July 22, 2020

Canadian inflation has surged!

Canada’s inflation rate surged in June, as the re-opening of more of the economy following COVID-19 shutdowns pushed consumer prices back into positive territory.

Statistics Canada reported Wednesday that consumer price index (CPI) was up 0.7 per cent year over year, a sharp reversal from the declines of 0.4 per cent in May and 0.2 per cent in April. It was the biggest increase in the annual inflation rate in nine years.

The index surged 0.8 per cent from May to June, as the easing of pandemic-containment restrictions triggered rebounds in prices for consumer goods, which had slumped amid a dearth in demand during the lockdowns. The biggest contributor was gasoline, which jumped 10.5 per cent from May. Excluding energy prices, CPI was up 0.4 per cent month-over-month, and 1.2 per cent on an annual basis.

Among the leading price gains in the month were clothing and footwear, as stores in many provinces re-opened. Beef prices also surged, reflecting COVID-related shutdowns and production slowdowns at several meat processing plants.

The much discussed RBC LRCNs, given credit for a nice little pop in the market last week, have been priced:

Royal Bank of Canada bolstered its balance sheet this week by selling $1.75-billion of a new, tax-efficient security, opening the door to what’s expected to be a wave of similar offerings from rival Canadian banks.

The country’s largest bank sold what is known as a “limited recourse capital note,” or LRCN, that is seen as debt by institutional investors but will be treated similar to equity by federal regulators for the purpose of calculating RBC’s all-important capital requirements.

RBC’s launch of LRCNs is shaking up the domestic preferred share market, with some investors expecting the new notes to take the place of new preferred share offerings.

The LRCN offering was snapped up by 105 institutional investors, with demand more than twice the supply of notes.

RBC’s LRCNs pay 4.5-per-cent interest for the next five years, then the payout resets every five years at a set premium above the interest rate on Government of Canada debt. Each RBC note has a face value of $1,000 and matures in 60 years. The product can only be sold to institutional investors.

From RBC’s point of view, the LRCN is far more tax efficient than preferred shares, as the interest payments on the note can be deducted from the bank’s income for tax purposes, while dividends on preferred shares are not tax deductible.

The structure is attractive for several reasons. RBC managed to price the deal around 75 basis points, or 0.75 per cent, below where similar preferred shares are trading. It also managed to attract a huge amount of interest from institutional investors.

The official announcement from RBC reads:

Royal Bank of Canada (RY on TSX and NYSE) today announced the offering of $1.75 billion of non-viability contingent capital (NVCC) Additional Tier 1 (AT1) Limited Recourse Capital Notes, Series 1 (the “LRCNs”).

The LRCNs will bear interest at a rate of 4.50 per cent annually, payable semi-annually, for the initial period ending November 24, 2025. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 4.137 per cent. The LRCNs will mature on November 24, 2080. The expected closing date of the offering is July 28, 2020. RBC Capital Markets is acting as lead agent on the issue.

Concurrently with the issuance of the LRCNs, the bank will issue NVCC Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BQ (“Preferred Shares Series BQ”) to be held by Computershare Trust Company of Canada as trustee for a newly formed trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Preferred Shares Series BQ except in limited circumstances.

The bank may redeem the LRCNs during the period from October 24 to and including November 24, commencing in 2025 and every five years thereafter, only upon the redemption by the bank of the Preferred Shares Series BQ held in the Limited Recourse Trust, in accordance with the terms of such shares and with the prior written approval of the Superintendent of Financial Institutions (Canada), in whole on not less than 15 nor more than 60 days’ prior notice.

Net proceeds from this transaction will be used for general business purposes.

