Investment Q&A

Q: Hi Peter and Staff

This pref had held up well but is getting slammed this week badly maybe even worse than the BPO prefs of which I also own . I have read all the BPO answers - thoughts on the AX.PR.I please

Thanks for all you do
Dennis

Q: What do you folks think about this preferred. I like the div. but looks like it could be called away at $50 in 2026. Don't like the idea of taking a capital loss.

Q: I saw your recent answer on BPO preferreds. I have held these for a few years now. What do you see as the likelihood of BPO ceasing to exist ? There seems to be quite a bit of panic here.

Thanks,
Mark

Q: I have zero allocated to fixed income. My brokers make it tedious, difficult and expensive to buy T-Bills. I would be happy to ignore this asset class except the apps I use keep scolding me (as did 5i analytics last year). I regarded securities like BCE.us , AQN.us and other such dull ones as bond proxies and considered them as fixed income. Is this thinking unwise? I reluctantly turned my attention— at gun point— to preferred shares. Question:

BN.PR.B has declined almost 7.5% in the last month, pushing yield up over 9% p.a. Is the price change just a function of interest rate changes or is this a flawed security? If not this one , would some other preferred shares be better? Loblaws? Enbridge? Or ETFs like HYG? I just want something to tidy up that pesky asset allocation thing and move on to things I understand. Many thanks.

Q: Can you give me a brief overview of the evolution of Brookfield Office Properties. In which corporate entity do the BPO preferreds reside and what do you think of this preferred share?
Thank you, Hugh

Q: Please advise. Hold or sell. Forget buy, I'm not sure about your recent response to pat saying there were numerous responses to similar questions. There should have been so I assume I was doing something wrong in the search.

Q: This preferred has taken an awful dive, please speculate on causes, tia pat

Q: I currently hold 2 preferreds in my RSP, BEP and CPX, both with a floor yield. While I have no compelling reason to sell either (both are up between 5-10% based on my purchase price and disregarding dividends), I note that ZPR has a slightly higher yield and would be much easier to sell should I want to. What do you see as the pros and cons of selling the 2 individual preferreds and replacing with ZPR? Assuming (?) that rates have somewhat stabilized and are probably more likely to decrease long term rather than go higher, how would this affect the price of ZPR? Does the price of ZPR react more to interest rates or the overall market direction?
My objective here is more income-oriented that capital gains.

Thank-you, Grant

Q: Hi Peter and 5i,

Here is your answer to the last question on ECN.PR.C. November 2022.

"Yes; while it is a small company we are comfortable with its credit risk, and the dividend was re-set in June for the next five years. Note the shares can still fluctuate and decline if rates rise or investors worry about the company, but the dividend should be stable and fine."

Do you still feel the same way about this Preferred given the current circumstances of the company?

Thank you for your valuable service.

Cheers

Q: The BPO pref shares, in my view, are trading at levels that indicate serious concern over credit risk.
A question put to you on Jan 30, 2023 was with respect to who held the liability for the BPO pre shares (the questioner was asking about BPO.PR.G specifically). You replied:
“While BPO is a separate legal entity, its preferred shares are under the obligation of BN.”
However, a similar question was posed Mar 20, 2023 with respect to BPO.PR.P and you seemed to reply that the obligation on those BPO pref shares was with something called Brookfield Property Preferred LP.
Forgive me if I have mischaracterized your answers, this is a bit confusing to me. It seems to be a very big difference though.
I am assuming that the Preferred LP is some sort of subsidiary?
If so, that would make the BPO prefs MUCH more risky, in my opinion.
I note that the Financial Post reported in Feb 2023 that yet another Brookfield subsidiary (Brookfield DTLA] has defaulted on loans on two major office towers in downtown Los Angeles. The loan amounts are staggering, by the way.
Can you please clarify all this?

Q: With all the recent changes in Brookfield, I would like to find out who is the ultimate corporate entity behind these preferred shares. And if the corporation has become a US corporation, do these preferred still qualify for the dividend tax credit? How do you rate it for safety?
Thank you.

Q: Hi 5i,

More Brookfield questions. This is about Brookfield Properties Corporation and specifically the preferred shares BPO.PR.P.

Why do you think these shares are trading so low (currently $12.30 with a 9.22% dividend yield not counting capital gains)? BPO.PR.P (P3L) trades even lower than the CF.PR.A (7.2%) which is not currently rated (rated P4 when rated).

Which Brookfield company ultimately guarantees these shares? Are its financial statements available to the public? Any information about security would be appreciated.

What is your opinion about the safety of income and capital for these preferred shares? Are they a buy/hold/sell in your opinion?

Thanks for your opinions and information.

John

Q: In my RIF account I have RY, TD, & ENB reset preferred shares all bought when issued at $25, now trading in the $14 to $17 range. The accumulated book value is $61K. My present annual yield is 3.9%, 3.8% & 4.4% respectively. The reset year is 2024, when the reset interest rate will be the Bank of Canada 5 year rate plus 2.3%, 2.4% & 2.7% respectively. So my question is, with interest rates presently rising, in your opinion are they worth holding to the reset date or should I accept my loss & redeem them now. Thanks … Cal

Q: Hi 5i,

In Sept 22 you gave NFI a "B" rating. You commented that it is a little on the risky side.

Do you think the Balance Sheet and Cash Flow are strong enough for an investment in their convertible debenture (NFI.DB) which is due in 2027? I realize their would be no conversion possibility with the bond.

Thanks for your opinion on NFI.
John

Q: Hi 5i, I currently have preferred shares in 13 different companies. I would like to diversify as they are all in finance, utilities, energy and Telecom. Can you name three companies to put into my RRSP that are US based with preferred shares that are solid. I'm looking for 5y resets or perpetual, thanks.

Q: Do you believe these preferred shares are safe to hold until maturity?
Thanks

Q: Do you agree with this statement....
"BPYPO matures (at the option of BAM) in March next year, with incentives for BAM to retire the ticker at par of 25% per unit, translating to a potential 56% yield to maturity opportunity in one year."

BPYPO is trading at roughly $15.40 USD. Is the par price $25 USD ? Do you believe BAM (I think that should actually be BN) will retire this preferred next year ? Is this a good investment ?

Q: Would this be a good time to average down on this for a long term hold? Thx James
BPYP.PR.A

Q: Hi 5i, can you please give me details on these preferred as I have looked and cant find much at all. Were they issued at $50 and is there a perpetual preferred here as I'm currently looking for those not the resets. I'm assuming these are preferred shares and not debentures.

Q: Subject Preferred Shares are up for reset June 1, 2023. In the event company redeems on this date (they redeemed ENB.PR. J USD last year), is there any recommendation to avoid large currency related capital gain on this shareholder uncontrollable event while Can $ is particualrly weak vs US$?
Thank you