Press Release

DBRS Finalizes Provisional Rating of Pfd-3 (high) of Global Dividend Growth Split Corp.’s Preferred Shares

Split Shares & Funds
June 15, 2018

DBRS Limited (DBRS) finalized the provisional rating of Pfd-3 (high) assigned to the Preferred Shares issued by Global Dividend Growth Split Corp. (the Company). The Company issued an equal number (3,550,000) of the Preferred Shares and the Class A Shares at an issue price of $10.00 per Preferred Share and $12.00 per Class A Share. From to time or during the events of issuance and redemption, the number of the Class A Shares outstanding may exceed the number of the Preferred Shares outstanding. It is expected that such excess will not be more than 10% and the excess of over 10% should not be outstanding for more than 15 days. Both classes of shares are scheduled to mature on June 30, 2021. The term of the Company may be extended beyond the maturity date for additional terms of five years each as determined by the Company’s board of directors.

Net proceeds from the offering will be invested in a portfolio of equity securities of large capitalization global dividend growth companies (the Portfolio). In order to qualify for inclusion in the Portfolio, at the time of investment, each global dividend growth company comprising the Portfolio must (1) have a market capitalization of at least USD 10 billion and (2) have a history of dividend growth or have potential for future dividend growth. The Company expects that at least 20 global dividend growth companies will comprise the Portfolio. Equity securities selected will generally be equally weighted at the time of investment and after rebalancing the Portfolio. The Portfolio will be rebalanced and/or may be reconstituted at least annually. A portion of the Portfolio’s investments will be denominated in currencies other than Canadian dollars and this exposure is expected to be substantially all hedged back to the Canadian dollar. Furthermore, in addition to, or instead of, investing in equity securities of global dividend growth companies directly, the Company may invest a portion of the Portfolio’s assets in exchange-traded funds that provide exposure to global dividend growth companies, including exchange-traded funds managed by Brompton Funds Limited (the Manager).

Dividends received on the Portfolio will be used to pay fixed cumulative quarterly dividend to holders of the Preferred Shares in the amount of $0.125 per share to yield 5.00% per annum on the issue price of $10.00, while holders of the Capital A Shares are expected to receive regular monthly non-cumulative distributions targeted to be $0.10 per Class A Share to yield 10.00% per annum on the issue price of $12.00. No monthly distributions to the Class A Shares will be made if (1) distributions to the Preferred Shares are in arrears or (2) in respect of a cash distribution, the net asset value of the Company falls below 1.5 times (x) the principal amount of the outstanding Preferred Shares.

Based on the initial asset coverage of 2.1x, the net asset value of the Company would have to fall by approximately 53% for the holders of the Preferred Shares to be in a loss position. The initial dividend coverage ratio is 0.6x. To supplement portfolio income, the Company has the ability to write covered call and put options or engage in security lending.

The Pfd-3 (high) rating reflects (1) the level of downside protection available to holders of the Preferred Shares, (2) potential foreign investment risk, (3) the Portfolio quality and underlying securities correlation, (4) the effect of stated distributions to the Class A Shares and (5) the term to maturity of the Preferred Shares.

The main constraints to the rating are the following:

(1) The downside protection available to holders of the Preferred Shares will depend on the value of the equity securities held in the Portfolio.

(2) Volatility of price and changes in the dividend policies of the underlying issuers may result in significant reductions in interest coverage or downside protection from time to time.

(3) Dividends and interest received on the Portfolio are currently unable to fully cover distributions on the Preferred Shares.
(4) Reliance on the Manager to generate additional yield on the Portfolio to meet distributions and other trust expenses without having to liquidate portfolio securities.

(5) Stated monthly distributions on the Class A Shares, which will create a grind on the Portfolio mitigated by an asset coverage test of 1.5 times, which ensures sufficient levels of downside protection to the holders of the Preferred Shares.

All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Rating Canadian Split Share Companies and Trusts, which can be found on under Methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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Global Dividend Growth Split Corp.
  • US = Lead Analyst based in USA
  • CA = Lead Analyst based in Canada
  • EU = Lead Analyst based in EU
  • UK = Lead Analyst based in UK
  • E = EU endorsed
  • U = UK endorsed
  • Unsolicited Participating With Access
  • Unsolicited Participating Without Access
  • Unsolicited Non-participating