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Preferred Share Description
Bank of Montreal (BMO.PR.E)
4.85% Non-Cumulative, Redeemable, Rate-Reset, NVCC* Class B preferred shares, Series 44
Prospectus - September 10, 2018
DBRS Credit Rating: June 22, 2018 - DBRS confirmed the ratings of Bank of Montreal and its related entities, including BMO’s Long-Term Issuer Rating at AA and Short-Term Issuer Rating at 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 benefit to the Long-Term Issuer Rating. The trend on all ratings is Stable, reflecting the finalization of the Canadian Bank Recapitalization Regime (the Bail-In Regime) and DBRS’s view that a sufficient level of bail-inable senior debt will provide an adequate buffer for non-bail-inable obligations, which will offset the expected removal of systemic support.
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 44 a rating equal to the Bank’s intrinsic assessment less four rating notches because the Series 44 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.
Trading Note: The shares are expected to begin trading on the TSX on or about September 17, 2018.
- 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
- Payable 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 November 25, 2023. The dividend rate will be reset on November 25, 2023 and on November 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 2.68%.
- The shares are not redeemable by the company prior to November 25, 2023. On November 25, 2023 and on November 25th every five years thereafter the Bank may redeem all or any part of the then outstanding Preferred Shares Series 44, 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 44 shares have the right to convert their shares into an equal number of Series 45 Floating-Rate preferred shares on November 25, 2023 and on November 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 2.68%. On November 25, 2028 and on November 25th every five years thereafter Series 45 shareholders have the right to convert back into Series 44 rate-reset preferred shares.
- Lead Underwriter(s)
- BMO Capital Markets
- 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 44 and, if issued, each outstanding Preferred Share Series 44 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 44 or Preferred Share Series 45 by the Conversion Price.
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