As expected, the Bank of Montreal announced today that it will be redeeming its Series 21 preferred shares (BMO.PR.O), effective May 25th. The $275,000,000 issue had a 6.50% dividend rate and a reset spread of 458 basis points.
At current prices, investors should carefully consider taking profits now, if they hold this issue. The yield until redemption of BMO.PR.O is quite low and there is an opportunity to reinvest at much better yields. In addition, new issue supply continues to lag the pace of redemptions, and with $1.8 billion of redemptions scheduled for the end of this month, demand for remaining issues is expected to remain strong.