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Bombardier Inc. T.BBD.A

Alternate Symbol(s):  BDRPF | T.BBD.PR.B | BDRXF | T.BBD.PR.C | T.BBD.PR.D | BOMBF | BDRAF | T.BBD.B | BDRBF

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It operates aerostructure, assembly and completion facilities in Canada, the United States and Mexico. Its robust customer support network services the Learjet, Challenger and Global families of aircraft, and includes facilities in strategic locations in the United States and Canada, as well as in the United Kingdom, Germany, France, Switzerland, Austria, the United Arab Emirates, Singapore, China and Australia. The Company's jets include Challenger 350, Challenger 3500, Challenger 650, Global 5500, Global 6500, Global 7500 and Global 8000.


TSX:BBD.A - Post by User

Bullboard Posts
Comment by Acuras1on Feb 20, 2016 10:44am
170 Views
Post# 24577763

RE:Do any of preferred shares have mandatory redemption by BBD?

RE:Do any of preferred shares have mandatory redemption by BBD?Remember that all Bombardier preferred shares have different redemption features. For example the B and D can be converted / exchanged for one another every 5 years (I think the next date is 2017). (BCE and others have similar featured series) 

The C series 4 is a fixed rate 6.25% and has a conversion feature to the common shares - these do not have fixed date redemtion features - or if so at a date, is at the issuer's prerogative. If the company was rolling in dough right now and wanted to reduce the debt, they could repurchase the shares at $25, but they won't because they don't have to, and besides the 6.25% dividend (based on issue price of $25) is a competitive rate to borrow money at today. Makes a nice fat bonus for today's buyers at $10 or so. 

A  holder of the variable rate B can exchange for the fixed rate D, or the D exchanged for the B. Depending on the share owner's perception of interest rates going up or down, one might choose to go variable or fixed. For any retire who has s decent amount of risk tolerance, the variable rate B could potentially offer amazing inflation protection for the rest of your life with the interest rate tied to BOC's prime rate. Those B shares paid about $1.60 annual back in 2006 when BOC prime was 6.0% +.

But the old fashion redemption feature you are looking for aren't present i.e. the ones where the issuer - the company - guarantees it will buy back at the $25 issue price are now few and far in-between today. Sure, some are available, but yield around 3%.

The $25 redemption is at the issuers prerogative, and not the holder's - owners. Given the basic risk reward potential here, all of Bombardier's preferred shares today offer an interesting way to make a little money (great income in a taxable account) without taking all the risks of the common. With the Caisse's, prov. and fed governments in, the near term risks of loosing your shirt are now much lower than say, only last August.
Bullboard Posts