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Preferred Share Description
National Bank of Canada (NA.PR.E) **New Issue**
4.60% Non-Cumulative, Redeemable, NVCC*, Rate Reset, 1st preferred shares, Series 40
Prospectus - January 15, 2018
DBRS Credit Rating: July 28, 2017 - DBRS has today confirmed its ratings on the National Bank of Canada and its related entities, including National’s Long-Term Issuer Rating of AA (low) and Short-Term Issuer Rating of R-1 (middle). DBRS has also assigned a new rating of AA (low) to the Bank’s Long-Term Deposits and a new Short-Term Issuer Rating of R-1 (middle). National’s Long-Term Issuer Rating is composed of an Intrinsic Assessment (IA) of A (high) 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 benefit to the Long-Term Issuer Rating. The trend on National’s 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 Credit Rating Note: NVCC preferred shares have a lower credit rating than other preferred share issues. DBRS assigned the NVCC Preferred Shares a rating equal to the Bank’s intrinsic assessment less one rating notch 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 (low) Stable Trend
- DBRS Rating Date
- Shares Issued
- Issued Date
- Shares O/S
- O/S Date
- $1.15 per share per year
- Dividend Dates
- The dividends are payable quarterly on the fifteenth day of February, May, August and November
- Dividend Details
- The initial dividend rate is fixed at 4.60% until May 15, 2023. On May 15, 2023 and on May 15th every 5 years thereafter the dividend will be set to a rate that equals the sum of the 5-year Government of Canada Bond Yield (GCAN5YR) plus 2.58%.
- The shares cannot be redeemed, by the company, prior to May 15, 2023. On May 15, 2023 and on May 15th every 5 years thereafter the company may, at their option, redeem the shares at $25.00 per share.
- Holders of the Series 40 Rate-Reset preferred shares will have the right to convert their shares into an equal number of Series 41 Floating-Rate preferred shares on May 15, 2023 and on May 15th every five years thereafter. The Series 41 Floating-Rate shares will calculate and pay a dividend, quarterly, at a rate equal to the sum of the Government of Canada 3-month T-Bill Rate plus 2.58%. In addition, on May 15, 2028 and on May 15th every five years thereafter holders of the Series 41 Floating-Rate shares will have the right to convert their shares back into an equal number of Series 40 Rate-Reset preferred shares.
- Lead Underwriter(s)
- National Bank Financial Inc.
- Transfer Agent
- Computershare Trust Company of Canada
- Computershare Trust Company of Canada
- Dividend Reinvestment Plan
- Not available to preferred shareholders
- Convertible by Company
- Contingent Conversion: If a "Trigger Event" (as defined below) were to occur, all of the then outstanding Preferred Shares Series 40 and 41 will be automatically exchanged, without the consent of the holders, for newly issued fully-paid and freely-tradable common shares of the Bank (the “Common Shares”), the number of which to be determined in accordance with the Contingent Conversion Formula; rounding down, if necessary, to the nearest whole number of Common Shares, such conversion being referred to herein as the “Contingent Conversion”. Fractions of Common Shares will not be issued or delivered pursuant to a Contingent Conversion and no cash payment will be made in lieu thereof. A Trigger Event means any one of the following: 1) the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion of the Preferred Shares Series 34 and all other non-viability contingent capital instruments issued by the Bank and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or 2) a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. See the share's prospectus for the exact details.
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