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Discussion Starter #1
boralex conv debs 6.75s of 2017. BLX.DB. Last @ 103.55. For an rrsp.

would anyone have an opinion about these that they're willing to share. Would especially appreciate negative opinion.

conv @ 12.50/sh; BLX common presently around 7.80.

co-gen gas facilities in quebec, ontario, northern new england, france.

wind farms in quebec & france. Total production already pre-sold to hydro quebec.

boralex issued debs last month to cover purchase of their own Power Income unit trust, ie they're taking it private.
 

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This offering just closed on Sept 29th so you are already paying a 3.55% premium which reduces your effective yield.

The conversion price seems poor. Normally it is 25% over the current trading range. That would be under $10 not $12.80.

The other thing to look at is what are their early buyout options. I have not looked at the prospectus for this info.
 

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Discussion Starter #3
thank you keith.

1) i'd already factored in the 3.50% premium. It's ok to me because it's amortized over 7 years. YTM drops to just over 6%, still quite respectable. Other paper i was looking at has 3% premiums but matures in 2 years or less, ouch.

2) i wasn't considering the conversion. Yes the price is too rich. But i'd be buying the debs in a rrsp just for the income. Now that my rrsp energy trusts are becoming corporations with eligible dividends, i want to get them into non-registered accounts, which leaves a bunch of cash in rrsp. And the $64 million question. What. Should. We. Buy. Now.

3) and now for your jewel in the crown. What are their early buyout options, you say. Ta Da ! I hadn't thought of this. I've whizzed thru prospectus, didn't see any early redemptions mentioned. But i'll check it again in detail, for sure. Were they to occur they'd force premature loss of the entire 3.50% premium, what a burn.

thanking you again,
hum
 

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thank you keith.

1) i'd already factored in the 3.50% premium. It's ok to me because it's amortized over 7 years. YTM drops to just over 6%, still quite respectable. Other paper i was looking at has 3% premiums but matures in 2 years or less, ouch.

2) i wasn't considering the conversion. Yes the price is too rich. But i'd be buying the debs in a rrsp just for the income. Now that my rrsp energy trusts are becoming corporations with eligible dividends, i want to get them into non-registered accounts, which leaves a bunch of cash in rrsp. And the $64 million question. What. Should. We. Buy. Now.

3) and now for your jewel in the crown. What are their early buyout options, you say. Ta Da ! I hadn't thought of this. I've whizzed thru prospectus, didn't see any early redemptions mentioned. But i'll check it again in detail, for sure. Were they to occur they'd force premature loss of the entire 3.50% premium, what a burn.

thanking you again,
hum
HUMBLE,

I am really replying to your #2 point above......

I have the exact same scenario with my RRSP....some of my holdings there are converting and paying eligible divs, and I too am going to get them out and put them into my taxable account.....and it will leave a bunch of cash in my RRSP too.
I am pondering exactly what you asked....."what do we buy now???"
Do you have anything in mind?

As an after thought, I called my brokerage about doing a swap, euities come out of RRSP, cash goes in...there fore no RRSP withdrawl.
This is a first for me.
I was told on the phone that there will be a $45 charge..... which I told him I will NOT pay, ( I am a good customer)........does your brokerage charge you??

I suppose another way to do this is simply to sell the equities the the RRSP, and immediately buy them in the cash account.....that would still be 2 commissions to move your own money!

Any thoughts?
 

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Discussion Starter #5
warp re selling stk in rsp & buying same stk in non-registered (ie not swapping,) this would be 3 commish, not the 2 that you mention.

1) the trading approach:

1st commish to sell in rsp, 2nd to buy in cash or margin, 3rd to buy another security in rsp. Altogether about $30.

however stk price could move against you in the pairs trade (sell in rsp, buy in margin.) Suppose you're doing 1000 sh. If stk slips by more than 2.5 pennies, costs will exceed $55 which is the breakeven amount.

of course, price could move in your favour (ie you could sell in rsp & it drops before you buy in margin; or you could short in margin & it rises before you sell in rsp) but there's a risk here, as there always is in pairs trading.

2: the swap approach:

costs will be fixed at $55. Yes the brokers charge a swap fee. Mine would be 45 also. I don't mind paying it. In this swap, broker will move cash into rsp & will move securities at an agreed-upon price out of rsp into cash or margin account. Investor will then have to pay one more $10 commish to buy the final security in the rsp for a total of $55.

there's another advantage to the swap approach. Investor may choose any price between the lo & the hi of the day to evaluate his stock, as long as he gets his swap request in before market close (therefore he does this around 3:45 pm.) In your case warp you will want to choose the lo of the day, because you want to end up with as few dollars as possible in the rsp, right. It's unlikely, using the all-trading approach above, that you'll hit the lo of the day. Keep in mind that if you request a swap after market closes, they can still do it but you'll have to accept the day's closing price. Also keep in mind that your cost base for the swapped-out securities will be the price that you choose, and although choosing the lo of the day will be slightly less advantageous for future capital gains than would be the hi of the day, nevertheless the greater benefit in your case will arise from keeping the dollar value in the rsp as low as is strategically possible.

