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

DBRS Limited (DBRS) confirmed the rating of the Class C Preferred Shares, Series 1 (the Preferred Shares) issued by AllBanc Split Corp. (the Company) at Pfd-2. The Company invests in common shares of the Bank of Montreal (rated AA with a Negative trend by DBRS), The Bank of Nova Scotia (rated AA with a Negative trend by DBRS), the Canadian Imperial Bank of Commerce (rated AA with a Negative trend by DBRS), the Royal Bank of Canada (rated AA with a Stable trend by DBRS) and The Toronto-Dominion Bank (rated AA with a Stable trend by DBRS; collectively, the Portfolio). Dividends received on the Portfolio are used to pay a fixed cumulative quarterly distribution to holders of the Preferred Shares, yielding 4.00% annually on the initial issue price of $31.64. Holders of the Capital Shares receive all excess dividend income after the Preferred Shares distributions and other expenses of the Company have been paid.

The Company has announced that the final redemption day is scheduled to take place on March 9, 2018, upon which it will wind up and terminate as soon as practicable after such date. The Preferred Share Redemption Price will equal the lesser of (1) $31.64 or (2) the Unit Value (one Unit consists of one Preferred Share and two Capital Shares).

Since the last review and over the last 12 months, downside protection has been stable. It currently stands at about 71% as at February 1, 2018. Because of a dividend payout increase within the underlying common shares, the dividend coverage ratio grew to approximately 2.7 times.

Considering the amount of downside protection, credit quality of the Portfolio’s underlying shares and strong Portfolio metrics, DBRS has confirmed the rating of the Preferred Shares issued by the Company at Pfd-2.

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 under Related Documents or by contacting us at info@dbrs.com.

The principal methodology is Rating Canadian Split Share Companies and Trusts (July 2017), which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.