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

RE:RE:RE:RE:RE:RE:RE:Evaluating Reward Opportunity of Preferreds

[CanadianPreferr]

I do not think we are going to negative rates.

In terms of preferreds:
. perpetuals: Not affected by rates since they never reset.
. Resets. If they dont have a Minimum reset guarantee, they are getting hit if they renew during the period of the negative rates. Even so keep in mind the following

a).You only have to wory about those reseting during the period of negative rates.  Staying with HUSKY sereies 5 and 7 reset in 5 years from now. Series 3 in 4 years, till then you will be getting 8.59% , 8.19% and 10.2% in dividends respectivly .
b) The spreads on the resets today are huge. Ie. Series 5 spread is 5.42%. So if rate goes negative, assume  -0.5% you are still getting to get a 4.92% yield on your investment at renewal.

All the above yield calcuations are assuming you purchased the preferred at Fridays's closing price.

Yes the Website does handle negative rates.

Prefereds are a complex financial intrument and evaluating them is even more complex. In the website I have tried to explain how these metrics are constructed..

This complexity though is good for the educated investor since it makes its easier to find mispriced preferreds.