Assiduous Reader BG, who often brings interesting things to my attention unlike the rest of you lazy bums, brings to my attention Goldman Sachs’ real-estate ATM with Canadian financing:
Seven years after paying $215 million for Manhattan’s Park Central Hotel, a venture of Goldman Sachs Group Inc. has sold the 934-room property for $396 million to LaSalle Hotel Properties.
Sounds like a happy ending, right? Well it was for the Goldman venture, but not for some of the lenders that became involved in the deal.
Riding the real-estate boom, Goldman piled $465 million of debt on the 1920s-era hotel near Carnegie Hall. That enabled Goldman to take out all its equity and at least $150 million in profit, people familiar with the deal said.
…
The story of the Park Central sale also has an intriguing subplot. One of its junior creditors that is getting paid much less than the face value of its debt, Rockpoint Group LLC of Boston, actually is making more than $70 million on the deal. That is because Rockpoint paid an average of 30 cents on the dollar for its $215 million chunk of debt in 2010. The payoff is over 60 cents.
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Caisse de dépôt confirmed it sold debt in 2010 but declined to comment further.
Who wants to buy an asset management firm?
Deutsche Bank AG (DBK) executives decided yesterday to pursue a sale of asset-management units after they were satisfied with early interest in the business, according to two people with knowledge of the matter.
More than two dozen bidders, including banks, private- equity firms and asset managers, handed in preliminary offers last week, said the people, who declined to be identified because talks are private. Some bidders valued all of the assets between 1.5 billion euros ($1.9 billion) and 2.5 billion euros, while others made offers for pieces of the business, the people said. A selected group of potential buyers will be asked to submit second-round bids in February, one person said.
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The units hold less than 400 billion euros in assets under management, according to estimates from Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets.
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Europe’s top financial regulator is requiring the region’s banks to bolster their capital levels by mid-2012 to withstand losses on sovereign debt. Deutsche Bank needs to fill a capital gap of 3.2 billion euros after the results of a stress test by the European Banking Authority.
Sears is losing access to credit:
Sears Holdings Corp.’s (SHLD) suppliers will no longer be able to get loans from CIT (CIT) Group Inc. for their shipments to the retailer, according to two people familiar with the situation.
CIT, the largest U.S. company that provides what’s known as factoring, told clients it would no longer approve credit for orders after today, according to the people, who declined to be identified because the information isn’t public.
It was another day of rock ‘n’ roll on the Canadian preferred share market today, with PerpetualDiscounts winning 46bp, FixedResets up 14bp and DeemedRetractibles gaining 24bp. The winnings produced another longer than usual list of performance highlights, nearly all winners and again with insurance issues prominent among the higher returns. Volume continued to be extremely heavy.
The Bozo Spread (Current Yield PerpetualDiscounts less Current Yield FixedResets) is now negative – something that I consider significant, particularly in light of the fact that the last time this happened the credit quality of the PerpetualDiscount index was higher, there weren’t as many low-coupon issues in the FixedReset index, and at that time (February 2011) the PerpetualDiscounts included banks, which were the object of a certain amount of speculation at the time.
PerpetualDiscounts now yield 4.86%, equivalent to 6.32% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.6%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) now stands at about 170bp, a sharp decline from the 195bp reported January 4.
The Median YTW of the PerpetualDiscount index is now less than its Mean Current Yield. There is some distortion of the figures since POW.PR.D, priced at 25.30, is still considered a PerpetualDiscount, as changes due to price and volume are made to index composition only at month-end. POW.PR.D has a Current Yield of 4.94% and a YTW of 4.55% – with only seven issues in the index (soon to be six … if the current situation continues) even one oddity can make relative values a little difficult to understand!
