TD Capital Trust II – a subsidiary of The Toronto-Dominion Bank (TD) – announced that it will redeem all the outstanding TD Capital Trust II Securities – Series 2012-1 (TD CaTS II). The redemption will take place on December 31, 2012.
These securities would be redeemed at $1,000 per share. The redemption amount will also include accrued and unpaid distributions until the redemption date arrives.
TD Capital Trust II has already deposited an amount equal to the proceeds of the redemption in trust for the holders of the TD CaTS II under the terms and conditions governing the TD Capital Trust II. The deposited amount includes payments associated with the fulfillment of the terms and conditions by the TD Capital Trust II of the redemption proceeds payable on the TD CaTS II.
Earlier in November this year, U.S. based PNC Financial Services Group Inc. (PNC) announced that it will redeem preferred securities worth $500.1 million. The redemption will include PNC Financial's Non-Cumulative Perpetual Preferred Stock, Series M. The preferred securities would be redeemed at 100% of the liquidation amount, which is $100,000 per share. The redemption will take place on December 10, 2012.
We believe that the abovementioned redemption will lead to a reduction in TD Bank’s borrowed funds, which will go a long way in improving the company’s overall financials. Further, we expect the company to maintain its superior position in the market based on its positive approach to market conditions and opportunistic organic growth. However, the regulatory reforms are likely to affect the company’s near-term results to some extent.
TD Bank’s shares maintain a Zacks #4 Rank, which translates into a short-term Sell rating.
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