S&P has put Portugal on watch-negative:
What Portugal does to combat downward pressures on growth and under what terms it accepts external support–if it does at all–will influence the government’s creditworthiness. The Eurogroup Ministers recently proposed treaty changes to establish a permanent crisis mechanism to be called the European Stability Mechanism (ESM), which will be based on the European Financial Stability Facility. It is our understanding that the ESM may be designed to rank ahead of private creditors in any future debt restructurings beginning in 2013. As a result, debt that European Monetary Union member states issue might not rank pari passu with debt that the ESM issues. We think that this treaty change would represent a move away from the original design of the European Financial Stability Facility, which was intentionally exempt from preferred creditor status by the 16 members of the Euro Area in an effort to assist European Monetary Union members in financial difficulties.
I’m always looking for new perspectives, so I asked the question:
Why Issue Preferred Shares
Glad you asked…
Perferred shares are issued for a wide variety of reasons. One of the reasons why a preferred share may be issued is because people actually like these kinds of shares compared to other types of shares.Nicole_Marie8201, Answers Expert
Well, I’m relieved to have finally cleared that one up!
Are politicians taking the US fiscal deficit seriously enough? Is the perfect the enemy of the good? If two deficit panel members are to be believed, the answers are “No” and “Yes”:
A panel vote set for today was delayed until Dec. 3. Bowles said yesterday he didn’t know if members will reach agreement on the proposal, which includes scaling back such popular tax breaks as the home-mortgage interest deduction. Agreement from 14 of the commission’s 18 members is needed to send a plan to Congress for a vote on whether to put it into effect. A failure to get 14 votes would kill the plan.
…
Representative Paul Ryan, a Wisconsin Republican on the panel, said in an interview he will vote against the plan because it doesn’t do enough to address rising health-care costs. Representative Jeb Hensarling, a Texas Republican, expressed the same concern and said, “I don’t know if you’re going to get my vote.”
Achieving the goal imperfectly and then merely having to tinker with the solution in place is just not sexy enough, I guess.
I had a laugh at the 7% targetted distribution of Quadravest’s Dividend Select 15 on November 26. In the interest of fairness, I think we should all now laugh just as loudly at Mulvihill’s Canadian Utilities & Telecom Income Fund:
The Fund’s investment objectives are (i) to pay holders of its Units (“Unitholders”) monthly distributions in an amount targeted to be 7.0% per annum on the NAV of the Fund; and (ii) to preserve and enhance the Fund’s NAV while reducing portfolio volatility.
The Fund will seek to achieve its investment objectives by investing in a portfolio consisting principally of equity securities of large capitalization (over $1 billion) utility and, to a lesser degree, telecommunications issuers listed on the Toronto Stock Exchange (“TSX”).
The underwriter’s fee is 5.25%. dealers get a trailer of 40bp, and Mulvihill gets 1.1%; the total underlying performance required for a stable NAV is about 8.91% … not entirely unreasonable for equities, provided we ignore sequence-of-returns risk. And, of course, Mulvihill does not provide details of its track record in the prospectus, merely their experience.
PrefBlog salutes Emil Cohen who, despite the best efforts (and a little bullying) of the Toronto District School Board, has the makings of an independent and assertive young man.
In a further abuse of the right to due process, police can now impound cars for failure to make family support payments. Doesn’t this make everybody feel good? After all, the SIU now admits that their investigation of the police assault on Adam Nobody did not include such esoteric investigative techniques as talking to the guy who made the video (although it seems that in the last few days they have listened to a lecture on investigative techniques by Officer Bubbles).
Abuse of police authority? Cover-ups and grossly incompetent pseudo-investigations? A police spokesman claims the officers involved would be outraged at allegations that there’s any kind of cover-up going on, no sir, no way, ain’t never gonna happen, but remains unable to name the officers. Ah, well … here in the true North strong and free, abuse of power is rewarded.
There was continued high volume on the Canadian preferred share market today, with PerpetualDiscounts losing 14bp and FixedResets down marginally.
