The Shrinking Preferred Share Universe: CIBC, Cenovus, and the Redemption Wave
Canadian Preferred Shares Are Disappearing
If you've been investing in Canadian preferred shares for a while, you've probably noticed something: the market is getting smaller. And it's happening faster than you might think.
In our database alone, we track over 30 preferred share issues that have been redeemed and are now inactive. That's out of approximately 260 active issues — meaning roughly 10% of the market has been called away in recent years.
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Recent High-Profile Redemptions
Cenovus Energy (CVE) — March 31, 2026
Cenovus redeemed both its Series 1 (CVE.PR.A) and Series 2 (CVE.PR.B) preferred shares at $25.00 per share, returning $300 million to holders. The final dividends were $0.16106 per Series 1 share and $0.24337 per Series 2 share.
This is another energy company exiting the preferred share market entirely. CVE.PR.A was a 2.577% fixed rate issue; CVE.PR.B was a 3.948% floating rate issue. Both were redeemed at par.
CIBC (CM) — Series 43 (CM.PR.Q)
CIBC redeemed its Non-cumulative Rate Reset Class A Preferred Shares Series 43 (NVCC) at $25.00 per share. The final quarterly dividend was $0.196438 per share. This is part of a broader pattern of big banks redeeming NVCC (Non-Viability Contingent Capital) preferreds.
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Why Are Issuers Redeeming?
Several forces are driving the redemption wave:
1. TLAC Requirements
Canadian banks are subject to Total Loss-Absorbing Capacity (TLAC) rules. Older NVCC preferreds issued before the regulatory framework was finalized don't always count efficiently toward TLAC, giving banks an incentive to redeem and reissue with updated terms — or simply reduce their preferred share capital.
2. Lower Cost Alternatives
With interest rates having come down from their peaks, some issuers can refinance at lower costs through other instruments. When preferred shares trade below $25, issuers can redeem at par — effectively buying back at face value.
3. Capital Optimization
Non-bank issuers like Cenovus are choosing to use cash on hand rather than carry preferred share obligations. Energy companies in particular are focused on debt reduction and capital discipline.
4. Reset Mechanics
When a rate reset date arrives, issuers face a choice: let the shares reset to a new (potentially higher) dividend rate, or redeem at $25. With 5-year bond yields around 3.11%, the new reset rates would be significantly higher than what some issuers want to pay.
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The Big Picture: Who's Been Redeemed
Looking at our inactive list, the redemptions span every sector:
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What This Means for Investors
Supply is shrinking. Fewer outstanding preferred shares means less liquidity, but also potentially stronger prices for the remaining issues as demand chases a smaller pool.
Be selective on resets. If you hold a preferred share approaching its reset date, the issuer may redeem rather than pay the new higher rate. Don't count on holding forever.
New issues matter. The few new issues entering the market (like Brompton's recent $55M offering) are important for replenishing supply. Watch for new split corp and bank issuances.
Quality over quantity. With fewer options, focus on issuers with strong credit ratings and sustainable dividend coverage. The remaining issues from P-1 rated banks and utilities remain the core of the market.
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By the Numbers
| Metric | Value |
|--------|-------|
| Active preferred shares tracked | ~260 |
| Inactive (redeemed) issues | 30+ |
| Bank redemptions (all series) | 15+ |
| Recent redemption value (Cenovus) | $300M |
The Canadian preferred share market is evolving. Fewer issues, higher quality, and better yields on resets. For income-focused investors, the opportunity is real — but so is the need to stay informed.
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Data sourced from TMX and company press releases. This is not investment advice.