Brookfield Office Properties Inc T.BPO.PR.C

RE:RE:RE:RE:RE:RE:I own a lot of one bank...

[SONOFFERGUS]

Thanks Pierre.  Enjoying so far thx but having to do some homework on the prefs.

Dunno why the discount is so big -- it's a little concerning.  Maybe there is something to the idea that politics could get in the way.

When I was younger and more aggressive I got absolutely torched on the 2008 BCE takeover that was aborted on a ludicrious interpretation of the agreement terms.  Politics behind it IMHO.  Still angry lol.

On CWB, I looked at the prospectus for the prefs and are redeemable at $25.50.  My theory is that NB will want to wind up CWB once the deal has closed in order to consolidate regulatory capital.  Buying CWB.PR.B at $23 looks like a safe and fun way to bet the deal closes.

On taxes, two things: (1) the new rate also applies to corps and trusts with no threshold, and (2) these things are so illiquid that a little selling pressure goes a long way.  You (well, your estate lol) will have to dribble your Ts out over weeks!  

On capital appreciation from here, hopefully an improved credit situation for BPO will offset lower resets.  I like that aspect of the BPO complex.  

On rates, Powell was hawkish again today and hope of any cuts in the US this year are fading fast.  Tiff spoke at a conference today and said inflation is still off target.  If US rates stay high, it will be tough for GoC5 to get too low -- already 90bps or so lower than US10Y.

Adding all that up, I'm not ready to let go of my As just yet.  Like wynner, I really like the floaters too because they will benefit most from improved credit given their price point.  I also think that market appreciation for floaters generally will increase as it becomes clear that ZIRP  is dead.  Even another 200bps of cuts will give yields of 9.40%ish, and that is likely to look pretty good against other fixed rate options.  My pick for long-term hold is E given their terms for the price.  The As -- and Ts for that matter, are pretty weak issues that are only sexy for their reset rates.

Cheers.

Sonoffergus