Monday was as strong day for the markets with the S&P 500 index up 1.2% and Toronto up 0.8%.
Among the gainers were:
BHP Billiton – up 3.0% for the BBL shares on New York
Canadian Western Bank, up 2.6%.
FedEx, up 2.8%.
Dollarama, up 6.1%
American Express, up 2.2%
AutoCanada, up 2.9%
TFI International, up 2.6% and has announced another modest acquisition
CRH Medical, up 3.4% in Toronto
Linamar, up 2.2%
For those interested in rate rest preferred shares: Canadian Western Bank today announced the new reset distributions on CWB.PR.B Series 5. The timing of the reset is fortuitous for CWB in that it comes after the Bank of Canada five year bond yield has fallen from a recent high of almost 2.5% of last October to a level of 1.54% at noon today. The reset distribution on these pref shares will be $1.07525 per year or 4.301% of $25. Since these shares closed today at $19.10 this is a yield of 5.63% of that price. Alternatively, those holding these shares can (up until April 15th) elect to convert to a floating rate option that will pay $0.27525 in the initial quarter or an annualized yield of 4.404% on $25 or 5.764% of the current $19.10 price. But this second option will float with three month T-bill rates.
It is unusual that the floating yield option here, at least initially, is higher than the new five year fixed rate. That is because the three month treasury bill yield is currently slightly higher than the 5 year bond yield (Inverted yield curve). Either option might be considered reasonably attractive. Choosing the floating option might make sense if you expect the 3 month treasury yield to rise and not fall over the next five years.
It will be interesting to see what percentage of the holders of these shares choose the fixed and floating options. In either case, CWB is not going to redeem them and they will continue to trade in the market. (Although if too few chose the floating option or too few choose the fixed option then only the more popular option will continue.) I think staying with the fixed five year distribution might make the most sense.