The prospectus for this issue is not yet available but there is a term-sheet on SEDAR. I am not permitted to link directly to this document, because the Canadian Securities Administrators think you’re too dumb to read it, but search for “Royal Bank of Canada Jul 21 2020 22:55:26 ET Marketing materials – English PDF 198 K”. Anyway, the part I’m interested in is just what “Limited Recourse” means:

Limited Recourse: If (i) there is non-payment by the Bank of the principal amount of the Notes, together with any accrued and unpaid interest, on the Maturity Date, (ii) a Failed Coupon Payment Date occurs, (iii) the Bank does not pay the Redemption Price in connection with a redemption of the Notes in cash, (iv) an event of default under the Notes occurs or (v) a Trigger Event (defined below) occurs (each such event, a “Recourse Event”), the recourse of each Noteholder will be limited to that Noteholder’s proportionate share of the assets (the “Trust Assets”) held by a third party trustee (the “LRT Trustee”) in respect of the Notes in a newly formed trust (the “Limited Recourse Trust”). The LRT Trustee may hold assets in the Limited Recourse Trust in respect of more than one series of limited recourse capital notes, in which case the assets (including the Bank’s preferred shares) for each such series will be held separate from the assets for other series. Initially, Computershare Trust Company of Canada will act both as the LRT Trustee and the Indenture Trustee (defined below).

Initially, at the time of issuance of the Notes, the Trust Assets will consist of the Bank’s Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BQ (“Preferred Shares”) issued at an issue price of C$1,000 per Preferred Share. The Trust Assets may alternatively consist of (i) Preferred Shares, (ii) cash if the Preferred Shares are redeemed for cash by the Bank with the prior written approval of the Superintendent, (iii) Common Shares upon the conversion of the Preferred Shares into Common Shares as a result of a Trigger Event or (iv) any combination thereof, depending on the circumstances.

The number of Preferred Shares issued at the time of issuance of the Notes will be equal to the total principal amount of the Notes divided by C$1,000. If the Trust Assets consist of Preferred Shares at the time a Recourse Event occurs, the Bank will deliver to each Noteholder one Preferred Share for each C$1,000 principal amount of Notes held, which shall be applied to the payment of the principal amount of the Notes, and such delivery of Preferred Shares will be each Noteholder’s sole remedy against the Bank for repayment of the principal amount of the Notes and any accrued but unpaid interest thereon then due and payable.

Upon the occurrence of a Recourse Event that is a Trigger Event, the Bank will deliver to each Noteholder that Noteholder’s proportionate share of the Common Shares issued in connection with the Trigger Event. The number of Common Shares issuable in connection with the Trigger Event will be calculated based on a Share Value (as defined below in the Preferred Share Final Term Sheet) of C$1,000. Such Common Shares shall be applied to the payment of the principal amount of the Notes, and such delivery of Common Shares will be each Noteholder’s sole remedy against the Bank for repayment of the principal amount of the Notes and any accrued but unpaid interest thereon then due and payable. See “NVCC Automatic Conversion” below.

The receipt by a Noteholder of its proportionate share of the Trust Assets upon the occurrence of a Recourse Event shall exhaust the remedies of the Noteholders under the Notes. If a Noteholder does not receive its proportionate share of the Trust Assets under such circumstances, the sole remedy of the Noteholder for any claims against the Bank shall be limited to a claim for the delivery of such Trust Assets.

In case of any shortfall resulting from the value of the Trust Assets being less than the principal amount of and any accrued and unpaid interest on the Notes, all losses arising from such shortfall shall be borne by the Noteholders.

All claims of Noteholders against the Bank under the Notes will be extinguished upon receipt of the Trust Assets.

So anyway, what happens in sixty years when the maturity date of the notes arrives but market conditions are such that the underlying preferred shares may be reasonably expected to trade below par? The choices available to the bank will be to
(a) redeem the preferreds anyway, or
(b) distribute the preferreds to the noteholders.

Seeing that option (b) will be viewed by the market as a default, it seems to me that that’s a helluva incentive to redeem the preferreds. And Tier 1 Capital is not supposed to have any incentive to redeem (that’s why banks and insurers can’t offer minimum rate guarantees on their marketable preferreds). I can only wonder at how the skilled logicians at OSFI have managed to square that circle.

