PrefBlog

6 Responses to “August 21, 2019”

1. skeptical says:

   August 22, 2019 at 6:45 am

   I wonder what is the effective price point spreads at which these resets become non pariah again?
   for so many issues, at zero rate, the coupon would be now between 4 to 5%. That’s a hefty premium for good credits like TCP, HSE, CM, NA. Even BMO etc. are slowly getting there.
   One thing is certain- as soon as these preferreds stage a comeback, all the same people would be jumping in to buy with both hands. Matter of when.

2. skeptical says:

   August 22, 2019 at 6:46 am

   for so many issues, at zero rate, the coupon would be now between 4 to 5%.

   I meant yield here and not coupon.

3. Tim says:

   August 22, 2019 at 7:11 am

   Bah.

   5YC yield up a big 6.9% yesterday day-over-day, common Canadian equities go up 0.6%, and the inflation print comes in higher than expected, … but preferreds still set new yearly lows.

   Preferreds are selling off for any reason, no reason, and now against reason.

4. mbarbon says:

   August 22, 2019 at 7:56 am

   Could the selling be caused because some investors have come to realise that their capital is at risk. These shares are unlikely to ever be redeemed for $25.. A lot of them are behaving just like return of capital. I sure hope interest rates rise to prevent this.

5. CanSiamCyp says:

   August 22, 2019 at 10:03 am

   As James has advised us loyal and long-suffering pref investors: “Just shut up and clip your coupons!”. Or something to that effect! My pref portfolio is down 19% on cost, but hey am I worried!

6. jiHymas says:

   September 9, 2019 at 11:39 pm

   I wonder what is the effective price point spreads at which these resets become non pariah again?

   I think it’s a matter of momentum, which will be related to but not the same as price point.

   I think most investors who are aware of the market will recognize that the yields are fabulous, but are spooked by falling prices. They don’t want to catch a falling knife, as the expression go.

   Before these guys dust off their chequebooks, they’ve got to be convinced that the market has bottomed; I think this is not simply a matter of what the preferred share market is doing, but what the GOC-5 yield is doing, how many headlines there are about reductions in the policy rate and less speculation about when Canadian yields will turn negative.

   Stabilizing the market and getting it off its lows is the responsibility of speculators and the serious money is held by non-taxable and/or foreign investors. Both classes get no benefit from the Dividend Tax Credit and Gross-up; the latter is also subjected to withholding tax. And these guys have to see their way to making a good dollar after accounting for all that.

   We may have reached that point at the end of August; serious money was put to work on August 29 and August 30 and at time of writing (after the close on September 9) there’s been a pretty good recovery – although we’re still a good ways below where we were at the end of July!

   It’s encouraging, but I don’t think we’re out of the woods yet. A few bits of bad news, another ill-advised TweetStorm from the leader of the free world and we’ll be back in the soup … clipping our coupons!