PrefBlog

The national securities regulation pipe-dream is over:

The Supreme Court of Canada has stopped the federal government’s initiative for a single national securities regulator in its tracks. While the court suggested that the door remained open to a single national regulator achieved through federal-provincial co-operation, the near-total victory achieved by the provinces gives the scheme’s provincial opponents no incentive to participate.

A national securities regulator would be nice. It would also be nice if it rained soup and snowed marshmallows.

Part of the problem – as far as I’m concerned – is that the idea was oversold. Various idiots claimed that things like the ABCP market freeze would never have happened if only we had a national regulator, which is egregious nonsense. A national regulator would make the system more efficient, by making it possible for issuers and other market participants (such as myself) to get national clearance with one filing and one fee. Full stop.

Long ago, I suggested it would make far more sense for interested provinces to combine their regulatory activities – a modest goal, but one with the potential for actually happening. If the OSC were to merge with, say, the PEI Securities Commission then I would be better off. Marginally, yes, but measurably, also yes.

Leaks from the talks on the voluntary-ha-ha Greek debt writedown are getting interesting:

Greece’s creditors are resisting pressure from the International Monetary Fund to accept bigger losses on holdings of the indebted nation’s government bonds, said three people with direct knowledge of the discussions.

Lenders want the 70 billion euros ($91 billion) of new bonds the government will issue in return for existing securities to carry a coupon of about 5 percent, said the people, who declined to be identified because the negotiations are private.

The IMF is pushing for creditors to accept a smaller coupon in order to reduce Greece’s debt-to-gross domestic product ratio to 120 percent by 2020, a key element of the Oct. 27 agreement by European Union leaders, the people said.
…
As part of Greece’s 130 billion-euro second bailout, investors would take a 50 percent hit on the nominal value of 206 billion euros of privately owned debt. Exchanging bonds for securities with a 5 percent coupon would leave investors with a 65 percent loss in the net present value of their holdings of Greek government debt, the people said.
…
The sides have also agreed that the deal should include collective action clauses that would ensure lenders participate in the swap, the people said.

Vega Asset Management LLC resigned this month from a committee of Greek creditors negotiating the debt swap with European authorities, because the Madrid-based hedge fund refused to accept a net present value loss exceeding 50 percent, according to a Dec. 7 e-mail sent to other panel members, which was obtained by Bloomberg News.

It will be interesting to see how a collective action clause will be worded in order to preserve the fiction that the participants are volunteers!

Someone at the Financial Times points out:

The European Central Bank’s lending of €489-billion to more than 500 banks was nothing short of a feeding frenzy.
…
The money — and there is another three-year loan offer in February — should ease the pressure on banks to dump assets at firesale prices to raise cash.

But the hoarding suggests the funds will instead flow to that traditional parking space for spare cash; euro zone government bonds.
…
There is of course an irony in the fact that banks’ ditching of their sovereign holdings in the last year is partly to blame for the rise in government borrowing costs. There is then further irony in that the market freeze which produced Thursday’s feeding frenzy was in part the result of worries about banks’ exposure to sovereign debt. Buying more government bonds does nothing to square this vicious circle, it just buys some breathing space to repair balance sheets and restore public finances. Investors and taxpayers can only hope politicians and bankers use the time wisely.

Fed action on mortgage bonds is showing some benefits:

Mortgage rates for 30-year U.S. loans dropped to the lowest level on record amid signs the housing market may be set for a turnaround.

The average rate for a 30-year fixed loan fell to 3.91 percent in the week ended today, the lowest in data dating to 1971, from 3.94 percent, Freddie Mac said in a statement. The average 15-year rate matched last week’s previous all-time low of 3.21 percent, according to the McLean, Virginia-based mortgage-finance company.

The U.S. housing market, under pressure from tight lending standards and foreclosures that depress values, is showing signs of improvement. Purchases of previously owned homes rose to a 10-month high in November as the inventory of unsold properties shrank to the lowest level in six years, the National Association of Realtors reported yesterday.

Whether those benefits are worth the cost is, of course, a matter for debate, but at least there are some benefits!

It was another strong day for the Canadian preferred share market, with PerpetualDiscounts up 6bp, FixedResets winning 29bp and DeemedRetractibles gaining 20bp. Good volatility – all winners, including a healthy contingent from the insurance sector, which has been badly beaten down lately. Volume was on the high side of average.

