DBRS Confirms AllBanc Split Corp. Class C Preferred Shares, Series 1 at Pfd-2

DBRS Limited (DBRS) has today confirmed the rating of the Class C Preferred Shares, Series 1 (the Class C Preferred Shares), issued by AllBanc Split Corp. (the Company) at Pfd-2. On March 8, 2013, the Company issued 1,177,652 Class C Preferred Shares and 560,000 Class A Capital Shares (the Capital Shares) as part of a share capital reorganization, where all previously outstanding Class B Preferred Shares, Series 1 were fully redeemed. The final redemption date for the both classes of shares is March 8, 2018.

Net proceeds of the offering were used to purchase additional common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank (the Portfolio). Dividends received on the Portfolio are used to pay a fixed cumulative quarterly distribution to holders of the Class C Preferred Shares, yielding 4.00% annually on the initial issue price of $31.64. Increases in the dividend distribution policies of the underlying banks in the past year have boosted the dividend coverage ratio to 2.3 times. Holders of the Capital Shares are expected to receive all excess dividend income after the Class C Preferred Share distributions and other expenses of the Company have been paid.

Since the last rating action in March 2014, the net asset value of the Company has been slightly volatile, mirroring the performance of Canadian banks over the past year. However, downside protection rose from 60.1% on February 20, 2014, to 62.6% as of February 26, 2015. As a result, the rating of the Class C Preferred Shares has been confirmed at Pfd-2.

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

The applicable methodology is Rating Canadian Split Share Companies and Trusts (July 2014), which can be found on our website under Methodologies.

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.

Going forward, DBRS will not provide rating reports for Split Shares companies that are being reviewed for surveillance purposes. This change will be made in an effort to provide more concise and meaningful updates. A rating report will continue to be published for initial fund ratings, reorganizations and extensions.