Terms

Series

Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series E

Liquidation Preference

$25.00

Coupon Rate

6.125%

Rate Type

Fixed To Floating

Annual Dividend

$1.53

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

December 15, 2026

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Secured And Unsecured Debt, All Liabilities Of Keybank And Other Subsidiaries; Pari Passu With: Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Any Other Parity Preferred Stock; Senior To: Common Stock, Junior Preferred Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Shares Offered

20,000,000

Prospectus Summary

KeyCorp (NYSE: KEY), a major U.S. bank holding company with ~$135.8 billion in assets, is offering 20,000,000 depositary shares, each representing a 1/40th interest in a share of its Series E Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, with a liquidation preference of $25 per depositary share. The stock pays a fixed annual dividend of 6.125% (approximately $0.383/depositary share per quarter) through December 14, 2026, then resets quarterly to three-month LIBOR plus 3.892%. The preferred is non-cumulative: if KeyCorp's board does not declare a dividend for any period, that dividend is permanently lost and investors have no recourse to recover it. As a holding company issue, these depositary shares are structurally subordinated to all liabilities of KeyCorp's subsidiaries—most importantly KeyBank—whose deposit and borrowing obligations totaled approximately $116.9 billion at September 30, 2016. The Series E ranks junior to all of KeyCorp's secured and unsecured debt at the holding company level, pari passu with Series A, C, and D Preferred Stock, and senior only to common and other junior stock. A regulatory capital treatment event call allows KeyCorp to redeem all (not part) of the Series E at $25/depositary share if regulators determine the stock no longer qualifies as additional tier 1 capital—a meaningful risk given potential changes in Federal Reserve capital rules—and any such redemption requires prior Federal Reserve approval. At the $25 offering price, the fixed-period yield is 6.125% annually, with quarterly payments on March 15, June 15, September 15, and December 15, commencing March 15, 2017. Dividends received by individual U.S. holders generally qualify as 'qualified dividend income' taxed at a maximum 20% rate, and distributions to U.S. corporate holders generally qualify for the 70% dividends-received deduction, subject to sufficient current or accumulated earnings and profits. The dividend stopper provision blocks KeyCorp from paying dividends on common or junior securities unless Series E dividends for the most recently completed period have been paid in full—providing a degree of protection to preferred holders, though the non-cumulative structure means any skipped dividend is gone permanently.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If KeyCorp has not paid full dividends on the Series E Preferred Stock for the most recently completed dividend period, it cannot declare or pay dividends on its common stock or other junior securities, nor repurchase those junior securities.

Other Preferreds from KeyCorp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 50 (Average)