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Manulife Financial CEO Donald GuloienADRIEN VECZAN/Reuters

Manulife Financial Corp. issued preferred shares Tuesday in a bid to shore up its balance sheet while tapping demand for yield.

In the last quarter, chief executive Donald Guloien said the company was comfortable with its capital ratio. Thanks to moves like hedging, Manulife significantly reduced its susceptibility to market volatility and strengthened its reserves.

But today the company issued 8 million preferred shares for total proceeds of $200-million to be put toward general corporate purposes. The shares, worth $25 each, bring a quarterly fixed dividend yielding 4 per cent a year for about five years before that rate gets recalculated.

But just because Manulife is raising capital, doesn't mean management is concerned about its cushion. Manulife announced a seemingly low capital ratio of 204 per cent at the end of the third quarter, but while that ratio was lower than the prior quarter, the company attributed that to changes in its earnings and a rise in the capital needed to guarantee risks in its assets and segregated funds.

Peter Routledge, an analyst from National Bank Financial, said at the time that while the ratio was down a little from what he expected, the company's balance sheet balance sheet is nowhere near as susceptible to risk as it was two years ago.

Manulife CFO Steve Roder said in a statement on Tuesday the financing would take into account future financing needs, but noted that part of Manulife's motivation to issue the shares stemmed from the opportunities created by favourable markets.

Manulife isn't the only company using preferred share offerings to cater to investors on the hunt for yield, but with a degree of safety. In May (a month where Manulife issued two sets of preferred shares) Streetwise noted an onslaught of new preferred share issues, as firms such as Enbridge Inc. also saw market opportunity in preferred shares.