Yesterday I reported on the optimistic accounting at BNP Paribas. The Danes are cracking down on optimism:
The Financial Supervisory Authority will restrict the flexibility it gives banks to calculate writedowns under international financial reporting standards, FSA Director General Ulrik Noedgaard said in an interview in Copenhagen. The regulator wants to curb “an optimistic approach” to writedowns displayed by some banks, he said.
Amagerbanken A/S and Fjordbank Mors A/S collapsed this year after the FSA told the two regional lenders to write down 1.9 billion kroner ($371 million) more in property and farming loans than stated in their accounts. The insolvencies triggered the European Union’s first senior creditor losses within a resolution framework, and prompted Moody’s Investors Service in May to downgrade six Danish banks, including Danske Bank A/S, the country’s biggest. Proper accounting could have helped deal with the losses in a less disruptive way, Noedgaard said.
This one will drive the slogan-chanters nuts:
Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.
S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.
…
S&P has awarded AAAs to more than $36 billion of securities in the U.S. this year that were created by bankers who continue to gather thousands of loans, bundle them into bonds of varying risk and pay ratings firms a fee to assign credit rankings.
The ambulance-chasers are after Sino-Forest … and anybody else they can blame for their investment:
Sino-Forest Corp. (TRE-T4.81—-%), the TSX-listed Chinese forestry company whose shares have collapsed following fraud allegations, repeatedly misrepresented its financial statements, backdated stock options and engaged in unusual and undisclosed related-party transactions, according to fresh allegations levelled in a proposed class-action lawsuit seeking more than $7-billion in damages.
The notice of action, filed on behalf of a group of Sino-Forest shareholders who purchased shares in various offerings between 2007 and 2011, is seeking more than $6.5-billion in damages from Sino-Forest, its top management, directors, and auditors Ernst & Young LLP, as well as the Beijing office of Pöyry Consulting Co. Ltd., which published reports about the size and value of the company’s forestry assets.
A host of investment banks … that underwrote Sino-Forest’s equity offerings were also named as proposed defendants in the action, which seeks an additional $824-million related to the stock sales.
Say what you like about US Republicans, they’re rugged individualists who scorn government hand-outs:
When Texas billionaire Harold Simmons wanted to build a radioactive waste dump, one data point that would loom large in the permitting process wasn’t required on the application: He is a major donor to Governor Rick Perry.
…
Perry has a public record of rewarding his political donors with jobs and state contracts. He has appointed about 4,000 people — including many donors — to commissions, boards and other posts, according to Texans for Public Justice, an Austin- based, nonpartisan group that tracks state political donations.
The campaign to eliminate humour in the western world scored another victory:
The department store said in its statement: “We agree that the ‘Too pretty’ T-shirt does not deliver an appropriate message, and we have immediately discontinued its sale. Our merchandise is intended to appeal to a broad customer base, not to offend them.”
YLO did not file any Insider MTN purchases on SEDI today, but the Normal Course Issuer Bid for the preferreds continued – in fact, it appears that the company bought a block, as some insider (presumably the company) bought a block of 57,100 YLO.PR.B at 9.15, total value $522,465. The common traded somewhere north of 179-million shares on the month – about a third of the entire float, although a lot of that will be double-counted, what with day-traders and all.
The Canadian preferred share market closed the month on a mixed note, with PerpetualDiscounts losing 16bp, FixedResets up 2bp and DeemedRetractibles winning 18bp. Volatility was average. Volume was average.
PerpetualDiscounts now yield 5.39%, equivalent to 7.01% interest at the standard equivalency factor of 1.3x. Long Corporates now yield about 5.00%, so the pre-tax interest-equivalent spread (also called the seniority spread) is now 201bp, a tightening from the 210bp reported August 24 as yields converged slightly.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2134 % | 2,160.4 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2134 % | 3,249.2 |
| Floater | 2.81 % | 2.54 % | 25,740 | 20.95 | 4 | -0.2134 % | 2,332.7 |
| OpRet | 4.88 % | 3.46 % | 61,131 | 0.80 | 9 | -0.1589 % | 2,444.9 |
| SplitShare | 5.37 % | 0.07 % | 59,059 | 0.49 | 4 | 0.1295 % | 2,498.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1589 % | 2,235.7 |
| Perpetual-Premium | 5.66 % | 4.80 % | 131,628 | 0.65 | 14 | -0.0829 % | 2,109.1 |
| Perpetual-Discount | 5.34 % | 5.39 % | 109,784 | 14.74 | 16 | -0.1565 % | 2,234.7 |
| FixedReset | 5.14 % | 3.16 % | 210,341 | 2.67 | 60 | 0.0187 % | 2,323.2 |
| Deemed-Retractible | 5.06 % | 4.67 % | 263,932 | 7.83 | 46 | 0.1797 % | 2,189.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -2.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-31 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 2.54 % |
| FTS.PR.C | OpRet | -1.49 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2011-09-30 Maturity Price : 25.50 Evaluated at bid price : 25.86 Bid-YTW : -11.57 % |
| FTS.PR.E | OpRet | -1.23 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-01 Maturity Price : 25.75 Evaluated at bid price : 26.51 Bid-YTW : 3.03 % |
| GWO.PR.L | Deemed-Retractible | 1.19 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.35 Bid-YTW : 5.45 % |
| IAG.PR.C | FixedReset | 1.20 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 27.00 Bid-YTW : 2.45 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| IFC.PR.C | FixedReset | 221,464 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 24.97 Bid-YTW : 4.28 % |
| GWO.PR.N | FixedReset | 135,340 | RBC crossed blocks of 80,000 and 50,000, both at 24.65. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 3.47 % |
| PWF.PR.M | FixedReset | 135,200 | TD crossed 135,000 at 27.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.71 Bid-YTW : 3.27 % |
| SLF.PR.H | FixedReset | 126,045 | Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.73 Bid-YTW : 4.02 % |
| TD.PR.Q | Deemed-Retractible | 105,662 | TD crossed 100,000 at 26.70. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-01-31 Maturity Price : 26.00 Evaluated at bid price : 26.58 Bid-YTW : 4.09 % |
| MFC.PR.A | OpRet | 63,796 | Nesbitt crossed 50,000 at 25.50. YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2015-12-18 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 3.66 % |
| There were 30 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 20.75 – 22.00 Spot Rate : 1.2500 Average : 0.9591 YTW SCENARIO |
| CIU.PR.C | FixedReset | Quote: 25.00 – 25.49 Spot Rate : 0.4900 Average : 0.3258 YTW SCENARIO |
| FTS.PR.E | OpRet | Quote: 26.51 – 27.00 Spot Rate : 0.4900 Average : 0.3268 YTW SCENARIO |
| MFC.PR.E | FixedReset | Quote: 26.33 – 26.73 Spot Rate : 0.4000 Average : 0.2468 YTW SCENARIO |
| BAM.PR.P | FixedReset | Quote: 27.00 – 27.38 Spot Rate : 0.3800 Average : 0.2388 YTW SCENARIO |
| BNS.PR.Z | FixedReset | Quote: 24.85 – 25.49 Spot Rate : 0.6400 Average : 0.5289 YTW SCENARIO |
Yellow Media should be maxxed out on Series 1 and 2 Preferreds now, according to their original press release for the NCIB (1,127,882
and 684,028 respectively). Series 3 and 5 have a long way to go.
[…] MAPF Portfolio Composition: August 2011 analysis (which is greater than the 5.34% index yield on August 31). Given such reinvestment, the sustainable yield would be $11.1492 * 0.0580 = $0.6467, an increase […]