reset is still several years away, so the stock reaction will likely see some leverage to interest rates. If rates fall, we would expect an uptick in valuation, to a degree. The reverse will be true if rates rise. As we get closer to the reset rate, much will depend on rates at that time. Our guess (and it is a guess) is that rates will be lower at reset, and yes this may indicate a small decline in price, all else equal.