Press Release
DBRS Removes Trends on Ratings of 53 Preferred Shares/Securities Issued by Split Share Companies or Trusts
Split Shares & FundsDBRS has today removed all trends on the ratings of 53 preferred shares and securities issued by 48 split share companies and trusts (the Issuers). DBRS will no longer assign trends to preferred shares (the Preferred Shares) issued by split share corporations.
Each of the Issuers has invested in a portfolio of securities (the Portfolio) funded by issuing two classes of shares – preferred shares and capital shares. The main form of credit enhancement available to Preferred Shares is a buffer of downside protection. Downside protection corresponds to the percentage decline in market value of the Portfolio that must be experienced before the Preferred Shares would be in a loss position. The amount of downside protection available to Preferred Shares fluctuates over time based on changes in the market value of the Portfolio.
Split share ratings are unique in that the level of credit enhancement available is dependent largely on the market value of the split share company’s portfolio. As a result, the outlook for a particular rating can change significantly over very short time periods, as was demonstrated during the equity markets decline of Q4 2008/Q1 2009, and the subsequent rebound. Therefore, a longer-term trend is not a fitting indicator for a Preferred Share rating because the level of stability associated with the rating is dependent on the volatility and trend of equity markets. As a result, DBRS has removed its trends for existing Preferred Share ratings and will no longer use rating trends when assigning Preferred Share ratings.
DBRS will continue to place Preferred Share ratings Under Review with Positive, Negative or Developing Implications when appropriate to indicate the potential for a rating change based on changes in the market value of a split share issuer’s portfolio. For further details, refer to DBRS’s recently published split share methodology.
Notes:
The applicable methodology is Rating Canadian Split Share Companies and Trusts, which can be found on our website under Methodologies.
This is a Structured Finance rating.
Ratings
5Banc Split Inc.
AIC Global Financial Split Corp.
AllBanc Split Corp.
Allbanc Split Corp. II
B Split II Corp.
BNS Split Corp. II
Big 8 Split Inc.
Big Bank Big Oil Split Corp.
Brompton Equity Split Corp.
Brompton Lifeco Split Corp.
Brompton Split Banc Corp.
CANADIAN Financials & Utilities Split Corp.
Canadian Banc Corp.
Canadian General Investments, Limited
Canadian Life Companies Split Corp.
Dividend 15 Split Corp.
Dividend 15 Split Corp. II
Dividend Growth Split Corp.
Energy Split Corp. II
Energy Split Corporation
ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.
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Related Documents
Methodology Used:
Contacts
- Jamie Feehely
Managing Director, CDN Structured Finance - Global Structured Finance
+1 416 597 7312
jfeehely@dbrs.com