The term sheet for the preferreds, attached to the term sheet for the LRCNs states:

Concurrently with or upon the maturity of the Notes, with the prior written approval of the Superintendent, the Bank may redeem all but not less than all of the outstanding Preferred Shares by the payment of an amount in cash for each share redeemed of C$1,000 and apply, or cause the LRT Trustee to apply, the proceeds of such redemption towards the repayment of the aggregate principal amount of and any accrued and unpaid interest on the Notes.

To add to my discussion of July 15, July 16 and July 17, I will quote from an eMail I sent recently:

It’s entirely possible that LRCNs will rise in price in the future and narrow their spreads; and it also seems quite likely that future supply of bank – and probably insurance – issues will be constrained.

But there’s more going on than just that. Supply has been virtually nil since late May 2019 (when TD & CM came out with new issues) and not much of a positive effect has been observed (to put it mildly!). I will also note that supply was massive during the great FixedReset issuance frenzy (and of pretty poor quality to boot) and prices just continued to rise until one day they didn’t.

I keep reading that limited supply will raise prices dramatically, but it all seems just a little desperate to me. I haven’t seen one single supply-and-demand curves graph, for instance. Given the overwhelming influence of rate-anticipation on the preferred market for the past ten years, I’m not even sure how one would go about creating one!

It is also important that there are limits on the issuance of LRCNs – … RBC has about $4.2-billion of issuance capacity. But as of YE 2019, they had about $5.7-billion in preferreds outstanding (see http://prefblog.com/?p=41139 ), so they couldn’t redeem them all with LRCN proceeds even if they wanted to. I suspect that they will use the proceeds of one note to redeem all their outstanding NVCC non-compliant issues and then simply issue LRCNs when they need capital.

Bank treasurers will also want to keep the preferred share market reasonably healthy simply to keep a financing avenue available.

LRCNs may will trade at a lower yield than preferreds, but I’m highly uncertain about the potential for preferreds to gain in price as a direct result, particularly if the LRCNs are issued in foreign currencies. Who is going to sell LRCNs to buy preferreds? Especially if they’re of a different currency? Canadian institutions will be writing off the tax benefits of preferreds; Canadian retail investors won’t be allowed to buy LRCNs in the first place; all investors will have to deal with the scanty liquidity available in the Canadian preferred share market; price volatility is enormous in the preferred share market, for those who care about such things; and there are other technical issues, such as investment mandates that specify that only bonds (or things that look a little bit like bonds) can be purchased and just what exactly can be pledged to Central Banks in times of stress.

I believe there will be some effect. I believe that the existence (and the potential for further issuance) of LRCNs is somewhat beneficial for the market. But I believe that the overwhelmingly most influential factor in preferred share market levels at this time is government interest rate anticipation – and I don’t think the market will be forecasting sharply higher rates any time soon.

I will also note that it is my understanding (unconfirmed, because FTSE Russell wants me to register – and presumably pay – just to read their damned index announcements) that the issue will not be included in the FTSE Canada Universe Bond Index or other FTSE Canada fixed-rate indexes. I’m very pleased that OSFI’s prior attempts to influence the indices and hoodwink investors have been beaten back.

PerpetualDiscounts now yield 5.68%, equivalent to 7.38% interest at the standard equivalency factor of 1.3x. Long corporates now yield 2.91%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened slightly (and perhaps spuriously) to 445bp from the 440bp reported July 15. We are now back at the pre-2020 record of 445bp briefly touched in 2008.

