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Preferred Share Description
Bank of Montreal (BMO.PR.B)
4.85% Non-Cumulative, Redeemable, Rate-Reset, NVCC* Class B preferred shares, Series 38
Prospectus - October 14, 2016
DBRS Credit Rating: July 28, 2017 - DBRS has today confirmed its ratings on the Bank of Montreal and its related entities, including BMO’s Long-Term Issuer Rating of AA and Short-Term Issuer Rating of R-1 (high). BMO’s Long-Term Issuer Rating is composed of an Intrinsic Assessment (IA) of AA (low) and a Support Assessment (SA) of SA2, reflecting the expectation of timely, systemic support from the Government of Canada (rated AAA with a Stable trend by DBRS). The SA2 designation results in a one-notch lift to the Long-Term Issuer Rating. The trend on BMO’s short-term ratings as well as the Long-Term Issuer Rating, Long-Term Senior Debt, Long-Term Deposits and older-style subordinated debt remains Negative while other capital instruments whose ratings are notched down from the Bank’s IA continue to have Stable trends.
Important Note: NVCC preferred shares have a lower credit rating than other Bank of Montreal preferred share issues. DBRS assigned the NVCC Preferred Shares Series 38 a rating equal to the Bank’s intrinsic assessment less four rating notches because the Series 38 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.
*NVCC is short for Non-Viability Contingent Capital and it refers to the issuer's ability to convert the preferred shares into common shares if a "Trigger Event" occurs. See "Convertible by Company" section below for the definition of a trigger event.
- DBRS Rating
- Pfd-2 Stable Trend
- DBRS Rating Date
- Shares Issued
- Issued Date
- Shares O/S
- O/S Date
- $1.2125 per share per year
- Dividend Dates
- On the 25th day of February, May, August and November
- Dividend Details
- Initially the dividend is set at a fixed annual rate of 4.85% until February 25, 2022. The dividend rate will be reset on February 25, 2022 and on February 25th every five years thereafter. The dividend rate will be set at an annual rate equal to the 5-year Government of Canada Bond Yield (GCAN5YR) plus 4.06%.
- The shares are not redeemable by the company prior to February 25, 2022. On February 25, 2022 and on February 25th every five years thereafter the Bank may redeem all or any part of the then outstanding Preferred Shares Series 38, at the Bank’s option without the consent of the holder, by the payment of an amount in cash for each such share so redeemed of $25.00 per share.
- Holders of the Series 38 have the right to convert their shares into an equal number of Series 39 Floating-Rate preferred shares on February 25, 2022 and on February 25th every five years thereafter. The Floating Rate shares will calculate and pay dividends quarterly. The floating-rate dividend will equal the 3-month Government of Canada Treasury Bill yield plus 4.06%. On February 25, 2027 and on February 25th every five years thereafter Series 39 shareholders have the right to convert back into Series 38 rate-reset preferred shares.
- Transfer Agent
- Computershare Trust Company of Canada
- Computershare Trust Company of Canada
- Dividend Reinvestment Plan
- Holders of this series of BMO preferred shares may be eligible for the DRIP, where preferred share dividends can be reinvested into common shares of BMO. Check with the financial institution that administers your account.
- Convertible by Company
- Upon the occurrence of a Trigger Event (as defined in the prospectus), each outstanding Preferred Share Series 38 and, if issued, each outstanding Preferred Share Series 39 will automatically and immediately be converted, without the consent of the holders thereof, into that number of Common Shares of the Bank determined by dividing $25.00 plus any declared but unpaid dividends in respect of such Preferred Share Series 38 or Preferred Share Series 39 by the Conversion Price.
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