| 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 | 1.2980 % | 2,277.3 |
| FixedFloater | 4.75 % | 4.11 % | 39,515 | 17.22 | 1 | 0.6841 % | 3,282.8 |
| Floater | 2.92 % | 3.05 % | 68,301 | 19.62 | 3 | 1.2980 % | 2,458.8 |
| OpRet | 4.96 % | 1.61 % | 64,757 | 1.34 | 7 | -0.0384 % | 2,493.7 |
| SplitShare | 5.40 % | 1.21 % | 70,686 | 0.91 | 4 | -0.3352 % | 2,589.9 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0384 % | 2,280.2 |
| Perpetual-Premium | 5.42 % | -6.88 % | 87,166 | 0.09 | 23 | -0.0693 % | 2,206.5 |
| Perpetual-Discount | 5.04 % | 4.86 % | 147,679 | 15.60 | 7 | 0.4575 % | 2,402.6 |
| FixedReset | 5.05 % | 2.69 % | 207,333 | 2.40 | 64 | 0.1395 % | 2,377.7 |
| Deemed-Retractible | 4.91 % | 3.08 % | 198,270 | 1.31 | 46 | 0.2359 % | 2,295.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BNA.PR.E | SplitShare | -1.04 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 23.75 Bid-YTW : 6.00 % |
| TCA.PR.Y | Perpetual-Premium | -1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-05 Maturity Price : 50.00 Evaluated at bid price : 52.40 Bid-YTW : 3.13 % |
| BAM.PR.N | Perpetual-Discount | 1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 24.09 Evaluated at bid price : 24.59 Bid-YTW : 4.84 % |
| IFC.PR.A | FixedReset | 1.28 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.37 Bid-YTW : 3.58 % |
| SLF.PR.G | FixedReset | 1.28 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.96 Bid-YTW : 4.33 % |
| MFC.PR.C | Deemed-Retractible | 1.33 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.81 Bid-YTW : 5.73 % |
| GWO.PR.H | Deemed-Retractible | 1.40 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.67 Bid-YTW : 5.07 % |
| SLF.PR.D | Deemed-Retractible | 1.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.37 Bid-YTW : 5.90 % |
| BAM.PR.K | Floater | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 3.10 % |
| BMO.PR.Q | FixedReset | 1.53 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.96 Bid-YTW : 2.75 % |
| GWO.PR.I | Deemed-Retractible | 1.92 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.40 Bid-YTW : 5.38 % |
| GWO.PR.N | FixedReset | 2.31 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.40 Bid-YTW : 3.31 % |
| BAM.PR.B | Floater | 2.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 3.05 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.O | Deemed-Retractible | 138,303 | RBC crossed 105,600 at 25.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-02-10 Maturity Price : 25.75 Evaluated at bid price : 26.00 Bid-YTW : -10.09 % |
| ENB.PR.B | FixedReset | 131,366 | Desjardins crossed 81,100 at 25.45; Nesbitt crossed 14,600 at 25.46. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 23.28 Evaluated at bid price : 25.46 Bid-YTW : 3.58 % |
| BAM.PR.B | Floater | 128,151 | RBC crossed blocks of 14,000 shares, 17,600 and 48,100, all at 17.15. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 3.05 % |
| TD.PR.G | FixedReset | 118,853 | RBC crossed 86,200 at 27.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.08 Bid-YTW : 2.37 % |
| ENB.PR.D | FixedReset | 116,154 | RBC crossed 15,400 at 25.30; Scotia crossed 18,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-01-11 Maturity Price : 23.20 Evaluated at bid price : 25.31 Bid-YTW : 3.56 % |
| GWO.PR.N | FixedReset | 113,138 | RBC crossed 67,800 at 24.70. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.40 Bid-YTW : 3.31 % |
| IFC.PR.A | FixedReset | 100,805 | RBC crossed 72,900 at 25.11. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.37 Bid-YTW : 3.58 % |
| CM.PR.L | FixedReset | 100,044 | RBC crossed 76,800 at 27.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.15 Bid-YTW : 2.49 % |
| There were 62 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| FTS.PR.G | FixedReset | Quote: 25.79 – 26.43 Spot Rate : 0.6400 Average : 0.3933 YTW SCENARIO |
| IFC.PR.C | FixedReset | Quote: 25.52 – 25.93 Spot Rate : 0.4100 Average : 0.2452 YTW SCENARIO |
| TCA.PR.X | Perpetual-Premium | Quote: 52.21 – 52.75 Spot Rate : 0.5400 Average : 0.3915 YTW SCENARIO |
| FTS.PR.H | FixedReset | Quote: 25.50 – 25.90 Spot Rate : 0.4000 Average : 0.2706 YTW SCENARIO |
| RY.PR.E | Deemed-Retractible | Quote: 25.87 – 26.32 Spot Rate : 0.4500 Average : 0.3226 YTW SCENARIO |
| W.PR.J | Perpetual-Premium | Quote: 25.42 – 25.90 Spot Rate : 0.4800 Average : 0.3621 YTW SCENARIO |
[…] PerpetualDiscounts now yield 4.91% (lower than the Current Yield because some of the issues are now actually Premiums … with so few issues left in this class, special cases are a problem) equivalent to 6.38% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.55%, so the pre-tax interest-equivalent spread (in this context also referred to as the Seniority Spread) is now about 185bp, an increase from the 170bp reported January 11. […]