Connor, Clark & Lunn Capital Markets Inc. reports that the final prospectus for Canadian Banc Capital Securities Trust has been filed for an initial public offering of Class A units and Class F units of the fund.

The maximum amount of the offerings is $100 million. The offerings are expected to close on June 9. The Toronto Stock Exchange has conditionally approved the listing of the Class A units under the symbol of CSB.UN, subject to the fulfillment of TSX requirements. Class F units will not be listed on a stock exchange but may be converted into Class A units on a weekly basis.

Canadian Banc’s investment objectives are to provide unitholders with attractive tax-advantaged quarterly cash distributions, and return to unitholders the original issue price of the units upon termination of the fund on June 30, 2014. Distributions are initially targeted to be $1.50 per year per unit consisting primarily of returns of capital. This represents a yield on the unit issue price of 6.0% per year, CC&L says.

The fund will invest in an actively managed portfolio consisting primarily of Innovative Tier 1 Capital Securities of the six largest Canadian banks, including such issues as TD Capital Trust IV Notes (TD CaTS IV), Scotiabank Capital Trust Securities (Scotia BaTS II) and BMO Capital Trust II Notes (BoATS VI). CC&L believes that an attractive opportunity currently exists to invest in Innovative Tier 1 Capital Securities.

Connor, Clark & Lunn Investment Management Ltd., the portfolio manager to the fund, notes that “the soundness of Canadian banks relative to their international counterparts has been particularly highlighted during the recent financial crisis, during which Canadian banks have maintained investment grade credit ratings while many U.S. and European banks have been forced into restructuring, bankruptcy or partial or full government nationalization.”

It adds that “the recent volume of issuance by Canadian banks of preferred shares and common shares to strengthen their balance sheets has increased their regulatory capital levels to levels approaching historical highs, and has further enhanced the downside protection of Innovative Tier 1 Capital Securities.”

According to CC&L, securities in the portfolio have a weighted average investment grade credit rating of A, a weighted average yield to the first date upon which the securities may be called at par of 6.74%, a current yield of 7.32% and an average term to call (to the first date upon which the securities may be called at par) of approximately 9.38 years.

Units are being offered for sale by a syndicate of agents led by BMO Nesbitt Burns Inc., CIBC World Markets Inc. and RBC Dominion Securities Inc. and includes Scotia Capital Inc., National Bank Financial Inc., TD Securities Inc., HSBC Securities (Canada) Inc., Richardson Partners Financial Limited, Dundee Securities Corp., Wellington West Capital Markets Inc., Blackmont Capital Inc., Canaccord Capital Corp., Desjardins Securities Inc., GMP Securities L.P., Manulife Securities Incorporated, Raymond James Ltd., and Research Capital Corp.

IE