DBRS Rates Top 10 Split Trust

Dominion Bond Rating Service (“DBRS”) has today assigned a new rating to the Preferred Securities issued by Top 10 Split Trust (the “Trust”), a split share company that holds a portfolio of the six largest Canadian chartered banks and the four largest Canadian Life insurance companies (the “Portfolio”). The Portfolio will be actively managed by Mulvihill Capital Management Inc. and will not invest in less than 5% and not more than 15% of the Trust’s assets in the securities of each issuer in the Portfolio.

The holders of the Preferred Securities are entitled to receive fixed preferred quarterly payments to yield 6.25% annually. The Capital Units are expected to receive a targeted quarterly distribution equal to 7.50% of the net asset value (NAV) of the Trust per annum. DBRS views this distribution structure favourably as it reduces the hurdle rate for the Trust and its requirement to write more options in the event of a potential declining NAV. Distributions on the Capital Units are conditional upon the Trust being current in its obligation to pay interest on the Preferred Securities.

The rating of the Preferred Securities is based on the available downside protection as well as the dynamic targeted distribution rate to the Capital Units. At maturity, the Trust will pay the outstanding principal amount of the Preferred Securities by liquidating the Portfolio in the open market.