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Preferred Share Description
Bank of Montreal (BMO.PR.S)
4.00% Non-Cumulative, Redeemable, Rate Reset, Class B, NVCC* Preferred Shares, Series 27
Prospectus - April 16, 2014
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 BMO preferred share issues. DBRS assigned the NVCC Preferred Shares Series 27 a rating equal to the Bank’s intrinsic assessment less four rating notches because the Series 27 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
- $1.00 per share per year
- Dividend Dates
- On the 25th day of February, May, August and November.
- Dividend Details
- Initially fixed. The dividend rate will be reset on May 25, 2019 and on May 25th every five years thereafter. The dividend rate will be set at an annual rate equal to the Government of Canada Yield (GCAN5YR) plus 2.33%.
- Not redeemable prior to May 25, 2019. Redeemable at the issuer's option on May 25, 2019 and on May 25 every five years thereafter, at $25.00 per share plus all declared and unpaid dividends.
- Holders of the Series 27 have the right to convert their shares into an equal number of Series 28 Floating-Rate preferred shares on May 25, 2019 and on May 25th every five years thereafter. The Floating Rate Class B shares will calculate and pay dividends quarterly. The floating-rate dividend will equal the 3-month Government of Canada Treasury Bill yield plus 2.33%. On May 25, 2024 and on May 25th every five years thereafter Series 28 shareholders have the right to convert back into Series 27 rate-reset preferred shares.
- Lead Underwriter(s)
- BMO, CIBC,National Bank, RBC Dominion Securities, Scotiabank, TD
- 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
- Contingent Conversion: If a "Trigger Event" (as defined below) were to occur, all of the then outstanding Preferred Shares Series 27 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 27 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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