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Preferred Share Description
National Bank of Canada (NA.PR.A)
5.40% Non-Cumulative, Redeemable, NVCC**, Rate Reset, 1st preferred shares, Series 36
Prospectus - June 6, 2016
DBRS Credit Rating: July 26, 2018 - DBRS confirmed the ratings of National Bank of Canada and its related entities, including the Bank’s Long-Term Issuer Rating at AA (low) and Short-Term Issuer Rating at R-1 (middle). The trends on all ratings are Stable. National’s Intrinsic Assessment (IA) is A (high) and Support Assessment is 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 one notch of uplift from the IA to the Long-Term Issuer Rating. However, following the finalization of the Canadian Bank Recapitalization Regime (the Bail-In Regime), DBRS eventually expects to remove the uplift from systemic support. This will be actioned once a sufficient level of Bail-inable Senior Debt is issued, thereby providing an adequate buffer for non-bail-inable obligations, which is expected to offset the removal of systemic support (see the press release “DBRS Takes Rating Actions on Six Canadian Banking Groups after Finalization of Bail-In Regime,” April 19, 2018).
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 36 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
- $1.35 per share per year
- Dividend Dates
- On the 15th day of February, May, August and November
- Dividend Details
- The initial dividend rate is fixed at 5.40% until August 15, 2021. On August 15, 2021 and on August 15th every 5 years thereafter the dividend will be reset to a rate that equals the sum of the 5-year Government of Canada Bond Yield (GCAN5YR) plus 4.66%.
- The shares cannot be redeemed, by the company, prior to August 15, 2021. On August 15, 2021 and on August 15th every 5 years thereafter the company may, at their option, redeem the shares at $25.00 per share.
- Holders of the Series 36 Rate Reset preferred shares will have the right to convert their shares into an equal number of Series 37 Floating-Rate preferred shares on August 15, 2021 and on August 15th every five years thereafter. The Series 37 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 4.66%. In addition, on August 15, 2026 and on August 15th every five years thereafter holders of the Series 37 Floating-Rate shares will have the right to convert their shares back into an equal number of Series 35 preferred shares.
- Lead Underwriter(s)
- Scotia bank, BMO Nesbitt Burns, CIBC World Markets
- 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 36 and 37 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 36 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. Investors should read the share's prospectus for the exact details.
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