Agreement has been reached on the US too-big-to-fail fund:
The deal would eliminate a proposed industry-paid $50 billion fund to cover the government’s costs of liquidating a failing financial firm, Dodd said today in an interview. Republicans said the fund would encourage bailouts rather than prevent them.
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The Dodd-Shelby agreement would apply to a section of the bill that would give the government authority to liquidate large failing financial firms whose collapse would threaten the economy. The two senators have agreed to replace the proposed pre-funded $50 billion reserve with language that would require regulators to impose fees on the financial industry to recoup costs for unwinding a company after a collapse, Dodd said today.
The amendment passed 93-5. Typical of modern Republicans – spend first, tax later. Much later!
The Club Med countries may be paying much, much later!
Greek bond yields yesterday rose above their level before the government agreed on a European Union-led bailout on May 2 as escalating protests cast doubt on its ability to drive through austerity measures. Spanish and Portuguese bonds also renewed last week’s slide as investors question their ability to cut budget deficits that are among the highest in the euro area.
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That didn’t stop a sell-off in Spanish bonds yesterday. The extra yield that investors demand to buy its debt over German bunds rose 21 basis points to a 14-month high of 117.8 points. Spain’s benchmark IBEX Index, the euro region’s worst performer after Greece, fell 5.4 percent to the lowest since July. Portugal’s spread rose 40 basis points to 247 yesterday.The euro weakened 1.4 percent to $1.3011, the lowest in more than a year. The currency retreated further in Asian trading today, to $1.2961 as of 11 a.m. in Singapore.
Volume in the Canadian preferred share market was off significantly today, but remains on the high side of normal. PerpetualDiscounts squeaked out another win, gaining 2bp, while FixedResets continued their recovery with a 15bp gain. Volatility was muted, with only four issues on the performance highlights list.
PerpetualDiscounts now yield 6.35%, equivalent to 8.89% interest at the standard equivalency factor of 1.4x. Long Corporates now yield 5.6% (gaining total return of +44bp on the month-to-date), so the pre-tax interest-equivalent spread is now about 330bp, an increase from the +320bp reported at month end, as long corporate yields have come in a little while PerpetualDiscounts have remained flat.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 2.53 % | 2.56 % | 50,174 | 21.05 | 1 | 0.4052 % | 2,191.2 |
| FixedFloater | 4.92 % | 2.98 % | 43,686 | 20.37 | 1 | 0.0000 % | 3,252.7 |
| Floater | 2.04 % | 2.25 % | 100,710 | 21.73 | 3 | 0.0172 % | 2,385.6 |
| OpRet | 4.91 % | 4.09 % | 94,393 | 1.78 | 11 | -0.1492 % | 2,299.2 |
| SplitShare | 6.40 % | 6.54 % | 128,624 | 3.55 | 2 | -0.1762 % | 2,133.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1492 % | 2,102.4 |
| Perpetual-Premium | 5.53 % | 4.77 % | 23,084 | 15.84 | 1 | 0.0000 % | 1,823.5 |
| Perpetual-Discount | 6.27 % | 6.35 % | 215,997 | 13.38 | 77 | 0.0163 % | 1,701.6 |
| FixedReset | 5.53 % | 4.38 % | 520,251 | 3.59 | 44 | 0.1539 % | 2,142.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.H | OpRet | -1.61 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2012-03-30 Maturity Price : 25.00 Evaluated at bid price : 25.10 Bid-YTW : 5.86 % |
| HSB.PR.D | Perpetual-Discount | 1.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-05-05 Maturity Price : 19.80 Evaluated at bid price : 19.80 Bid-YTW : 6.41 % |
| ELF.PR.G | Perpetual-Discount | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-05-05 Maturity Price : 16.88 Evaluated at bid price : 16.88 Bid-YTW : 7.13 % |
| NA.PR.N | FixedReset | 1.40 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-09-14 Maturity Price : 25.00 Evaluated at bid price : 26.16 Bid-YTW : 3.83 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| GWO.PR.J | FixedReset | 122,703 | Desjardins crossed 100,000 at 26.60. TD crossed 19,200 at 26.66. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.38 Bid-YTW : 4.56 % |
| TD.PR.K | FixedReset | 73,044 | Nesbitt crossed 32,000 at 26.80; TD crossed 25,000 at 26.85. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 26.90 Bid-YTW : 4.36 % |
| SLF.PR.C | Perpetual-Discount | 57,540 | RBC crossed 50,000 at 17.50. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-05-05 Maturity Price : 17.44 Evaluated at bid price : 17.44 Bid-YTW : 6.48 % |
| BNS.PR.X | FixedReset | 40,950 | Desjardins crossed 34,500 at 26.88. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 26.75 Bid-YTW : 4.47 % |
| NA.PR.M | Perpetual-Discount | 34,810 | Nesbitt crossed 16,700 at 23.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-05-05 Maturity Price : 23.65 Evaluated at bid price : 23.85 Bid-YTW : 6.32 % |
| BMO.PR.J | Perpetual-Discount | 31,271 | Desjardins crossed 12,000 at 18.72. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-05-05 Maturity Price : 18.72 Evaluated at bid price : 18.72 Bid-YTW : 6.03 % |
| There were 38 other index-included issues trading in excess of 10,000 shares. | |||