Well, that was interesting:
The S&P 500 was up about 1 percent at about 1,578 at 1:07 p.m. New York time today when a posting on the Associated Press Twitter account said there had been explosions at the White House and President Barack Obama had been injured. The benchmark gauge for American stocks erased almost the entire gain, falling as low as 1,563.03 by 1:10 p.m. The index recovered from the plunge within three minutes as the news service said its Twitter account had been hacked and there were no explosions. The S&P 500 ended the session up 1 percent at 1,578.78.
Who says Asian financial markets are backward? When yields are horribly low, the vendors raise commissions:
Borrowers in Asia have stepped up the use of rebates to get wealthy individual investors to buy their dollar-denominated bonds, underscoring weakness in the market as returns dwindle to an 18-month low.
At least 24 percent of the deals in the region last quarter provided a monetary incentive for private banks whose clients bought the offerings, more than double the same period of 2011, according to FIL Ltd., a global fund manager known as Fidelity Worldwide Investment that oversees $248.2 billion. While the practice is legal, it’s only common in Asia, lawyers say.
…
Billionaire Mukesh Ambani’s Reliance Industries Ltd. (RIL) sold 53 percent of its $800 million offering to private banks, according to a company statement on Jan. 29. The Mumbai-based issuer offered a 50 cent discount to private banks per $100 of bonds purchased, said a person with knowledge of the matter, who asked not to be identified without authorization to speak publicly.Singapore-based CapitaLand Ltd. (CAPL) sold $400 million of 10- year bonds in September in part by offering a 25-cent rebate to private banks for every $100 of bonds they bought, said Arthur Lang, the group chief financial officer at Southeast Asia’s biggest property developer.
Maybe Canadian bond salesmen can learn from Asia:
“Since the beginning of the year, most institutional clients have been net buyers of credit,” said credit trader Julian Pope at Desjardins Securities. “What we’ve noticed in the past 10 to 12 trading sessions has been a reversal of that trend.” In a recent report, he referred to the trend as the possibility of an emerging “buyers strike.”
No doubt, deals are still selling. However, the word on Bay Street is that there are a lot more “full fills” for many new issues, which means institutional buyers are often getting the full amounts that they request. For a hot deal, they may only get a fraction of what they request because the order book is oversubscribed.
You can also see a cool down of sorts in the spreads for investment grade Canadian issuers over their government benchmarks, because these spreads are starting to widen. For now it amounts to just a few basis points on average, but even that has caught some people offside because the spreads only moved tighter for so long.
Because the trend is so nascent, the voracious appetites for new debt could very well roar back. But the current pause is at least forcing people to bonder if fixed-income supply truly has the legs to stay hot for another full year.
Toronto take note! Casinos in Macau are generating ancillary investment:
Casino companies in Macau, the world’s biggest gambling hub, will gain from expanding family entertainment as the city seeks to become China’s top leisure spot, said Templeton Emerging Markets Group’s Mark Mobius.
The Macau gaming industry is growing at a “fast rate,” said Mobius, the group’s executive chairman, after a visit to the Chinese city. Templeton will continue to hold and buy Macau gambling stocks, he said in an e-mail response to questions, declining to give specific recommendations.
A vote on Harper government legislation that would curb civil rights in the fight against terrorism is being delayed until Wednesday.
…
The bill would also allow authorities to imprison a Canadian for up to 12 months if the person refuses to testify in front of a judge at an investigative hearing.The legislation would also make it a federal crime to leave or try to leave Canada for the purpose of committing terrorism or attending a terrorist training camp.
Replace “terrorism” with “the Opposition” in the first sentence and the story would be more accurate.
