Rate Reset Season 2026: Fixed vs Floating on Canadian Preferred Shares

Rate Reset Season 2026: Fixed vs Floating — How to Make the Conversion Decision

Autumn is reset season in the Canadian preferred share market, and September 30, 2026 is a focal point: series across several issuers have their five-year reset dates on or around that day. For each one, holders face the same income decision that arrives every five years: take the new fixed dividend rate, or convert to the floating-rate series? Get the framework right once and you can reuse it at every future reset.

What Is a Rate Reset on a Preferred Share?

A rate-reset preferred share (often called a FixedReset) pays a fixed dividend for five years. At the reset date, the dividend is recalculated using a formula fixed at issuance: the Government of Canada 5-year bond yield plus a fixed spread. That spread never changes for the life of the share. Across today's universe of roughly 120 rate-reset issues, the median spread is about 2.65%, with individual issues spanning roughly 1.28% to 5.18%.

At reset, two things happen at once:

• The issuer chooses: redeem the shares at $25.00, or let them continue at the new reset rate.


• The holder chooses (if the issuer doesn't redeem): keep the shares at the new fixed rate, or convert one-for-one into the floating-rate companion series.

The floating-rate companion typically pays 3-month Government of Canada Treasury Bill yield plus the same spread, recalculated every quarter. So the decision is, in effect: lock in a rate for five years, or ride the T-bill rate quarter by quarter.

A Real Example: BPO.PR.R's September 30, 2026 Reset

Brookfield Office Properties just announced the terms for its Class AAA Series R shares (BPO.PR.R), setting the pattern for the season:

• New fixed rate: 6.829% annually ($0.4268125 per share quarterly) for the five years from October 1, 2026 to September 30, 2031.


• Conversion deadline: holders must elect to convert into the floating Series S by 5:00 p.m. Toronto time on September 15, 2026.


• Floating alternative: 3-month GoC T-bill + 3.48%, which computes to about 5.77% annualized for the first quarter period.

Notice the arithmetic of the announcement itself: the fixed rate of 6.829% minus the 3.48% spread implies the market's then-current 5-year GoC yield was about 3.35%. The floating side pays T-bill (currently around 2.29% annualized, per the announcement's first-quarter math) plus the same spread — well below the fixed alternative today. That gap is the entire decision in one announcement: take the fixed side and you earn 6.829% for five years; take the floater and you start near 5.77%, with every quarter a new roll of the rate dice.

How the Two Sides Have Performed Historically

Look at what happened to holders who made each choice in past cycles:

• Rates rose after reset (2022-2023 style): floater holders were paid handsomely as T-bills climbed; fixed holders watched their locked rate become below-market for the coming years — but they kept the income floor.


• Rates fell or flatlined (2015-2020 style): fixed holders kept a steady 4-5% stream while floater coupons collapsed toward 2% or lower. Several floating-rate series saw their quarterly dividends shrink below what fixed holders had locked.


• Issuer forced conversion: if too few shares would remain in one series after the election (usually a 1-million-share minimum), remaining holders are automatically switched. Check this clause in every notice — it limits how much a minority election can accomplish.

The Decision Framework: Three Questions

1. What does the curve say today?

Compare the new fixed rate to the floating rate computed at today's T-bill level. When the fixed rate exceeds the floater by a large margin — as with BPO.PR.R's 6.829% versus 5.77% — the market is effectively paying you to accept the fixed side. You give up nothing today and gain certainty. When the spread is narrow (within about 25 basis points), the floating side becomes more interesting, because a floater also protects you against reset-date volatility — its price converges toward $25.00 at each quarterly repricing.

2. What is your inflation and policy view?

Floaters are effectively an inflation hedge: when policy rates rise, their coupons rise each quarter. Fixed holders accept rate-cut risk in exchange for a locked income stream. In the current environment — with Canadian unemployment elevated at 6.4% and US labor data strong — the Bank of Canada's path is uncertain enough that a diversified approach (some fixed, some floating) is a defensible middle path.

3. What is the price telling you?

If you hold a series trading at $23.50, converting or holding at reset locks in a 6.8% fixed dividend on a discounted holding — the accretion to $25.00 over five years adds roughly 30 basis points annually to your return. If you hold the same series at $26.50, the price risk is mirrored. Price-to-par can change the effective answer by more than the fixed-floating gap itself.

Where Reset Rates Are Landing in 2026

A couple of actively reset series illustrate the range of outcomes this season (all effective September 30, 2026 unless noted):

In the database today, the median projected yield at reset on all FixedReset issues (110 with a calculable projection) is about 5.79% — well above the coupons most of those shares currently pay. That is the mechanical reason issuer redemption risk has surged: see our redemption guide and yield-to-worst explainer for the holder-side consequences.

Portfolio Implications

• Elections are one-way windows: conversion privileges expire at a stated deadline (5:00 p.m. Eastern on the announced date). Miss it, and you hold the fixed series until the next reset in five years.


• Track your issuers' notices: reset terms arrive via news release and then a formal notice through the transfer agent; your broker will not reliably chase you for the decision.


• Floating-rate series are seasonally attractive immediately after resets, when conversion imbalance sometimes leaves the floater slightly discounted relative to its coupon math.


• Some pairs are interconvertible both ways — the Sun Life structure lets Series 10R and 11QR holders flip repeatedly, a flexibility most pairs lack.

Key Takeaways

• Rate-reset preferred shares recalculate their dividend every five years at the GoC 5-year bond yield plus a fixed spread (median spread today: ~2.65%).


• At each reset the issuer can redeem; if it does not, the holder chooses between the new fixed rate and converting to a floating-rate series paying 3-month T-bill + spread.


• The September 30, 2026 examples show fixed decisively ahead: BPO.PR.R resets to 6.829% vs ~5.77% floating; SLF.PR.H to 5.519%.


• Choose fixed when the curve rewards it and you value income certainty; choose floating when you expect rising policy rates or want quarterly repricing that pins the price near par.


• Conversion deadlines are hard: the BPO.PR.R election closes September 15, 2026 at 5:00 p.m. Toronto time. Diarize them.

See the reset date, spread, and projected reset dividend for every issue in our preferred share database, or use the rankings tool to filter by upcoming reset dates.