3. another approach would be to sell the rsp securities that are being transformed into corporations in the rsp & buy another more appropriate security in rsp, then wait in cash or margin account for the original security to drop in price. If you think it's going to drop in price. If you don't mind missing any dividends that it might declare while you're out & waiting.
 

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Thankyou Humble, for you reply.

Just another example where the govt ,( and the banks) , have to complicate our lives.

Never having done a "swap"...this is all new to me.

There were several points you made that I didnt think of so i appreciate your thoughts.
Then again I havent really studied swaps yet, so Id be researching it all, but you have helped a lot.

I will say that I don't intend to pay the swap fees, as I'll be asking for them to be waived. As I have several equities I may want to swap out, itwould be $45 each.
Asking for a goodwill gesture, as a good customer, or threatening to move my accounts usually does the trick.
Im not cheap...I just cant see how $45 is a reasonable fee.....maybe for $10 Id pay..but $45 seems excessive to me.

If you are interested I will let you know how it works out.....


Thaks again for your help......

On the other question,,,What should we buy with the new cash in the RRSP?
 

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Discussion Starter #7
re swapping, $45 is a perfectly reasonable fee. The broker holding my rrsp does a good job. There is work involved in this transaction & they're entitled to their fee imho. This is a representative-handled phone-in job & i believe their minimum commish for a rep-handled phoned-in trade would be $43 ...

plus i wouldn't dream of threatening them. Instead, i always seek to have them partner with me. This works out better imho. And i'm a Very. Good. Customer. One. Of. Their. Best.
 

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The early redemption usually ties to the conversion price so you would be in the money on the whole deal.
 

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Humble;

I respectfully disagree with you.

$45 seems excessive to me....

As far as I'm concerned my brokerage does pretty well holding all of the accounts I watch over...and their phone-in reps are being paid to service clients.

As with so many bank fees, all of them seem to have the same fees for the same service...it can't be a co-incidence.

All that being said,,,,my brokerage has always been very fair with me..and the service has been top notch. However it always makes sense, at least to me, to ask for a waiver of these fees.
As for "threatening " them....that might have been a harsh term,,,,its probably more of letting them know that accounts can be moved if need be.

I will give out an example....I had many accounts at 2 brokerages for a few years...
thats because each had features for certain accounts that I liked that the other did not. Also I could easliy monitor what each was charging for individual bonds...Unfortunately it became confusing, ( I received 30 T5's one year)..so I decided to consolidate and use one brokerage only.

As soon as I was moving the accounts out, the manager called me asking why,,and I told him about all these features the other was giving me, and he said that if I had asked for all these things he would have gladly also given them to me for free!!........I asked him why I should have to "ask" for such things, and told him that as I already had told the receiving brokerage that the accounts were coming, I wouldnt go back on my word.

Remember that the brokerages should work for you, and that they make a good return on your accounts,,,,,,they are not your friends.

I will also tell you that I will not hesitate to move my accounts to get free bonus money on transfers. I have done so several times,,,and the free bonus money really adds up!
 

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resurrecting a thread from ancient history...

I was holding Boralex units when the whole income-trust thing was blown up. Boralex converted the income trust units into these debentures.

The 6.75% interest has been good so far, but the stock conversion option at 100:8 is also in the money right now, based on par value. The current price of this debenture is 114.76 which gives an out-of-the-money 14.35 for conversion. I suppose the market price of the debenture will gradually converge on the stock price as we come to maturity. I am kind of considering my options.

Hold and take cash or hold and convert -- I guess the choice here is whether the market stock price is above or below 12.50 on the day
Sell and take the CG -- maybe even use the money to buy BLX at 13.30

Anyone else holding these debentures? Is there an obvious course that I am missing? Thx.
 

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So BLX is redeeming most of these debentures at par next week. The estimate is 101.68 including interest. They are trading at $106.69 I guess I need to exercise to get my 160 shares.

If I exercise, is my ACB for the resulting shares based on the par value I originally put in, or do I have a CG on the debenture to $106.98 and an ACB on the shares of $106.69/8 or $13.34?
 
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