A bit more on the PACE Savings and Credit Union preferred share scandal, mentioned yesterday, from the IIROC Notice of Hearing and Statement of Allegations against Joseph Anthony Thomson and Gerald Douglas McRae:
14. By Confidential Offering Memorandum (the “PFL OM”) dated June 27, 2017, PFL offered Series A 5% Cumulative Redeemable Retractable Non-voting Term Preference Shares (the “PFL Preference Shares”) as an exempt distribution without a prospectus. PFL had no capital other than the proceeds of sale from the PFL Preference Shares.
…
28. FHHI’s founding capital was $10,001 and its only other assets were the proceeds of sale from the FHHI Preference Shares.
…
85. The PFL OM did not disclose the use of leverage or options. McRae signed leverage and options agreements for PFL and was aware it used those strategies, yet he never raised the issue or evidenced any supervision concerning whether their use was consistent with
the PFL OM.86. The FHHI OMs did not disclose the use of options, other than for hedging purposes, yet McRae signed options agreements for FHHI and was aware of options use in the account. He never raised the issue or evidenced any supervision concerning whether options use was consistent with the FHHI OMs.
So, capped returns on a go-go fund, with (essentially) no junior capital to take a first loss.
Wow, looks like PACE picked some real prizewinners to run their securities subsidiary. I find it very difficult to comprehend how anybody, anywhere, could recommend these securities to anybody.
| 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 | -0.4078 % | 1,451.0 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4078 % | 2,662.5 |
| Floater | 5.40 % | 5.71 % | 48,264 | 14.35 | 4 | -0.4078 % | 1,534.4 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3492 % | 3,440.5 |
| SplitShare | 4.88 % | 5.07 % | 66,074 | 3.85 | 7 | -0.3492 % | 4,108.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3492 % | 3,205.8 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1367 % | 3,039.3 |
| Perpetual-Discount | 5.55 % | 5.72 % | 76,379 | 14.25 | 35 | 0.1367 % | 3,260.0 |
| FixedReset Disc | 6.23 % | 5.15 % | 154,366 | 14.81 | 83 | -0.0254 % | 1,833.0 |
| Deemed-Retractible | 5.30 % | 5.32 % | 86,513 | 14.44 | 27 | 0.0705 % | 3,230.2 |
| FloatingReset | 4.88 % | 4.87 % | 48,172 | 15.75 | 3 | -0.3776 % | 1,784.0 |
| FixedReset Prem | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0254 % | 2,535.0 |
| FixedReset Bank Non | 1.98 % | 3.43 % | 125,798 | 1.58 | 2 | 0.0000 % | 2,785.0 |
| FixedReset Ins Non | 6.48 % | 5.21 % | 119,119 | 14.90 | 22 | 0.1604 % | 1,848.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.I | FixedReset Ins Non | -7.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 15.40 Evaluated at bid price : 15.40 Bid-YTW : 5.52 % |
| TD.PF.M | FixedReset Disc | -3.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.51 Evaluated at bid price : 21.51 Bid-YTW : 4.98 % |
| HSE.PR.A | FixedReset Disc | -3.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 6.25 Evaluated at bid price : 6.25 Bid-YTW : 8.55 % |
| MFC.PR.G | FixedReset Ins Non | -3.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 15.75 Evaluated at bid price : 15.75 Bid-YTW : 5.31 % |
| SLF.PR.J | FloatingReset | -2.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.00 Evaluated at bid price : 9.00 Bid-YTW : 4.42 % |
| GWO.PR.N | FixedReset Ins Non | -2.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.40 Evaluated at bid price : 9.40 Bid-YTW : 4.50 % |
| BAM.PF.A | FixedReset Disc | -2.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 15.95 Evaluated at bid price : 15.95 Bid-YTW : 5.70 % |
| BAM.PR.B | Floater | -1.83 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 7.52 Evaluated at bid price : 7.52 Bid-YTW : 5.71 % |
| BAM.PR.R | FixedReset Disc | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 11.85 Evaluated at bid price : 11.85 Bid-YTW : 5.70 % |
