Brookfield Office Properties Inc T.BPO.PR.A

A's vs T's ..... Watching this price action is the most

[CrazyTrader]

interesting to see if the "market" is "correct".   The A's and T's are basically the same, just the timing of reset different.    

The T's will only pay $0.39 more than the A's in dividends by the time the A's reset.
Yet there's a $1.32 price diffence in share price now.

$1.32-$0.39 = $0.93.    Factoring in the extra $0.39 the T's will pay, you have $0.93 difference (arbitrage).   

What is the market saying with this $0.93 difference?   

As I understand the market is saying basically the next 5 years after the A's reset the T's will pay $0.93 more than the A's.

For the A's to be on equal footing with the T's, it has to reset with 3.1% as it's 5yr rate.
The market is saying the A's will reset at a lower 5yr rate than 3.1%

Current 5yr rate is 3.76%

Is the 5yr rate going to drop below 3.1% by the end of the year?  

My bet is NO (market is wrong).... so I think the share price gap will close.   How it will close, I don't know.

The market has been correcting itself past 6 months.   The A's share price gaining on the T's.  I think it's still wrong and gap needs to close more.

Maybe the A's should be worth MORE than the T's even!!!!

[CrazyTrader]

I think I over thought this and made a brain fart. The T's current 5 yr rate is 3.63% I believe. Since the A's and T's are basically the same except for timing of reset.... Then if the A's reset with 3.63% for 5 yr rate then their share price should be the same. Current 5yr rate is 3.76%   that's pretty close.    Current Arbitrage is $0.93.