Redemption of 3.55% CDN notes Ok, so managment decided to redeem $750 million of cdn $ notes which have a cost of capital of 3.55% - see note 17 of the March financials - when sitting right below that is some $900 million of preferred shares that have an equivalent cost of capital that is close to 5.5 %. From an economic sense i cannot see the logic of their CFO?
I know the preferred shares get booked into equity, so their net worth calculations are more positively effected with the preferred shares but due to their imbedded sunset retirement date, i believe they only count as 50% their value for equity calculations.
so they are pissing away a gross 2% spread on at least $750 million EVERY year the preferred shares are outstanding. This ain't a one time mistake , but one that keeps on ticking year after year.