DBRS Confirms R Split II Corp. at Pfd-2 (low)

Dominion Bond Rating Service (“DBRS”) has today confirmed the ratings of R Split II Corp. (“R Split” or the “Company”) as indicated above.

R Split is a split share company that holds a portfolio (the “Portfolio”) of Royal Bank of Canada (“Royal Bank”) common shares. At inception, the Portfolio provided for a downside protection of 50% to the principal amount of the outstanding Preferred Shares compared to about 66% downside protection as of November 2005.

The distributions to both classes of shares will be made primarily from income generated by the underlying yield on the Portfolio. Holders of the Preferred Shares will be entitled to receive fixed, quarterly cumulative distributions for an annual yield of 4.25%. The Company will also pay quarterly distributions to Capital Shares in an amount equal to the dividend received on the Portfolio minus the distribution payable on the Preferred Shares and expenses.

The current rating confirmation of the Preferred Shares is based on: (1) the available downside protection, (2) credit quality and consistency of dividend distributions of Royal Bank, and (3) the ability to sell shares to provide liquidity and certainty of dividends to Preferred Shares. The main constraint to the rating is the dependence of the entire Portfolio on the shares of Royal Bank for downside protection and dividend income. The redemption date for both classes of shares will be May 31, 2009. The Portfolio performance has been fairly consistent over time and with low volatility.

There is a risk that the use of covered call option writing strategies can potentially distribute the income to the Capital Shares while reducing the NAV of the Portfolio, resulting in lower levels of protection for the Preferred Shares.