I’m not sure exactly how I did it, but when I was writing the BC Taxation Update, I wiped out the Ontario one from September 15, that I will now replace.
Ontario announced their tax credit improvement, which E&Y have analyzed to mean:
| Investors | Taxable Income | Marginal Rate on Interest | Marginal Rate on Dividends | Equivalency Factor |
| Widows & Orphans | $30,000 | 21.3% | 0.00% | 1.27 |
| Professionals | $75,000 | 43.41% | 20.74% | 1.40 |
| Plutocrats | $150,000 | 46.41% | 25.09% | 1.40 |
[…] So: YTW = -4.99%. If it makes it to the softMaturity, then the yield will be considerably greater (one might even call it respectable: 3.60% in dividends net of capital loss converts to 5.04% interest-equivalent for Ontario Investors who don’t need the money anyway, which is a lot better than you can get at the bank for a two-year deposit … or in the bond market. […]
[…] I don’t get it. This now has a pre-tax bid-YTW of 0.35% based on a bid of 28.8 and a call 2008-12-31 at $26.00. Even if it makes it to the softMaturity 2011-11-30, it will only have yielded 2.56% (PRE-tax) from these nose-bleed levels … and this latter, generous figure is only 3.58% interest-equivalent with an Ontario Equivalency Factor of 1.40. Three point Five Eight Percent? I can do better than that in Canadas. Retail. […]
[…] Now with a pre-tax bid-YTW of 2.99% based on a bid of $27.10 and a call 2011-7-19 at $26.00. Will have yielded 3.06% if it lasts until its softMaturity 2015-12-18, so it hardly seems worthwhile. Even the latter figure, at an equivalency factor of 1.40, is equivalent to only 4.28% interest – you can do better with bonds. […]
[…] Huh. I like this issue – and it has a horrible day! Such is life. Now with a pre-tax bid-YTW of 4.14%, based on a bid of $27.81 and a call 2014-4-30 at $25.00. And 4.14% dividends is worth 5.80% interest, at the Ontario Equivalency Factor of 1.4. Try getting that from a seven-year (OK, maybe eleven if there’s no early call) bond! […]
[…] It’s not often a seasoned splitShare makes it to the volume list! Desjardins bought 15,000 from RBC at $16.15, then crossed 60,000 at the same price. Now with a pre-tax bid-YTW of 3.63% based on a bid of $16.10 and a hardMaturity 2010-11-01 at $15.00. That’s an interest-equivalent for high-bracket Ontarians of 5.08% … not bad for a less than three year term! […]
[…] Credit watch negative! RBC crossed 50,000 at $26.02, TD crossed 121,900 at $26.02, Desjardins crossed 25,000 at $26.02 and finally TD crossed 50,000 at $26.02. Now with a pre-tax bid-YTW of 3.67% based on a bid of $26.00 and a softMaturity 2009-06-30. Sure, the credit watch isn’t pleasant … but the interest-equivalent is 5.14% at an equivalency factor of 1.40. Loblaws bonds (maturing 2010) are trading at about 36bp over Canadas, call it 4.46%. Seems a little disconnected to me. But sometime soon I’ll be discussing the Weston issues in comparison with what happened to poor old Bombardier … the pref market can over-react like crazy! […]
[…] Scotia crossed 100,000 @ 10.70, then Desjardins bought 25,000 from RBC in two tranches at the same price. Desjardins then crossed 25,000 at $10.70. Nice to see some action in this issue … it’s a perennial favourite of mine. Now with a pre-tax bid-YTW of 3.70% based on a bid of $10.70 and a hardMaturity 2011-6-30 at $10.00. That’s an interest-equivalent of nearly 5.2% at the Ontario Equivalency … not bad for a Pfd-2 (DBRS) with a known maturity of less than five years! […]
[…] Traded as high as $28.40 today and closed at 27.90-06, 3×10. The buyers are obviously sanguine about the potential for a redemption at $26.00, 2008-12-31, which results in the YTW scenario yielding 1.45% pre-tax … they seem to be hoping for the softMaturity 2011-11-30, which will yield 3.09%. Of course, that’s still only the equivalent of a bond paying 4.33% for rich Ontario investors, but that doesn’t seem to matter much! […]
[…] Update 2007-02-20 : I note that the YPG bonds, 5.25% of Feb. 2016 are indicated at Canada 4.5/15 + 143bp, call it 5.51% at last night’s close. So, at a pre-tax YTW of 4.24%, interest equivalent (for rich Ontario residents) to 5.94%, the new prefs are trading at a reasonable spread to bonds. […]
[…] Desjardins crossed 100,000 at $27.18. Now with a pre-tax bid-YTW of 2.51% (yech!) based on a bid of $27.10 and a call 2008-6-14 at $26.00. Holy smokes! Sure, there’s a lot of downside protection, given that it pays $1.4625. But 2.51%? With a bond-equivalency factor of 1.40 in Ontario, that comes to 3.51% interest-equivalent. My granny can do better with GICs. […]
[…] Scotia crossed 14,000 at $26.75, then another 65,000 at $26.83. Now with a pre-tax bid-YTW of 2.67% based on a bid of $26.58 and a call 2008-5-30 at $25.75. This YTW is only the bond-equivalent of 3.74% at the Ontario Equivalency Factor of 1.4, so the market seems to be hoping it lasts until the softMaturity 2013-4-29 at $25.00, which results in a pre-tax bid-Yield of 4.03%. I have my doubts! […]
[…] Scotia crossed 60,000 at 26.55, National Bank crossed 32,500 at 26.50 and Desjardins crossed 50,000 at 26.55. Now with a pre-tax bid-YTW of 3.33% based on a bid of 26.49 and a softMaturity 2015-12-18 at 25.00. Well … the interest-equivalent (at Ontario’s factor of 1.4x) is at least a small spread over bonds! […]
[…] I can compare this value with bonds by multiplying by my Interest Equivalency Factor of 1.4 … to get the same after-tax income from interest payments, I’d need a yield of about 5.9%. And I can compare this with other comparable preferred shares, such as, for instance, whatever has been recently recommended in PrefLetter. […]
[…] Now with a pre-tax bid-YTW of 4.27% based on a bid of 25.67 and a softMaturity 2013-7-30. Unfortunately, the pre-tax ask-YTW is 3.57%, based on the ask price of 26.31 and a call 2008-5-30 at 26.00. Mind you, given that the interest-equivalent in Ontario works out to 5.00%, it still looks worthwhile … a pleasant change from the usual state of affairs […]
[…] Update #2, 3:40pm: I don’t think the underwriters are having a very nice time. Now quoted at 20.30-00, 3×5, with 9,550 shares traded, new low of 20.10. Ouch! CIBC has been on the sell side of the last ten trades. With an annual dividend of $1.2125, a price of 20.21 corresponds to a yield of 6% … grossed up, that’s the equivalent of 8.4% interest! […]
[…] figures are not much different from the 2006 numbers. The top marginal rate on eligible dividends is expected to increase to 26.7% in 2012; this would […]