The migration of traders continues:
Guggenheim Partners LLC, the closely held investment bank and asset manager, plans to hire as many as 150 staff being pushed out of banks’ proprietary-trading units because of U.S. financial rules enacted last year.
Loren M. Katzovitz and Patrick Hughes, 49-year-old managing partners who have worked together since 1993, are launching Guggenheim Global Trading LLC in Purchase, New York, with an initial investment of $500 million as soon as June 1, they said yesterday in an interview. The firm plans to hire 100 to 150 traders and manage as much as $2 billion, they said.
Much the same thing is happening in Canada:
The cultural gulf between Canada’s independent securities firms – with their eat-what-you-kill pay structures – and the more staid bank-owned investment dealers is steadily widening. Some of the people who recruit bankers and traders say that the result of a move to more deferred pay and smaller cash bonuses at bank-owned firms means they are attracting a more risk-averse type of person, which is what regulators were seeking.
The pay system at independent firms like GMP Securities remains simple. Bankers and traders get paid for the business they bring in. Base salaries are rare, but bonus payments are regular and in cash. Bonuses are big when business is good, and they can dry up in fallow times.
It will be interesting to see how this plays out. I can tell you that the quality of institutional bond desk personnel has declined over the past 15 years. There’s still lots of the old guys around, but as they retire and move on, they’re being replaced by order-takers.
General Growth, the object of Brookfield’s affections, is taking advantage of better tone in the CMBS market:
General Growth Properties Inc. (GGP), the U.S. mall owner planning to refinance $5 billion of mortgage debt, tapped UBS AG and Morgan Stanley (MS) to fund loans as banks rebuild inventory to back bonds tied to commercial real estate.
UBS agreed to provide a $375 million loan on the 977,000- square-foot Providence Place Mall in Rhode Island, according to a person with direct knowledge of the deal who declined to be identified because the talks are private. Morgan Stanley will lend about $150 million for a Humble, Texas property, according to a person familiar with those negotiations. The banks plan to package the loans for sale as securities, the people said.
General Growth, which emerged from the largest real estate bankruptcy in U.S. history in November after piling up $27 billion in debt, plans to refinance $5 billion in mortgages in 2011, Chief Executive Officer Sandeep Mathrani said during a March 1 conference call with analysts. Property owners nationwide are benefiting as the Federal Reserve keeps its benchmark interest rates near-zero to stimulate economic growth.
…
General Growth buckled under its debt load when the market for commercial-mortgage backed bonds shut down in 2008 and the company was unable to refinance properties. The real estate investment trust has $18.2 billion in outstanding mortgage debt, Mathrani said.
A mixed, relatively quiet day on the Canadian preferred share market, as PerpetualDiscounts lost 5bp, FixedResets were down 7bp, and DeemedRetractibles gained 4bp. There are only two entries on the Performance Highlights table – and neither would have made had their closing bids been a penny lower. Volume remained at elevated levels.
| 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 | 0.2625 % | 2,396.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2625 % | 3,603.8 |
| Floater | 2.50 % | 2.27 % | 44,561 | 21.55 | 4 | 0.2625 % | 2,587.2 |
| OpRet | 4.87 % | 3.33 % | 59,910 | 0.40 | 9 | 0.0086 % | 2,392.5 |
| SplitShare | 5.09 % | 3.19 % | 232,068 | 1.05 | 5 | 0.1416 % | 2,485.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0086 % | 2,187.7 |
| Perpetual-Premium | 5.74 % | 5.55 % | 125,081 | 1.27 | 10 | 0.0079 % | 2,033.5 |
| Perpetual-Discount | 5.51 % | 5.61 % | 125,531 | 14.40 | 14 | -0.0455 % | 2,117.9 |
| FixedReset | 5.21 % | 3.51 % | 197,858 | 2.99 | 54 | -0.0697 % | 2,278.0 |
| Deemed-Retractible | 5.23 % | 5.24 % | 374,462 | 8.29 | 53 | 0.0429 % | 2,081.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BMO.PR.J | Deemed-Retractible | 1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.01 Bid-YTW : 5.01 % |
| BNA.PR.E | SplitShare | 1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 24.55 Bid-YTW : 5.19 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| MFC.PR.D | FixedReset | 176,634 | Desjardins crossed 11,000 at 27.22 and 50,000 at 27.25. RBC crossed blocks of 49,200 and 33,900 at 27.25, then bought 22,800 from Nesbitt at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-19 Maturity Price : 25.00 Evaluated at bid price : 27.18 Bid-YTW : 3.80 % |
| TD.PR.G | FixedReset | 141,482 | Desjardns crossed 50,000 at 27.50, then 70,000 at 27.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-30 Maturity Price : 25.00 Evaluated at bid price : 27.40 Bid-YTW : 3.37 % |
| SLF.PR.F | FixedReset | 112,710 | Desjardins crossed 110,000 at 26.85. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-30 Maturity Price : 25.00 Evaluated at bid price : 26.80 Bid-YTW : 3.64 % |
| W.PR.H | Perpetual-Discount | 96,137 | RBC crossed three blocks: 41,000 shares, 23,800 and 25,000, all at 24.35. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-03-03 Maturity Price : 23.29 Evaluated at bid price : 24.26 Bid-YTW : 5.71 % |
| BNS.PR.X | FixedReset | 75,416 | Desjardins crossed blocks of 25,600 and 45,000, both at 27.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.37 Bid-YTW : 3.41 % |
| FTS.PR.C | OpRet | 62,329 | TD crossed 50,000 at 25.70 and 11,100 at 25.80. YTW SCENARIO Maturity Type : Call Maturity Date : 2011-07-01 Maturity Price : 25.50 Evaluated at bid price : 25.70 Bid-YTW : 3.01 % |
| There were 45 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| GWO.PR.I | Deemed-Retractible | Quote: 22.23 – 22.69 Spot Rate : 0.4600 Average : 0.3282 YTW SCENARIO |
| TDS.PR.C | SplitShare | Quote: 10.46 – 10.78 Spot Rate : 0.3200 Average : 0.2019 YTW SCENARIO |
| BAM.PR.P | FixedReset | Quote: 27.50 – 27.84 Spot Rate : 0.3400 Average : 0.2389 YTW SCENARIO |
| RY.PR.L | FixedReset | Quote: 26.45 – 26.75 Spot Rate : 0.3000 Average : 0.2000 YTW SCENARIO |
| BAM.PR.R | FixedReset | Quote: 26.10 – 26.40 Spot Rate : 0.3000 Average : 0.2007 YTW SCENARIO |
| PWF.PR.H | Perpetual-Premium | Quote: 24.92 – 25.19 Spot Rate : 0.2700 Average : 0.1781 YTW SCENARIO |