SPDR Bloomberg Convertible Securities ETFNYSE American: CWB

Not for distribution to U.S. news wire services or for dissemination in the United States Aligned with National Bank's strategic plan to accelerate growth across all its business lines in Canada Provides customers an expanded product and service offering nationally, extensive banking centre network and common customer experience culture Maintains branch footprint and Edmonton-based executive and operational presence   Combination creates stronger competitor, and provides more choice for Canadians Concurrent subscription receipt offering of $1 billion MONTREAL and EDMONTON, Alberta, June 11, 2024 (GLOBE NEWSWIRE) -- National Bank of Canada (“National Bank”) (TSX: NA) and Canadian Western Bank (“CWB”) (TSX: CWB) today announced they have entered into a definitive agreement (the “Agreement”) for National Bank to acquire CWB, a diversified financial services institution based in Edmonton, Alberta. The transaction brings together two complementary banks with growing businesses, enabling the united bank to enhance services to customers by offering a comprehensive product and service platform at national scale, with a regionally focused service model.

SPDR® Bloomberg Convertible Securities ETF holds a portfolio of convertible securities and is well-diversified. The CWB ETF is a hybrid asset with characteristics of both equity and fixed income, and its behavior is closer to a stock index than a bond index. CWB doesn't look attractive as a long-term investment, but it is a good instrument for tactical allocation in a rotational model.

CWB offers investors a way to access innovative companies but with historically lower risk than small cap stock ETFs like IWM. Convertible bonds have a favorable reward/risk profile over many years, with equity-like returns alongside payment of principal built into these securities. Credit markets' future refinancing needs, the so-called maturity wall, bode well for convertible demand as an alternative to traditional bonds' higher interest expense.

Rising long-term interest rates make long-term treasuries a viable alternative to equities, with potential for downside protection. Convertible bonds offer characteristics of both stocks and bonds, providing upside potential and income potential in declining equity markets. The SPDR Bloomberg Convertible Securities ETF is the largest convertible ETF, but it has underperformed stocks and high yield bonds in the past year.

The convertible bond market has long been an appealing place to look for total return potential. However, demand for convertible bond ETFs has been minimal.

An upside to rising rates is the market's reintroduction to fixed-income assets providing a decent income. As exciting as auctions and secondary market sales are, though, typical Treasuries lack the excitement of active stock trading.