Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

RE:RE:RE:Pablo87..... What's your view on where rates are going?

[RagingBull3]

As I understand, the PR are redeemed at $25....   For the yield to be 10% on the C at $25, interest rate would need to go up to 6.87% on the 5 year bond.    I think right now we are at 1.46%.     

In 5 years I see rates higher, but not that high, so I don't expect HSE to redeem the PR..

Your 3% high, plus the fixed rate 3.13 would yield 6.13% at $25...... so based on what the market currently is demanding, this would return the share price to about $23 to maintain yield of around 6%+

I'm just guessing....

RagingBull3 wrote: I get the feeling that the "plan" was to increase interest rates but then Trump threw a wrench into that plan.     So, I think this pull back on interest rate is short term, temporary. 

If in 5 years rates do go way up, I still don't see HSE buying back the perferreds.  Share price would go up to keep yields from going way up.

So, that's my play...... on getting high yield with capital gains on share price also!

Rates near rock bottom, chances of moving up in the future pretty good.

Maybe near taxloss selling time yeild will go even higher, hope to pick some more up maybe then.

pablo87 wrote: 3rd post of 3:

First, there's an important difference between the different HSE.PRs and how the related dividend is calculated on rate reset. Need to pay close attention on this.

Finally If I have to buy an HSE.PR, being conservative (when dealing in prefs) I would probably buy the PR.C but I'll wait to buy until the end (it is quite speculative to buy in the last couple of months of a rate reset as at that rate reset date, the rate is fixed for 5 years,that's it and can cause quite a fluctuation in the PR price).

If we reset along the lines of 1.42+3.57 = 4.99%, which at the current $16.20 price is 7.7% for 5 years. Not bad.  

Worse come to worse in 5 years and interest rates are zero, I still get 3.57% on $25 or 5.51% at the current trading price of $16.20. Starting in 2025 for another 5 years. My blended 10 year rate is still 6.6%.

At the same time if interest rates (the 5 year) go way up to say 3%, there's a good chance HSE would buy it out if not, the yield would be 10% (on the $16.20 sp) for another 5 years. 

That strategy only works of course if you hold and just want the income. If you don't (hold), you could take a significant loss (like everything else).

Good luck!!!