DBRS Confirms Canaccord Preferred Shares at Pfd-3 (low), Trend Remains Negative

DBRS has today confirmed the rating of the Cumulative Preferred Shares of Canaccord Genuity Group Inc. (Canaccord or the Company), formerly named Canaccord Financial Inc., at Pfd-3 (low). The Negative trend has been maintained due to the weak market environment that continues to be a source of concern for DBRS. The Company’s ability to achieve largely breakeven results through the unusually long market trough is a result of Canaccord’s highly variable expense structure and through-the-cycle resilience.

With recent restructuring charges and integration efforts basically complete, a return to consistent profitability seems imminent. Canaccord has been developing into a more diverse institution in the past few years, both geographically and by extending further into wealth management to supplement traditional capital markets advisory businesses. The diversity of earnings brought by the U.S. and U.K. businesses have compensated for recently poor underwriting activity and wealth management results in Canada. DBRS is monitoring Canaccord’s near-term results; the absence of reasonable profitability will pressure the rating.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Global Methodology for Rating Banks and Banking Organisations (June 2012), adjusted for the Company’s absence of balance sheet leverage. In addition, reference is made to DBRS Criteria: Preferred Share and Hybrid Criteria for Corporate Issuers (excluding Financial Institutions) (November 2012). Both can be found on our website under Methodologies.