These are total returns, with dividends presumed to have been reinvested at the bid price on the ex-date. The list has been restricted to issues in the HIMIPref™ indices.
| Issue | Index | DBRS Rating | Monthly Performance | Notes (“Now” means “August 31”) |
| BAM.PR.M | PerpetualDiscount | Pfd-2(low) | -4.01% | Now with a pre-tax bid-YTW of 5.95% based on a bid of 20.35 and a limitMaturity. |
| BAM.PR.N | PerpetualDiscount | Pfd-2(low) | -3.75% | Now with a pre-tax bid-YTW of 5.97% based on a bid of 20.27 and a limitMaturity. |
| BAM.PR.B | Floater | Pfd-2(low) | -3.64% | |
| BNA.PR.C | SplitShare | Pfd-2 (low) | -2.22% | Backed by BAM.A shares. Now with a pre-tax bid-YTW of 5.59% based on a bid of 22.46 and a hardMaturity 2019-1-10 at 25.00. |
| BAM.PR.K | Floater | Pfd-2(low) | -2.10% | |
| … | … | … | … | … |
| RY.PR.A | PerpetualDiscount | Pfd-1 | +2.52% | Now with a pre-tax bid-YTW of 4.90% based on a bid of 22.81 and a limitMaturity. |
| IGM.PR.A | OpRet | Pfd-2(high) | +2.55% | Now with a pre-tax bid-YTW of 3.26% based on a bid of 26.98 and a call 2009-7-30 at 26.00. |
| CU.PR.B | PerpetualPremium | Pfd-2(high) | +2.66% | Now with a pre-tax bid-YTW of 5.17% based on a bid of 25.91 and a call 2012-7-1 at 25.00. |
| BMO.PR.H | PerpetualPremium | Pfd-1 | +3.61% | Now with a pre-tax bid-YTW of 4.16% based on a bid of 26.44 and a call 2013-3-27 at 25.00. |
| MFC.PR.A | OpRet | Pfd-1(low) | +4.22% | Now with a pre-tax bid-YTW of 3.74% based on a bid of 25.61 and a softMaturity 2015-12-18 at 25.00. |
Not a stellar month for the BAM issues! These issues were discussed in the comments to the August 15 Market Action report; the basic story is that to a certain extent the BAM issues will trade as Pfd-3’s, a notch or two below their actual credit ratings of Pfd-2(low) (DBRS) and P-2 (S&P).
There are various explanations of why they should trade this way:
- BAM simply has too many issues on the market. There will be some participants who are attracted by the risk/reward profile, but have already bought all the BAM that they’re comfortable with having in the name [Note: This is very often a situation that applies to MAPF]
- The issue suffers from a conglomerate discount. Not very sensible, perhaps, but who ever told you the markets have to be sensible?
- Credit Anticipation. Some people believe that BAM is over-rated by the ratings agencies and explicitly trade it as a Pfd-3
Evidence from the world of bonds is available in some indications I have of 5-year CDS levels (see the Primer Links if you don’t know how a Credit Default Swap works). BAM is quoted at 39-44bp, +11 on the month; Enbridge (issuer of ENB.PR.A) is at 48-54bp (+1); Bombardier (BBD.PR.B / C / D) at 162-179 (-62); Alcan (until recently AL.PR.E / F) at 24-28 (+5); TransCanada (TCA.PR.X / Y) at 23-27 (-1); and finally BCE (lots!) at 397-418 (+54). Make of this what you will!
Update: It should be noted that there were a lot of Pfd-3 and other issues that did worse than the BAM issues. The list, as noted above, was restricted to issues included in the HIMIPref™ issues.
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