| PWF.PR.T | FixedReset Disc | -1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.71 Evaluated at bid price : 14.71 Bid-YTW : 5.31 % |
| PVS.PR.G | SplitShare | -1.52 % | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2026-02-28 Maturity Price : 25.00 Evaluated at bid price : 24.55 Bid-YTW : 5.34 % |
| SLF.PR.G | FixedReset Ins Non | -1.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.05 Evaluated at bid price : 9.05 Bid-YTW : 4.94 % |
| IFC.PR.C | FixedReset Ins Non | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.03 Evaluated at bid price : 14.03 Bid-YTW : 5.46 % |
| ELF.PR.G | Perpetual-Discount | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 5.72 % |
| BAM.PR.X | FixedReset Disc | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.89 Evaluated at bid price : 9.89 Bid-YTW : 5.68 % |
| BMO.PR.F | FixedReset Disc | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.10 Evaluated at bid price : 21.10 Bid-YTW : 4.97 % |
| BMO.PR.S | FixedReset Disc | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.77 Evaluated at bid price : 14.77 Bid-YTW : 5.05 % |
| CU.PR.C | FixedReset Disc | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.60 Evaluated at bid price : 14.60 Bid-YTW : 4.90 % |
| IFC.PR.I | Perpetual-Discount | 1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 23.71 Evaluated at bid price : 24.05 Bid-YTW : 5.62 % |
| BIP.PR.B | FixedReset Disc | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 22.77 Evaluated at bid price : 23.50 Bid-YTW : 5.84 % |
| MFC.PR.F | FixedReset Ins Non | 1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.30 Evaluated at bid price : 9.30 Bid-YTW : 4.87 % |
| IAF.PR.B | Deemed-Retractible | 1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.53 Evaluated at bid price : 21.79 Bid-YTW : 5.28 % |
| MFC.PR.K | FixedReset Ins Non | 1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.70 Evaluated at bid price : 14.70 Bid-YTW : 5.00 % |
| PWF.PR.P | FixedReset Disc | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 9.40 Evaluated at bid price : 9.40 Bid-YTW : 5.37 % |
| CU.PR.I | FixedReset Disc | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 24.10 Evaluated at bid price : 24.75 Bid-YTW : 4.54 % |
| TD.PF.E | FixedReset Disc | 1.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 16.85 Evaluated at bid price : 16.85 Bid-YTW : 4.90 % |
| BIP.PR.C | FixedReset Disc | 1.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.93 Evaluated at bid price : 22.50 Bid-YTW : 5.94 % |
| TRP.PR.H | FloatingReset | 1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 7.50 Evaluated at bid price : 7.50 Bid-YTW : 4.87 % |
| IFC.PR.A | FixedReset Ins Non | 1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 11.31 Evaluated at bid price : 11.31 Bid-YTW : 5.09 % |
| BIP.PR.E | FixedReset Disc | 2.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 20.20 Evaluated at bid price : 20.20 Bid-YTW : 6.22 % |
| IAF.PR.G | FixedReset Ins Non | 2.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 15.72 Evaluated at bid price : 15.72 Bid-YTW : 5.24 % |
| TRP.PR.B | FixedReset Disc | 3.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 7.80 Evaluated at bid price : 7.80 Bid-YTW : 5.32 % |
| BIK.PR.A | FixedReset Disc | 3.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 23.08 Evaluated at bid price : 24.49 Bid-YTW : 5.93 % |
| BAM.PR.Z | FixedReset Disc | 3.95 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 15.54 Evaluated at bid price : 15.54 Bid-YTW : 5.74 % |
| MFC.PR.N | FixedReset Ins Non | 20.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 14.45 Evaluated at bid price : 14.45 Bid-YTW : 5.11 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| SLF.PR.A | Deemed-Retractible | 95,708 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 22.34 Evaluated at bid price : 22.61 Bid-YTW : 5.26 % |
| BMO.PR.Q | FixedReset Bank Non | 77,903 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.40 Bid-YTW : 3.34 % |
