What are the potential scenarios if market yields for similar preferred shares change dramatically before the new maturity date?

Potential scenarios when market yields for comparable preferreds swing sharply before the 2031 maturity

1. Rising yields (higher prevailing preferred‑share rates) –
   
   If the broader preferred‑share market starts demanding a higher yield—perhaps because of a tightening monetary environment, rising inflation expectations, or a downgrade of credit‑risk sentiment—the Fund will have to set the extended‑term dividend at a higher rate to stay competitive. A higher coupon makes the existing PWI‑Preferreds less attractive at today’s 10.2 % distribution, so the market will price the shares down to reflect the new, higher required return. In practice you can expect a price discount on the preferreds (and a corresponding dip in the Class A equity price) as investors re‑price the security to a yield‑adjusted level. The technical picture will likely show a break of recent support (the August‑2025 closing level) and a move toward a new lower‑price channel. Traders can capture the downside by short‑selling the preferreds or by buying put options, while long‑duration investors may look for a higher‑yield entry point if the price falls enough to lock in a still‑attractive 10 %+ distribution.

2. Falling yields (lower preferred‑share rates) –
   
   Conversely, if the market drives yields down—perhaps because of a prolonged low‑rate cycle, a flight‑to‑quality rally, or an improvement in the credit outlook—the Fund will be able to set the dividend at a lower rate while still offering a competitive return. A lower required yield lifts the price of the existing preferreds, as the 10.2 % distribution now looks even richer relative to the new benchmark. The price will likely bounce off recent support and test the August‑2025 high, creating a short‑term bullish technical pattern (higher‑highs, higher‑lows). In this environment, a long‑position in the preferreds or the Class A shares can be justified, especially if the price is still below the intrinsic value implied by the new lower‑yield environment. Adding to the position on pull‑backs or using call spreads can lock in upside while preserving capital if yields later rise again.

3. Volatile or erratic yield movements –
   
   If yields oscillate wildly—perhaps due to mixed macro data, shifting central‑bank signals, or sector‑specific shocks—the Fund’s dividend‑rate decision will be made in a high‑uncertainty setting. In such a scenario the market will price in a risk premium, widening the spread between the preferreds and comparable securities. Expect increased price volatility and a broader trading range for both the preferreds and the Class A shares. Traders can profit from this by employing straddles or strangles (long volatility) on the preferreds, while risk‑averse investors may hold cash or short‑duration assets until the yield path clarifies.

Actionable take‑aways

• Monitor the yield curve for comparable TSX preferreds (especially those with 5‑year terms) over the next 12‑18 months. A 100‑basis‑point move in those yields is a strong signal for a price adjustment in PWI‑Preferreds.
  
• Set stop‑losses near the recent support level (≈ $9.00‑$9.30) if you’re long, and target the next resistance (≈ $10.20) for a short‑cover or profit‑take.
  
• If yields are trending higher, consider a short‑position or a put‑spread to capture the downside; if yields are trending lower, look for a higher‑yield entry on the dip, or a call‑spread to lock in upside while limiting risk.
  

In short, the dividend rate—and therefore the price—of the Preferred Shares will be directly tethered to the prevailing market yield environment. A clear read on that environment will dictate whether you position for a yield‑driven discount (short) or a yield‑driven premium (long).