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 1.2684 % 1,606.9
FixedFloater 0.00 % 0.00 % 0 0.00 0 1.2684 % 2,948.6
Floater 5.20 % 5.23 % 66,432 15.11 3 1.2684 % 1,699.3
OpRet 0.00 % 0.00 % 0 0.00 0 0.0740 % 3,475.7
SplitShare 4.83 % 4.86 % 51,962 3.75 7 0.0740 % 4,150.7
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0740 % 3,238.5
Perpetual-Premium 5.11 % 4.84 % 74,775 4.04 1 0.1171 % 3,080.2
Perpetual-Discount 5.54 % 5.68 % 82,003 14.35 35 0.0959 % 3,292.9
FixedReset Disc 5.69 % 4.54 % 145,935 15.86 75 -0.6331 % 1,987.4
Deemed-Retractible 5.27 % 5.35 % 88,899 14.45 27 0.0909 % 3,246.7
FloatingReset 2.36 % 2.37 % 30,878 1.50 4 -0.1160 % 1,768.4
FixedReset Prem 5.42 % 4.10 % 338,759 0.98 3 -0.1443 % 2,600.6
FixedReset Bank Non 1.95 % 2.46 % 100,507 1.50 2 -0.1210 % 2,831.2
FixedReset Ins Non 5.82 % 4.60 % 99,634 15.93 22 -0.7418 % 2,046.5
Performance Highlights
Issue Index Change Notes
CU.PR.C FixedReset Disc -12.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 14.05
Evaluated at bid price : 14.05
Bid-YTW : 5.10 %
TD.PF.E FixedReset Disc -7.97 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 17.31
Evaluated at bid price : 17.31
Bid-YTW : 4.67 %
MFC.PR.N FixedReset Ins Non -5.72 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 15.50
Evaluated at bid price : 15.50
Bid-YTW : 4.75 %
BAM.PR.R FixedReset Disc -4.87 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 12.10
Evaluated at bid price : 12.10
Bid-YTW : 5.57 %
IFC.PR.A FixedReset Ins Non -3.84 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 12.51
Evaluated at bid price : 12.51
Bid-YTW : 4.56 %
GWO.PR.N FixedReset Ins Non -3.66 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 10.00
Evaluated at bid price : 10.00
Bid-YTW : 4.20 %
TRP.PR.C FixedReset Disc -3.44 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 8.99
Evaluated at bid price : 8.99
Bid-YTW : 5.30 %
TD.PF.D FixedReset Disc -2.58 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 18.10
Evaluated at bid price : 18.10
Bid-YTW : 4.36 %
PWF.PR.P FixedReset Disc -2.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 10.35
Evaluated at bid price : 10.35
Bid-YTW : 4.75 %
IFC.PR.C FixedReset Ins Non -2.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.55
Evaluated at bid price : 16.55
Bid-YTW : 4.62 %
BAM.PF.E FixedReset Disc -1.99 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 14.25
Evaluated at bid price : 14.25
Bid-YTW : 5.48 %
TRP.PR.E FixedReset Disc -1.85 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 13.30
Evaluated at bid price : 13.30
Bid-YTW : 5.60 %
MFC.PR.F FixedReset Ins Non -1.77 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 9.99
Evaluated at bid price : 9.99
Bid-YTW : 4.50 %
BAM.PR.T FixedReset Disc -1.77 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 12.78
Evaluated at bid price : 12.78
Bid-YTW : 5.44 %
TRP.PR.D FixedReset Disc -1.67 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 13.55
Evaluated at bid price : 13.55
Bid-YTW : 5.54 %
BAM.PR.X FixedReset Disc -1.43 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 10.31
Evaluated at bid price : 10.31
Bid-YTW : 5.43 %
MFC.PR.M FixedReset Ins Non -1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.30
Evaluated at bid price : 16.30
Bid-YTW : 4.60 %
TRP.PR.B FixedReset Disc -1.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 8.54
Evaluated at bid price : 8.54
Bid-YTW : 4.87 %
BMO.PR.E FixedReset Disc -1.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 19.50
Evaluated at bid price : 19.50
Bid-YTW : 4.37 %
IAF.PR.G FixedReset Ins Non -1.25 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 18.15
Evaluated at bid price : 18.15
Bid-YTW : 4.53 %
BIP.PR.A FixedReset Disc -1.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 15.91
Evaluated at bid price : 15.91
Bid-YTW : 6.25 %
