Wednesday, March 25, 2009

Another, yawn, Canadian bank preferred share sale

Posted on Globe & Mail StreetWise by Andrew Willis:

Another day, another preferred share issue from a financial institution.

Toronto-Dominion Bank stepped up Wednesday with the latest in a series of stock sales, tapping investors for $200-million of preferred shares that yield 6.25 per cent. Subsidiary TD Securities is leading the financing, and the underwriters have an option to bump it up to $275-million.

Income-hungry investors have been chowing down on preferred shares offerings for the past six months, as banks and insurers shore up their balance sheets. Royal Bank of Canada and HSBC did preferred shares earlier this week. At some point, this appetite will be satiated, but until that day, the issues will keep coming.

Share sales from financial institutions underpined a record $6.8-billion in preferred share underwritings in 2008, according to data from the Investment Industry Association of Canada. If loan losses continue to mount, and investors continue to step up for offerings, that record could fall this year.

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