April 2, 2013

This may sound like a joke, but it’s actually a big deal:

The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.

Regulation FD requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively. It is intended to ensure that all investors have the ability to gain access to material information at the same time.

Previously, you had to issue a press release; in Canada, that generally (maybe always?) means you have to go through MarketWire or NewsWire, the two major agencies that distribute press releases.

Those two companies – the list is probably a little longer in the States! – have a history: if you issue through these places, you know you’re not going to get in trouble with the regulators for selective disclosure, whereas if you go to Honest Jimmy’s Press Release Distribution Service … you might. So what the established companies are really selling is safe harbor …. and boy-oh-boy, do they ever charge through the nose for it!

Now there are more safe harbours … FREE safe harbours! In the great scheme of things, potential savings from reduced press release costs probably won’t boost Royal Bank’s stock price much … but for smaller companies, every penny counts!

The feds have clarified the budget’s bail-in musings that were mentioned here yesterday:

“The bail-in scenario described in the Budget has nothing to do with depositors’ accounts and they will in no way be used here,” Finance Minister Jim Flaherty’s press secretary Kathleen Perchaluk said in a statement Tuesday. “Those accounts will continue to remain insured through the Canada Deposit Insurance Corporation, as always.”

“The [Canadian] bail-in regime is to protect both taxpayers from having to bail out banks and depositors from having to take a financial hit like we’ve seen in Cyprus,” Ms. Perchaluk said. “If a bank is having severe difficulties, the bail-in regime would force certain debt instruments to be converted into equity to recapitalize the bank.”

It’s a pity that the Globe’s reporter, Grant Robertson, has no idea of what bank regulation is all about and didn’t speak to anybody who does – he perpetuates the following confusion:

Under the proposed Canadian plan, banks would set aside contingent capital, such as shares, which could be quickly converted to cash to provide liquidity and stabilize their operations should a crisis hit.

However, it is charming that Spend-Every-Penny’s mouthpiece, Kathleen Perchaluk, has such faith in the CDIC. As mentioned on March 27 (and on other occasions!) the CDIC’s reserves are far too small to even begin to cope with the collapse of a major bank.

John Greenwood of the Financial Post not only knows more about bank regulation, but actually talked to people who knew more than him:

According to one senior fixed-income analyst, Ottawa has its eye on senior unsecured debt issued by banks. Popular with institutional fixed-income investors, the product is widely traded and makes up a big chunk of the domestic bond market.

So far it’s only a proposal in the budget and a vaguely worded one at that, but “everyone is taking the government at their word and hence the market is coming to terms with whether or not to buy it and at what price,” said the analyst, who asked not to be named.

Critics worried that investors may not buy it at a price that the banks consider affordable and the banks themselves have said they have reservations. In any case, the banks haven’t issued any yet. One interpretation of the budget is that Ottawa is looking to nudge the process forward.

The last one probably won’t be a big worry. The bank-owned TMX will be “encouraged” by the bank regulator to include the so-called bonds in the index which will virtually guarantee a market.

It was a day of modest losses for the Canadian preferred share market, with PerpetualPremiums losing 5bp, FixedResets off 1bp and DeemedRetractibles down 3bp. There was no volatility – none. Volume was below 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 0.1011 % 2,624.5
FixedFloater 4.13 % 3.48 % 29,607 18.29 1 0.0000 % 3,937.4
Floater 2.65 % 2.85 % 78,828 20.15 4 0.1011 % 2,833.8
OpRet 4.81 % 1.98 % 54,621 0.21 5 0.0387 % 2,606.0
SplitShare 4.81 % 3.98 % 136,196 4.17 5 0.1182 % 2,954.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0387 % 2,382.9
Perpetual-Premium 5.18 % 1.81 % 89,615 0.57 32 -0.0514 % 2,373.3
Perpetual-Discount 4.86 % 4.84 % 170,212 15.74 4 -0.0611 % 2,674.7
FixedReset 4.89 % 2.59 % 290,470 3.43 80 -0.0149 % 2,516.5
Deemed-Retractible 4.86 % 1.87 % 128,465 0.24 44 -0.0334 % 2,455.7
Performance Highlights
Issue Index Change Notes
No individual gains or losses exceeding 1%!
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.B FixedReset 148,779 National crossed 50,000 at 24.70, then bought 20,000 from Scotia at the same price. RBC crossed 49,300 at the same price.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-04-02
Maturity Price : 23.41
Evaluated at bid price : 24.69
Bid-YTW : 2.55 %
BNS.PR.P FixedReset 110,224 National crossed 25,000 at 25.20.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-05-25
Maturity Price : 25.00
Evaluated at bid price : 25.21
Bid-YTW : -3.38 %
BNS.PR.Z FixedReset 74,440 TD crossed 10,000 at 24.77; Desjardins crossed 16,500 at the same price.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.76
Bid-YTW : 3.04 %
PWF.PR.S Perpetual-Premium 73,123 Nesbitt crossed 10,000 at 25.27.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-04-30
Maturity Price : 25.00
Evaluated at bid price : 25.28
Bid-YTW : 4.62 %
BNS.PR.Y FixedReset 58,268 TD crossed 15,000 at 24.30, then sold 13,300 to anonymous at the same price.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.31
Bid-YTW : 2.90 %
MFC.PR.D FixedReset 40,627 RBC crossed 31,800 at 26.35.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.00
Evaluated at bid price : 26.41
Bid-YTW : 2.10 %
There were 26 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
VNR.PR.A FixedReset Quote: 26.93 – 27.55
Spot Rate : 0.6200
Average : 0.3913

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-10-15
Maturity Price : 25.00
Evaluated at bid price : 26.93
Bid-YTW : 2.76 %

TRI.PR.B Floater Quote: 23.90 – 24.55
Spot Rate : 0.6500
Average : 0.4605

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-04-02
Maturity Price : 23.63
Evaluated at bid price : 23.90
Bid-YTW : 2.18 %

CU.PR.E Perpetual-Premium Quote: 26.30 – 26.57
Spot Rate : 0.2700
Average : 0.1873

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-09-01
Maturity Price : 25.00
Evaluated at bid price : 26.30
Bid-YTW : 4.24 %

BMO.PR.L Deemed-Retractible Quote: 26.75 – 26.95
Spot Rate : 0.2000
Average : 0.1209

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-05-25
Maturity Price : 26.00
Evaluated at bid price : 26.75
Bid-YTW : -10.04 %

PWF.PR.L Perpetual-Premium Quote: 25.82 – 26.04
Spot Rate : 0.2200
Average : 0.1433

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-31
Maturity Price : 25.25
Evaluated at bid price : 25.82
Bid-YTW : 4.16 %

RY.PR.Y FixedReset Quote: 26.74 – 26.95
Spot Rate : 0.2100
Average : 0.1339

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-11-24
Maturity Price : 25.00
Evaluated at bid price : 26.74
Bid-YTW : 2.19 %

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