| GWO.PR.Q | Deemed-Retractible | 46,904 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 22.49 Evaluated at bid price : 22.75 Bid-YTW : 5.67 % |
| GWO.PR.P | Deemed-Retractible | 40,351 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 23.36 Evaluated at bid price : 23.65 Bid-YTW : 5.72 % |
| CU.PR.G | Perpetual-Discount | 37,803 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2050-06-19 Maturity Price : 21.63 Evaluated at bid price : 21.63 Bid-YTW : 5.25 % |
| RY.PR.E | Deemed-Retractible | 28,979 | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-07-19 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : -12.91 % |
| There were 15 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.M | FixedReset Disc | Quote: 15.65 – 25.50 Spot Rate : 9.8500 Average : 5.2476 YTW SCENARIO |
| MFC.PR.I | FixedReset Ins Non | Quote: 15.40 – 16.85 Spot Rate : 1.4500 Average : 0.8996 YTW SCENARIO |
| RY.PR.P | Perpetual-Discount | Quote: 25.10 – 25.99 Spot Rate : 0.8900 Average : 0.5424 YTW SCENARIO |
| TD.PF.M | FixedReset Disc | Quote: 21.51 – 22.30 Spot Rate : 0.7900 Average : 0.4837 YTW SCENARIO |
| TD.PF.B | FixedReset Disc | Quote: 15.12 – 15.99 Spot Rate : 0.8700 Average : 0.6062 YTW SCENARIO |
| TD.PF.I | FixedReset Disc | Quote: 18.25 – 18.99 Spot Rate : 0.7400 Average : 0.5226 YTW SCENARIO |
Hello James and most that post on this board. Many of the comments have been invaluable to me. I would like to ask for advice and comments about something I can’t understand. I bought a few hundred Westcoast M and K minimum rate resets in April of this year that have appreciated quite a bit. I know Westcoast used to be rated a 2L before Enbridge bought them. Now they are a 3H like the rest of the Enbridge preferreds. With the Westcoast preferred’s yielding about 5.25% now wouldn’t it make sense to trade them for the Enbridge minimum rate resets like the Enb.PF.K shares now yielding about 5.7%. Another thought would be just to trade to the Enb.A perpetual yielding 5.9%. Thoughts please? Especially the disparity in yield between the Enbridge and Westcoast minimum resets besides the name. Thanks very much
“Now they are a 3H like the rest of the Enbridge preferreds”
.Actually, cttglvr, Westcoast is rated higher than Enbridge: 2L by DBRS compared to 3H for Enbridge. S&P rates both 2L.
DBRS gives W a one-notch uplift due to the substantial dividends from W’s 46% equity interest in Enbridge Gas Inc, which is an “A” rated entity.
I own both.
I know Westcoast used to be rated a 2L before Enbridge bought them. Now they are a 3H like the rest of the Enbridge preferreds.
As noted, Westcoast Energy preferreds are rated Pfd-2(low) by DBRS.
With the Westcoast preferred’s yielding about 5.25% now
As of today, I make them 5.35% and 5.40% at the bid. But that’s just a quibble.
wouldn’t it make sense to trade them for the Enbridge minimum rate resets like the Enb.PF.K shares now yielding about 5.7%. Another thought would be just to trade to the Enb.A perpetual yielding 5.9%
I calculate a yield of 5.97% for ENB.PF.K and 6.01% for ENB.PR.A.
Thoughts please?
Firstly, I wonder why you are only considering issues with a minimum rate guarantee. That’s a very expensive option.
Secondly, I wonder what your portfolio goals are, how well your current portfolio reflects those goals and what your personal financial circumstances are. What risks should you be taking in expectation of excess return and which risks should be avoided because you’re already too exposed?
Once you have reviewed your needs and identified the characteristics of your desired portfolio, it will be much easier to determine which ones fit into your plan and which of your current investments don’t.
For advice on which investments are going to go up by 10% in the next seven weeks, ask a stockbroker. Most of them will be very happy to tell you exactly which ones; the rest will only be moderately happy but their advice will always be infallible unless something unexpected occurs.