DBRS Confirms Canaccord Preferred Shares at Pfd-3 (low), Trend Now Stable

DBRS has today confirmed its rating of the Cumulative Preferred Shares of Canaccord Genuity Group Inc. (Canaccord or the Company) at Pfd-3 (low). The trend was restored to Stable (from Negative) largely on the strength of integration success and because improved geographic diversity has demonstrated a strengthening of Canaccord’s through-the-cycle resilience in the extended weak market environment in Canada. Results in U.K. and Europe, in particular, have counterbalanced poor results in Canada. The return to a Stable trend reflects DBRS’s belief that a negative rating action is less likely to occur in the very near term.

Canaccord’s leverage, as measured by total debt plus preferred shares-to-capitalization, of around 20% is acceptable to DBRS, as are the coverage ratios that have rebounded from recent periods. DBRS does recognize that the current environment represents a low point in the cycle and thus metrics are expected to be in the weaker end of the ranges; nevertheless, any deterioration will be unfavourable for the rating.

The primary methodology used to guide the assignment of ratings for Canaccord is the “Global Methodology for Rating Banks and Banking Organizations,” published June 2012, adjusted for the absence of bank-style balance sheet leverage. As Canaccord is not a bank with capital and liquidity ratios mandated by bank-type regulations, the adjustments include using coverage ratios and leverage ratios more typically used in a corporate rating. When assessing the rating of Canaccord’s preferred shares, DBRS also uses the typical corporate rating approach in its assessment rather than the bank rating approach, which generally utilizes wider notching.

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 methodologies are Global Methodology for Rating Banks and Banking Organisations (June 2012) and Preferred Share and Hybrid Criteria for Corporate Issuers (Excluding Financial Institutions) (December 2013), which can be found on the DBRS website under Methodologies.