Investment Q&A

Q: I would appreciate your advice concerning Superior Plus convertible debentures. I am holding series G (7.5% coupon maturing Oct 31, 2016) which have a $11.35 conversion price and can be called as of Oct 31, 2014 if 125% above the conversion price. The debentures are currently trading at $128. Given that the share price is already just above the 125% call condition, and assuming it remains there, it is safe to expect that come this October they will be called by the company? When and if this is announced would the debenture price instantly drop? I am wondering if it makes sense to sell now with the small premium before they get called by the company?
Thanks.
Steven

Q: This is a comment for Warren, looking for a list of preferred shares.
James Hymas has one here: http://www.prefinfo.com/

Have a speedy recovery, Peter and thank to the whole team.
Marilyn

Q: Good Morning Team
I am interested in finding a list of Rate reset preferred shares(including reset date and terms). If this is not available do you have a few recommendations?
Thanks and stay safe.

Q: Hi Team
Could you comment on the interest rate sensitivity of VSN.PR.A
on the share price of this issue, i purchases it around 23.50 awhile ago.Would this issue be considered to be as volatile as the Perpetual Preferred shares that some company's issue, and finally would you recommend it.
Thanks Gordon

Q: Bonjour, I hold BPO.PR.J shares and part of my holding was exchanged for BPS.PR.B shares. Do you think that this is a good deal for holders of the initial shares J shares?
Thanks
Ronald

Q: I am considering to buy BPO.Pr.l and/or EFN.Pr.c. Like to have your comment. Also, will an eventual rate increase harm Preferreds and convertible debentures?
Thank you. Joseph

Q: IBI.BB

I own some IBI 7% Debentures that are coming due in December 2014. IBI has made an offer to extend the maturity date to 2019 and they haveattached 2 options with a yes vote:

"Option A" Debentureholders receive a consent fee, consisting of an unsecured, non-convertible promissory note equal to $195.65 per $1,000 principal amount of Debentures, payable December 31, 2016 and bearing interest at the rate of 7.0% per annum and payable on maturity; or

"Option B" Debentureholders receive a consent fee, consisting of an unsecured, non-convertible promissory note equal to $86.96 per $1,000 principal amount of Debentures, payable December 31, 2016 and bearing interest at the rate of 7.0% per annum and payable on maturity and the reduction of the conversion price for the Debentures to $5.00 per common share from $19.17 per common share.

The no voters would only get the changed conversion price.

Which option would you suggest, or would you suggest selling it. It's value presently is only about 1% of my RRSP portfolio.

Q: Hi Guys:

We are long term holders of Chemtrade Logistics (CHE-UN.TO) Recently they announced a public offering of $110 million @ 5.25% convertible unsecured subordinated debentures. How would we participate in this offering? What would your advice be for someone to get the 5.25%. This is in a registered account. Marc

Q: We currently have approx $20,000 GIC maturing that we wish to reinvest. The current yield on GIC's is very low and we are reluctant to put this money back in GICs. However in our portfolio we consider this $20,000 to be part of our "SAFE" money. We are considering preferred shares for their higher return and relative safety if we buy from a "blue" chip company.

Could you give me the name of 3 preferred shares that you feel confident in recommending. We are happy to hold these for long term. If you have any other suggestion for a very safe investment we would be happy to hear that as well.

Thank you

Q: Good morning 5I team!
I start my day with your good advice. You are great educators!
I hold a position in AIF.DB.A in a portfolio that consists mostly of stocks in your model portfolio. AIF.DB.A has done very well for me, and I wonder if I should let it run or take some profit. Thank you.
Ellen

Q: BPO.PR
Hi There
I hold approx equal amounts of the L and R series (~1.5% of each).I am thinking of selling R and buying more L with the proceeds, for higher current and reset yields and shorter time to reset.
Am I missing something, as the yields appear not to be what you might expect?
Thanks as always

Q: Comment to Shirley re: the new EFN preferred share issue: If you are interested in this new issue, I strongly suggest that you consider instead a "market purchase" of EFN.PR.C, which was issued a few months ago, and offers both a better (+0.1%) coupon rate and a higher (9bp) reset rate, while obviously having an identical credit quality and nearly the same reset date (a few months earlier). Furthermore, EFN.PR.C is about to go "ex-dividend", and so will from the start give an additional nearly 41 cent advantage over the new EFN issue. At the moment I'm writing this, EFN.PR.C is trading at $25.00.

Q: Peter; Thanks for the EFN reply. Insiders have been buying the EFN prefs, class A and C which yield
roughly 6.5% each. Could you comment on their safety for income and are they rated ? No rush . Thanks.Rod

Q: Hello Fivei Team

As a relatively new suscriber I have found the site very useful and a fresh perspective.
My question is a round real return bond funds. I have held the TD RR bond fund for several years. Last years talk of tapering and interest rate bump pulled them back pulled them back about 10%. YTD on the same fund is up 8.4% with little inflation although the ten year bond has come down since last year.
Can you explain the correlation here as I have always understood these RR's do well in more inflationary times.

Thanks
Jerry

Q: In response to John about information on preferred shares, I would suggest prefinfo.com, a free site by J. Hymas who also has a fee-based pfd share information service. I don't think this site lists everything out there, but the basic info for many pfd shares is listed.

Q: Would you buy cpx.pr.a for income and some growth?

Q: I have question about preferred shares. I noticed anew issue Brookfield Asset Management Inc. 4.50% Rate Reset Preference Shares, Series 4o. They cost $25. I understand one would get the interest rate for 5 years. But is the principal safe??? Can the principal increase decrease, and under what circumstances??? If ordinary shares go up or down do these shares follow suit. I don't understand these so your help in educating me about this type of product is appreciated.

Thank you

Q: In my RRIF I am holding the First Asset Convertible Debenture Fund (DCD.UN) which trades at a discount to NAV and yields about 7.4%. It seems to be structured on derivatives - a forward agreement with a bank - a setup that is different from that of CVD, though the past performance looks similar. CVD trades at a premium to NAV and has a lower yield but I wonder if it is safer overall and in your opinion would you recommend a switch? Thanks, J.

Q: Hi 5i: This comment/question relates to the many questions asked recently about CBO, with particular reference to Rob Carrick's comments. In March, Manfred asked about the disparity between CBO's indicated yield of about 4% and the best corporate bond yield that he could find (2.5%). On May 20 Alayne asked about Carrick's article that claims that the indicated yields badly overestimate the actual yields. Carrick refers to the "yield to maturity", and in your response you said that the point "about the GIC ladder" is valid (namely that an investor is as well off or better with a GIC ladder in place of CBO). These comments still puzzle me. For the last 8 months (for example), the CBO price has been $19.8 +/- $0.1, and the indicated yield has remained above 4%. Thus over this period, at least, Carrick's point about GIC ladders has been false. The dividend is paid monthly and I have received it - no question. The emphasis on yield to maturity seems to me misplaced, at least to a degree. The response you got from the CBO people (in response to John's question) stated that they sell all bonds once they get within a year of maturity. Thus for short term bonds the YTM is not the relevant comparison; you would need to know the "yield to maturity minus one year". The difference between this and YTM could be considerable for a two year bond, for example. I'd appreciate your comments - this whole issue has puzzled me for a while.

Q: Hello 5i
Thanks for the great responses. I am having trouble finding a post where you answered questions on fixed income, suggesting which bond etf’s you would use at the moment, both in the American and Canadian market. I cannot find it through the symbol search, as it is a general category question. I wonder if you could point me to that post or, sorry about the repetition, let me know once again what you would choose for fixed income at the moment.
thanks