American banks are getting more competitive:
U.S. bank bonds are about the safest on record relative to debt from European financial institutions as a growing economy allows Citigroup Inc. to wean itself off government support and a fiscal crisis roils Europe.
The average cost of protecting the notes of the six biggest U.S. banks including Citigroup and JPMorgan Chase & Co. against default fell to 12.16 basis points below the Markit iTraxx Financial Index of 25 European banks and insurers. Credit- default swaps on U.S. banks were 341 basis points higher than their European counterparts at the height of the credit crisis in October 2008.
Governments world-wide continued to express their contempt for the judicial process:
MasterCard and London-based Visa Europe Ltd. said yesterday that they are suspending use of their networks by WikiLeaks after the anti-secrecy group released thousands of clandestine U.S. military and State Department documents. The actions are the latest in a series by companies that may crimp access to funds for WikiLeaks, a nonprofit that relies on donations.
…
Simon Kleine, a spokesman for Visa Europe, declined to comment beyond a company statement yesterday that said it had suspended payment acceptance on WikiLeaks’ website “pending further investigation into the nature of its business and whether it contravenes Visa operating rules.”
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Chris Monteiro, MasterCard’s chief spokesman, has said that the company didn’t receive a request from the U.S. government or any third party before cutting off WikiLeaks. “This decision was MasterCard’s alone,” he said yesterday.
Volume remained high in the Canadian preferred share market, as PerpetualDiscounts lost 5bp and FixedResets gained 10bp.
PerpetualDiscounts now yield 5.38%, equivalent to 7.53% interest at the standard equivalency factor of 1.4x. Long Corporates now yield about 5.5%, so the pre-tax interest equivalent spread (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 bonds.
| 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 | -0.3489 % | 2,267.5 |
| FixedFloater | 4.73 % | 3.21 % | 29,979 | 19.03 | 1 | 0.0000 % | 3,557.5 |
| Floater | 2.63 % | 2.40 % | 54,961 | 21.24 | 4 | -0.3489 % | 2,448.3 |
| OpRet | 4.80 % | 3.44 % | 86,341 | 2.38 | 8 | -0.0913 % | 2,372.4 |
| SplitShare | 5.48 % | 1.01 % | 119,371 | 1.00 | 3 | -0.1473 % | 2,455.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0913 % | 2,169.3 |
| Perpetual-Premium | 5.70 % | 5.45 % | 158,298 | 5.45 | 27 | 0.1033 % | 2,011.0 |
| Perpetual-Discount | 5.37 % | 5.38 % | 280,812 | 14.79 | 51 | -0.0457 % | 2,027.4 |
| FixedReset | 5.24 % | 3.50 % | 376,460 | 3.12 | 52 | 0.1046 % | 2,256.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CM.PR.M | FixedReset | -2.12 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.30 Bid-YTW : 4.05 % |
| BAM.PR.J | OpRet | -1.17 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 26.00 Evaluated at bid price : 27.04 Bid-YTW : 4.25 % |
| PWF.PR.A | Floater | -1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-08 Maturity Price : 21.50 Evaluated at bid price : 21.76 Bid-YTW : 2.40 % |
| RY.PR.R | FixedReset | 1.03 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 27.48 Bid-YTW : 3.19 % |
| PWF.PR.E | Perpetual-Discount | 1.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-08 Maturity Price : 23.36 Evaluated at bid price : 24.56 Bid-YTW : 5.61 % |
| GWO.PR.J | FixedReset | 2.47 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.60 Bid-YTW : 3.67 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.X | FixedReset | 98,015 | TD crossed 95,000 at 27.52. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.52 Bid-YTW : 3.42 % |
| IGM.PR.B | Perpetual-Premium | 94,313 | RBC crossed three blocks, of 45,000 shares, 28,500 and 10,000, all at 25.10. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-12-08 Maturity Price : 24.85 Evaluated at bid price : 25.07 Bid-YTW : 5.96 % |
| RY.PR.T | FixedReset | 85,400 | RBC crossed 75,000 at 27.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 27.51 Bid-YTW : 3.50 % |
| TD.PR.K | FixedReset | 82,595 | RBC crossed 72,500 at 27.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.56 Bid-YTW : 3.53 % |
| RY.PR.I | FixedReset | 82,056 | RBC crossed 74,500 at 26.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 26.20 Bid-YTW : 3.47 % |
| TD.PR.I | FixedReset | 76,977 | RBC crossed 74,500 at 27.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.50 Bid-YTW : 3.59 % |
| There were 57 other index-included issues trading in excess of 10,000 shares. | |||
[…] spread (also called the Seniority Spread) is now about 210bp, a widening from the 200bp reported December 8 as long corporate yields increased but interest-equivalent PerpetualDiscount yields increased […]