PerpetualDiscounts now yield 5.37%, equivalent to 7.52% interest at the standard equivalency factor of 1.4x. Long Corporates now yield 5.4%, so the pre-tax interest equivalent spread is now 210bp, an apparrent, but probably meaningless, tightening from the 220bp reported at month-end (i.e., yesterday).
| 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 | 0.3762 % | 2,269.5 |
| FixedFloater | 4.75 % | 3.21 % | 28,165 | 19.05 | 1 | 1.2826 % | 3,542.0 |
| Floater | 2.62 % | 2.36 % | 52,963 | 21.36 | 4 | 0.3762 % | 2,450.4 |
| OpRet | 4.78 % | 3.48 % | 61,361 | 2.39 | 8 | -0.1292 % | 2,378.5 |
| SplitShare | 5.47 % | 1.65 % | 122,561 | 1.02 | 3 | -0.2602 % | 2,461.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1292 % | 2,174.9 |
| Perpetual-Premium | 5.70 % | 5.48 % | 157,197 | 5.44 | 27 | -0.0490 % | 2,008.3 |
| Perpetual-Discount | 5.35 % | 5.37 % | 283,204 | 14.83 | 51 | -0.1415 % | 2,036.0 |
| FixedReset | 5.23 % | 3.30 % | 356,668 | 3.15 | 51 | -0.0062 % | 2,270.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BNS.PR.O | Perpetual-Premium | -2.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 24.57 Evaluated at bid price : 24.80 Bid-YTW : 5.71 % |
| BAM.PR.T | FixedReset | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 22.96 Evaluated at bid price : 24.60 Bid-YTW : 4.59 % |
| RY.PR.B | Perpetual-Discount | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 22.81 Evaluated at bid price : 23.00 Bid-YTW : 5.14 % |
| TD.PR.C | FixedReset | -1.27 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 3.74 % |
| TDS.PR.C | SplitShare | -1.25 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-15 Maturity Price : 10.00 Evaluated at bid price : 10.30 Bid-YTW : 1.65 % |
| MFC.PR.E | FixedReset | -1.23 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-19 Maturity Price : 25.00 Evaluated at bid price : 26.53 Bid-YTW : 3.83 % |
| SLF.PR.E | Perpetual-Discount | -1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 20.52 Evaluated at bid price : 20.52 Bid-YTW : 5.49 % |
| SLF.PR.A | Perpetual-Discount | -1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 21.62 Evaluated at bid price : 21.62 Bid-YTW : 5.50 % |
| GWO.PR.J | FixedReset | 1.00 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 27.37 Bid-YTW : 2.66 % |
| BAM.PR.B | Floater | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 17.80 Evaluated at bid price : 17.80 Bid-YTW : 2.98 % |
| BAM.PR.G | FixedFloater | 1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 22.76 Evaluated at bid price : 22.90 Bid-YTW : 3.21 % |
| GWO.PR.H | Perpetual-Discount | 1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 23.06 Evaluated at bid price : 23.29 Bid-YTW : 5.20 % |
| TRP.PR.C | FixedReset | 1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 23.42 Evaluated at bid price : 25.92 Bid-YTW : 3.69 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.I | FixedReset | 88,430 | RBC crossed three blocks, of 10,000 shares, 49,000 and 25,000, all at 27.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.88 Bid-YTW : 3.15 % |
| BNS.PR.P | FixedReset | 80,493 | National crossed 40,000 at 26.22; GMP bought 30,000 from Scotia at 26.25. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-25 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 3.46 % |
| TRP.PR.A | FixedReset | 75,399 | RBC crossed 48,200 at 26.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-01-30 Maturity Price : 25.00 Evaluated at bid price : 25.91 Bid-YTW : 3.55 % |
| GWO.PR.N | FixedReset | 75,018 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-01 Maturity Price : 24.44 Evaluated at bid price : 24.49 Bid-YTW : 3.70 % |
| HSB.PR.E | FixedReset | 68,597 | RBC crossed 50,000 at 28.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-30 Maturity Price : 25.00 Evaluated at bid price : 28.30 Bid-YTW : 3.14 % |
| TD.PR.C | FixedReset | 68,029 | Desjardins crossed 13,000 at 27.05; RBC crossed 48,400 at 26.86. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 3.74 % |
| There were 51 other index-included issues trading in excess of 10,000 shares. | |||
[…] as long as I’m updating that story (discussed December 1, I’ll also update the Emil Cohen story: The principal’s decision to suspend Cohen, 17, was […]
[…] (also called the Seniority Spread) is now about 200bp, a tightening from the 210bp reported on December 1 that has been accomplished solely through an increase in yield for the […]