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	-0.1252 %	2,023.5
FixedFloater	4.89 %	4.64 %	38,926	17.04	1	0.6211 %	3,153.5
Floater	3.29 %	3.67 %	72,395	18.14	3	-0.1252 %	2,184.9
OpRet	4.95 %	1.68 %	62,636	1.39	6	-0.1422 %	2,464.6
SplitShare	5.46 %	2.16 %	80,911	0.96	4	0.4035 %	2,561.6
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.1422 %	2,253.7
Perpetual-Premium	5.48 %	-2.27 %	90,757	0.09	18	0.1284 %	2,179.6
Perpetual-Discount	5.22 %	5.10 %	109,034	15.09	12	0.0610 %	2,328.8
FixedReset	5.09 %	2.91 %	218,482	2.45	64	0.2921 %	2,350.1
Deemed-Retractible	5.01 %	3.71 %	196,282	2.94	46	0.2012 %	2,240.6

Performance Highlights
Issue	Index	Change	Notes
SLF.PR.A	Deemed-Retractible	1.12 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.65 Bid-YTW : 6.61 %
MFC.PR.B	Deemed-Retractible	1.15 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.20 Bid-YTW : 6.80 %
IAG.PR.A	Deemed-Retractible	1.18 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.14 Bid-YTW : 5.59 %
RY.PR.E	Deemed-Retractible	1.33 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2015-02-24 Maturity Price : 25.25 Evaluated at bid price : 25.85 Bid-YTW : 3.79 %
CM.PR.M	FixedReset	1.47 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.70 Bid-YTW : 1.98 %
BNA.PR.C	SplitShare	1.81 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 21.90 Bid-YTW : 6.65 %
SLF.PR.I	FixedReset	3.00 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-12-31 Maturity Price : 25.00 Evaluated at bid price : 24.00 Bid-YTW : 4.64 %

Volume Highlights
Issue	Index	Shares Traded	Notes
BNS.PR.Z	FixedReset	45,186	RBC crossed 24,700 at 25.05. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.05 Bid-YTW : 3.09 %
MFC.PR.G	FixedReset	37,332	Recent clearance sale. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.86 Bid-YTW : 4.88 %
CM.PR.G	Perpetual-Discount	28,091	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-01 Maturity Price : 25.00 Evaluated at bid price : 25.23 Bid-YTW : 4.74 %
IFC.PR.A	FixedReset	25,975	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.98 Bid-YTW : 3.73 %
SLF.PR.H	FixedReset	25,615	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.02 Bid-YTW : 5.18 %
RY.PR.W	Perpetual-Premium	24,680	YTW SCENARIO Maturity Type : Call Maturity Date : 2012-02-24 Maturity Price : 25.50 Evaluated at bid price : 25.68 Bid-YTW : 2.87 %
There were 35 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
CM.PR.P	Deemed-Retractible	Quote: 25.53 – 26.39 Spot Rate : 0.8600 Average : 0.4891 YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-29 Maturity Price : 25.00 Evaluated at bid price : 25.53 Bid-YTW : 2.28 %
MFC.PR.C	Deemed-Retractible	Quote: 20.51 – 21.10 Spot Rate : 0.5900 Average : 0.3280 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.51 Bid-YTW : 7.06 %
PWF.PR.O	Perpetual-Premium	Quote: 26.00 – 26.78 Spot Rate : 0.7800 Average : 0.5263 YTW SCENARIO Maturity Type : Call Maturity Date : 2018-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 5.28 %
FTS.PR.G	FixedReset	Quote: 26.03 – 26.88 Spot Rate : 0.8500 Average : 0.6347 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-09-01 Maturity Price : 25.00 Evaluated at bid price : 26.03 Bid-YTW : 2.94 %
MFC.PR.F	FixedReset	Quote: 23.21 – 23.79 Spot Rate : 0.5800 Average : 0.3716 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.21 Bid-YTW : 4.27 %
FTS.PR.F	Perpetual-Premium	Quote: 25.37 – 25.90 Spot Rate : 0.5300 Average : 0.3681 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-12-01 Maturity Price : 25.25 Evaluated at bid price : 25.37 Bid-YTW : 4.81 %

This entry was posted on Friday, December 23rd, 2011 at 12:54 am and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.