TSX:BPO.PR.A - Post by User
Post by
CrazyTraderon Jun 01, 2024 1:39pm
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Post# 36067637
A's vs T's ..... Watching this price action is the most
A's vs T's ..... Watching this price action is the mostinteresting to see if the "market" is "correct". The A's and T's are basically the same, just the timing of reset different.
The T's will only pay $0.39 more than the A's in dividends by the time the A's reset.
Yet there's a $1.32 price diffence in share price now.
$1.32-$0.39 = $0.93. Factoring in the extra $0.39 the T's will pay, you have $0.93 difference (arbitrage).
What is the market saying with this $0.93 difference?
As I understand the market is saying basically the next 5 years after the A's reset the T's will pay $0.93 more than the A's.
For the A's to be on equal footing with the T's, it has to reset with 3.1% as it's 5yr rate.
The market is saying the A's will reset at a lower 5yr rate than 3.1%
Current 5yr rate is 3.76%
Is the 5yr rate going to drop below 3.1% by the end of the year?
My bet is NO (market is wrong).... so I think the share price gap will close. How it will close, I don't know.
The market has been correcting itself past 6 months. The A's share price gaining on the T's. I think it's still wrong and gap needs to close more.
Maybe the A's should be worth MORE than the T's even!!!!