Bloomberg has an interesting story about the legal snarl of an effective Greek default:
Hedge funds seeking to wring profits from a Greek debt restructuring are underestimating the will of policy makers to impose losses on them, according to investors who say trying to beat the politicians is too risky.
…
European banks own most of the 200 billion euros ($263 billion) of Greek debt held by non-government investors. Hedge funds, pension funds, sovereign wealth funds and other “non- regulated investors,” own a further 60 billion euros, according to estimates by Pavan Wadhwa, JPMorgan Chase & Co.’s head of global interest-rate strategy.
…
Because hedge funds and other holders could collectively keep the participation rate below that level, Greece has said it may approve legislation that imposes losses on investors who don’t support the voluntary swap by adding a retroactive collective action clause into its bond documentation. Such a provision would give a majority of bondholders the ability to force holdouts to accept the same terms as everyone else.
…
It will be difficult for holdouts to assemble enough votes to block any collective action clause, because European banks have an incentive to support the provision, fund managers said.A lawsuit against a collective-action clause legislated by the Greek government may also be difficult to win, because it would probably have to be filed in Greece, said a hedge-fund executive whose firm holds the country’s debt and has examined the legal options.
Never play poker with somebody who can change the rules! The question is: will anybody in their right minds ever buy Greek debt again? Or any European’s?
DBRS confirmed GMP.PR.B at Pfd-3(low):
DBRS has confirmed the Pfd-3 (low) rating on the Preferred Share obligations of GMP Capital Inc. (GMP or the Company) with a Stable trend. The rating reflects the strength of the Company’s business franchise as a premier provider of investment banking and capital markets products and services to its targeted market of mid-sized Canadian companies, most of whom operate in the resource and energy sectors. Following the issue of preferred shares in early 2011, the Company’s capitalization has become relatively more aggressive as a result of $66 million in share buybacks completed during the first nine months of 2011. At current levels of financial leverage, the Company’s financial flexibility is somewhat impaired. A continued slump in underwriting and trading activities, which DBRS does not expect to recover in the short to medium term given the weak global economic outlook and continued absence of investor confidence, will prevent a material improvement in this condition in the medium term. Nevertheless, DBRS remains comfortable with the Pfd-3 (low) rating, given the Company’s flexible cost base and its excess regulatory capital at its operating subsidiaries.
The recent run-up in the Canadian preferred share market took a pause today, with PerpetualPremiums down 7bp, FixedResets off 2bp and DeemedRetractibles losing 13bp. Volatility was significant and fairly evenly distributed between asset classes, winners and losers. Volume was 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 | -0.1917 % | 2,427.2 |
| FixedFloater | 4.66 % | 4.03 % | 38,353 | 17.30 | 1 | 0.7407 % | 3,348.5 |
| Floater | 2.75 % | 2.96 % | 61,127 | 19.81 | 3 | -0.1917 % | 2,620.7 |
| OpRet | 4.80 % | -1.38 % | 66,427 | 1.28 | 6 | 0.0566 % | 2,533.2 |
| SplitShare | 5.28 % | -0.29 % | 79,904 | 0.84 | 4 | 0.3447 % | 2,650.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0566 % | 2,316.4 |
| Perpetual-Premium | 5.30 % | -8.51 % | 109,775 | 0.09 | 26 | -0.0691 % | 2,232.1 |
| Perpetual-Discount | 5.04 % | 4.88 % | 192,811 | 15.62 | 4 | -0.1545 % | 2,452.5 |
| FixedReset | 5.00 % | 2.48 % | 225,863 | 2.31 | 65 | -0.0250 % | 2,402.0 |
| Deemed-Retractible | 4.86 % | 1.58 % | 225,221 | 0.96 | 45 | -0.1266 % | 2,333.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.G | Deemed-Retractible | -2.41 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.51 Bid-YTW : 4.38 % |
| PWF.PR.F | Perpetual-Premium | -1.75 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-03-07 Maturity Price : 25.00 Evaluated at bid price : 25.32 Bid-YTW : -9.16 % |
| PWF.PR.K | Perpetual-Premium | -1.42 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-31 Maturity Price : 25.25 Evaluated at bid price : 25.64 Bid-YTW : 4.04 % |
| CU.PR.C | FixedReset | -1.11 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.95 Bid-YTW : 3.18 % |
| CM.PR.K | FixedReset | -1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.75 Bid-YTW : 2.48 % |
| MFC.PR.C | Deemed-Retractible | -1.00 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.69 Bid-YTW : 5.29 % |
| SLF.PR.G | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.80 Bid-YTW : 3.49 % |
| BNS.PR.X | FixedReset | 1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 27.42 Bid-YTW : 1.82 % |
| BNA.PR.E | SplitShare | 1.16 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 24.52 Bid-YTW : 5.43 % |
| CIU.PR.A | Perpetual-Premium | 1.40 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 4.14 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.Z | FixedReset | 313,461 | Desjardins crossed 101,000 at 25.10. RBC and Nesbitt both crossed 100,000 at 25.15 each. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.12 Bid-YTW : 3.08 % |
| BAM.PR.N | Perpetual-Discount | 74,740 | Nesbitt crossed 62,300 at 24.68. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-02-06 Maturity Price : 23.98 Evaluated at bid price : 24.48 Bid-YTW : 4.88 % |
| SLF.PR.E | Deemed-Retractible | 47,629 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.29 Bid-YTW : 5.49 % |
| BMO.PR.L | Deemed-Retractible | 42,930 | Desjardins sold 11,300 to National at 27.65 and another 10,000 to TD at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-25 Maturity Price : 26.00 Evaluated at bid price : 27.62 Bid-YTW : 0.52 % |
| SLF.PR.A | Deemed-Retractible | 30,498 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.38 Bid-YTW : 5.16 % |
| BMO.PR.M | FixedReset | 29,950 | Scotia crossed 25,000 at 25.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-08-25 Maturity Price : 25.00 Evaluated at bid price : 25.95 Bid-YTW : 2.35 % |
| There were 33 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 21.75 – 22.60 Spot Rate : 0.8500 Average : 0.6074 YTW SCENARIO |
| GWO.PR.G | Deemed-Retractible | Quote: 25.51 – 25.84 Spot Rate : 0.3300 Average : 0.2229 YTW SCENARIO |
| RY.PR.F | Deemed-Retractible | Quote: 26.10 – 26.38 Spot Rate : 0.2800 Average : 0.1733 YTW SCENARIO |
| PWF.PR.H | Perpetual-Premium | Quote: 25.46 – 25.79 Spot Rate : 0.3300 Average : 0.2253 YTW SCENARIO |
| RY.PR.H | Deemed-Retractible | Quote: 27.21 – 27.53 Spot Rate : 0.3200 Average : 0.2207 YTW SCENARIO |
| FTS.PR.E | OpRet | Quote: 28.08 – 28.50 Spot Rate : 0.4200 Average : 0.3317 YTW SCENARIO |