DBRS Morningstar also confirmed the ratings on the Class AA Preferred Shares, Series 8 (the Series 8 Preferred Shares); the Class AA Preferred Shares, Series 9 (the Series 9 Preferred Shares); the Class AA Preferred Shares, Series 10; the Class AA Preferred Shares, Series 11; and the Class AA Preferred Shares, Series 12 (collectively, the Class AA Preferred Shares) at Pfd-2 (low).
The Series 13 Preferred Shareholders will be entitled to receive a quarterly fixed cumulative dividend of
The Company owns a portfolio (the Portfolio) of
All series of Class AA Preferred Shares rank senior to the Capital Shares, the Class AAA Preferred Shares, and the Junior Preferred Shares, Series 1; the Junior Preferred Shares, Series 2; and the Junior Preferred Shares, Series 3 (collectively, the Junior Preferred Shares) and rank pari passu with all other Class AA Preferred Shares with respect to the payment of dividends and repayment of principal.
The Junior Preferred Shareholders are entitled to receive quarterly noncumulative cash distributions at an annual rate of 5% when declared by the board of directors. There is
The Company has issued a limited number of Class A Voting Shares that rank senior to the Class AA Preferred Shares in respect of capital upon the Company's dissolution, winding up, or insolvency. There are currently 100 of such shares outstanding with a book value of
Following the Series 13 Preferred Shares offering, the downside protection available to the Class AA Preferred Shares is expected to be approximately 88.7%. Based on the current dividends paid on the BAM Shares and the Canadian dollar and
The main constraints to the ratings are the following:
(1) The downside protection available to Class AA Preferred Shareholders depends solely on the market value of BAM Shares held in the Portfolio, which will fluctuate over time.
(2) There is a lack of diversification, as the Portfolio is entirely made up of BAM Shares.
(3) Changes in BAM's dividend policy may result in reductions in Class AA Preferred Shares dividend coverage.
(4) As BAM declares dividends inU.S. dollars, the Company is exposed to foreign currency risk relating to the Canadian-U.S. exchange rate, specifically the appreciation of the Canadian dollar versus theU.S. dollar. This may have a negative impact on the dividend coverage ratio of the Class AA Preferred Shares as these dividends are paid in Canadian dollars.
(5) Downside protection available to the Class AA Preferred Shares may be negatively affected by the retraction of the Junior Preferred Shares.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is Rating Canadian Split Share Companies and Trusts (
The DBRS
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@dbrsmorningstar.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.
Tel. +1 416 593-5577
Ratings
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
28-Mar-22 Class AA Preferred Shares, Series 10 Confirmed Pfd-2 (low) -- CA
28-Mar-22 Class AA Preferred Shares, Series 11 Confirmed Pfd-2 (low) -- CA
28-Mar-22 Class AA Preferred Shares, Series 12 Confirmed Pfd-2 (low) -- CA
28-Mar-22 Class AA Preferred Shares, Series 13 Provis.-Final Pfd-2 (low) -- CA
28-Mar-22 Class AA Preferred Shares, Series 8 Confirmed Pfd-2 (low) -- CA
28-Mar-22 Class AA Preferred Shares, Series 9 Confirmed Pfd-2 (low) -- CA
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