It was a modestly good day for the Canadian preferred share market, with PerpetualPremiums gaining 3bp, FixedResets winning 8bp and DeemedRetractibles up 6bp. Volatility was average. Volume continued to be at high 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 | -0.7158 % | 2,573.8 |
| FixedFloater | 3.96 % | 3.18 % | 32,912 | 18.76 | 1 | 0.4184 % | 4,150.7 |
| Floater | 2.70 % | 2.92 % | 83,267 | 19.93 | 4 | -0.7158 % | 2,779.1 |
| OpRet | 4.80 % | 1.90 % | 61,013 | 0.16 | 5 | 0.0774 % | 2,608.8 |
| SplitShare | 4.81 % | 4.28 % | 123,182 | 4.11 | 5 | -0.2046 % | 2,956.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0774 % | 2,385.5 |
| Perpetual-Premium | 5.19 % | 3.43 % | 86,950 | 0.51 | 32 | 0.0329 % | 2,378.6 |
| Perpetual-Discount | 4.83 % | 4.83 % | 174,782 | 15.73 | 4 | 0.0709 % | 2,691.9 |
| FixedReset | 4.93 % | 2.73 % | 249,617 | 3.76 | 80 | 0.0821 % | 2,505.1 |
| Deemed-Retractible | 4.88 % | 3.49 % | 135,115 | 1.38 | 44 | 0.0604 % | 2,452.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CU.PR.C | FixedReset | -1.58 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 26.10 Bid-YTW : 3.02 % |
| BAM.PR.B | Floater | -1.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-04-23 Maturity Price : 18.07 Evaluated at bid price : 18.07 Bid-YTW : 2.92 % |
| RY.PR.I | FixedReset | 1.11 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.43 Bid-YTW : 2.40 % |
| BNS.PR.Y | FixedReset | 1.25 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.32 Bid-YTW : 2.86 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.S | Perpetual-Premium | 135,072 | RBC crossed blocks of 35,000 and 33,100, both at 25.55. Scotia crossed 30,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2022-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.48 Bid-YTW : 4.55 % |
| TRP.PR.D | FixedReset | 89,219 | TD crossed 23,800 at 26.00; Nesbitt crossed 30,000 at 26.01. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-04-23 Maturity Price : 23.39 Evaluated at bid price : 25.96 Bid-YTW : 3.35 % |
| BNS.PR.Q | FixedReset | 84,800 | TD crossed 40,000 at 25.05; RBC crossed 30,600 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.04 Bid-YTW : 2.87 % |
| TRP.PR.C | FixedReset | 72,874 | National crossed 20.700 at 25.50; RBC crossed 27,800 at 25.55. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-04-23 Maturity Price : 23.58 Evaluated at bid price : 25.50 Bid-YTW : 2.66 % |
| BNS.PR.T | FixedReset | 57,188 | RBC crossed 50,000 at 25.91. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 25.90 Bid-YTW : 2.48 % |
| VNR.PR.A | FixedReset | 51,057 | Scotia crossed blocks of 13,400 and 30,000, both at 26.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-10-15 Maturity Price : 25.00 Evaluated at bid price : 26.70 Bid-YTW : 2.76 % |
| There were 49 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| CU.PR.C | FixedReset | Quote: 26.10 – 26.75 Spot Rate : 0.6500 Average : 0.4310 YTW SCENARIO |
| ELF.PR.H | Perpetual-Premium | Quote: 26.16 – 26.59 Spot Rate : 0.4300 Average : 0.2847 YTW SCENARIO |
| TCA.PR.Y | Perpetual-Premium | Quote: 50.85 – 51.29 Spot Rate : 0.4400 Average : 0.3453 YTW SCENARIO |
| NA.PR.O | FixedReset | Quote: 25.80 – 26.10 Spot Rate : 0.3000 Average : 0.2114 YTW SCENARIO |
| NA.PR.N | FixedReset | Quote: 25.20 – 25.40 Spot Rate : 0.2000 Average : 0.1135 YTW SCENARIO |
| GWO.PR.Q | Deemed-Retractible | Quote: 26.02 – 26.30 Spot Rate : 0.2800 Average : 0.1958 YTW SCENARIO |