DBRS Confirms Rating of Global Champions Split Corp. at Pfd-2 (high)

DBRS Limited (DBRS) confirmed the rating on the Class A Preferred Shares, Series 1 (the Class A Preferred Shares) issued by Global Champions Split Corp. (the Company) at Pfd-2 (high). The Company invests in a portfolio of common shares of 15 international large capitalization companies (the Portfolio). As of June 30, 2017, there were 16 companies in the Portfolio. The Portfolio may comprise non-U.S.-dollar-denominated securities which will be hedged back to U.S. dollars. Dividends received on the Portfolio securities denominated in currencies other than U.S. dollars are hedged back to U.S. dollars; however, this is not a requirement for the Company.

The Class A Preferred Shares receive quarterly fixed cumulative distributions of $0.25 per share, yielding 4.00% per annum on the issue price of $25.00. Distributions to holders of the Class A Preferred Shares are denominated in Canadian dollars and are hedged back to U.S. dollars unless the net asset value (NAV) of the Company is less than the aggregate original issue price of the Class A Preferred Shares. Based on the latest dividend yield on the Portfolio and foreign exchange rates, the dividend coverage ratio is approximately 1.6 times. Holders of the Capital Shares are expected to receive all excess income after the Company’s expenses and the Class A Preferred Shares distributions have been paid.

As of February 23, 2018, the downside protection available to the Class A Preferred Shares was approximately 66.2% based on the NAV of $74.04 and after accounting for exchange rate adjustment. Some particular strengths of the Company are the adequate diversification of the Portfolio with companies of strong credit quality and the consistency of dividend distributions of the companies in the Portfolio.

The redemption date for the Class A Preferred Shares will be on or about July 31, 2019.

Based on the amount of downside protection and its stable trend as well as strong Portfolio metrics, DBRS has confirmed the rating on the Class A Preferred Shares issued by the Company at Pfd-2 (high).

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.