PWF.PR.T FixedReset Disc -1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.04
Evaluated at bid price : 16.04
Bid-YTW : 4.70 %
BAM.PR.Z FixedReset Disc -1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.11
Evaluated at bid price : 16.11
Bid-YTW : 5.54 %
SLF.PR.J FloatingReset -1.16 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 9.40
Evaluated at bid price : 9.40
Bid-YTW : 4.23 %
CM.PR.P FixedReset Disc -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.30
Evaluated at bid price : 16.30
Bid-YTW : 4.50 %
CM.PR.S FixedReset Disc -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 17.20
Evaluated at bid price : 17.20
Bid-YTW : 4.45 %
CM.PR.O FixedReset Disc -1.14 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 15.61
Evaluated at bid price : 15.61
Bid-YTW : 4.68 %
TRP.PR.A FixedReset Disc -1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 12.16
Evaluated at bid price : 12.16
Bid-YTW : 5.39 %
TD.PF.F Perpetual-Discount -1.05 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 24.17
Evaluated at bid price : 24.46
Bid-YTW : 5.01 %
CM.PR.Q FixedReset Disc -1.05 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 16.95
Evaluated at bid price : 16.95
Bid-YTW : 4.65 %
RY.PR.M FixedReset Disc -1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 18.10
Evaluated at bid price : 18.10
Bid-YTW : 4.18 %
TD.PF.J FixedReset Disc 1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 19.75
Evaluated at bid price : 19.75
Bid-YTW : 4.17 %
BAM.PR.B Floater 1.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 8.28
Evaluated at bid price : 8.28
Bid-YTW : 5.23 %
BAM.PR.C Floater 1.47 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 8.28
Evaluated at bid price : 8.28
Bid-YTW : 5.23 %
BNS.PR.I FixedReset Disc 1.86 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 19.21
Evaluated at bid price : 19.21
Bid-YTW : 4.12 %
Volume Highlights
Issue Index Shares
Traded
Notes
MFC.PR.O FixedReset Ins Non 63,352 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-06-19
Maturity Price : 25.00
Evaluated at bid price : 25.21
Bid-YTW : 5.27 %
TD.PF.L FixedReset Disc 56,319 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 22.42
Evaluated at bid price : 23.10
Bid-YTW : 4.22 %
TD.PF.D FixedReset Disc 53,045 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 18.10
Evaluated at bid price : 18.10
Bid-YTW : 4.36 %
RY.PR.H FixedReset Disc 51,445 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 17.06
Evaluated at bid price : 17.06
Bid-YTW : 4.22 %
BMO.PR.C FixedReset Disc 44,043 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 21.80
Evaluated at bid price : 22.30
Bid-YTW : 4.24 %
RY.PR.Q FixedReset Disc 43,809 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 24.10
Evaluated at bid price : 25.24
Bid-YTW : 4.87 %
There were 14 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 Disc Quote: 14.05 – 16.99
Spot Rate : 2.9400
Average : 1.9834

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 14.05
Evaluated at bid price : 14.05
Bid-YTW : 5.10 %

TD.PF.E FixedReset Disc Quote: 17.31 – 19.35
Spot Rate : 2.0400
Average : 1.1668

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 17.31
Evaluated at bid price : 17.31
Bid-YTW : 4.67 %

TD.PF.D FixedReset Disc Quote: 18.10 – 19.10
Spot Rate : 1.0000
Average : 0.6141

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 18.10
Evaluated at bid price : 18.10
Bid-YTW : 4.36 %

CCS.PR.C Deemed-Retractible Quote: 22.30 – 23.50
Spot Rate : 1.2000
Average : 0.8797

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 22.07
Evaluated at bid price : 22.30
Bid-YTW : 5.65 %

GWO.PR.N FixedReset Ins Non Quote: 10.00 – 11.50
Spot Rate : 1.5000
Average : 1.2381

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 10.00
Evaluated at bid price : 10.00
Bid-YTW : 4.20 %

MFC.PR.N FixedReset Ins Non Quote: 15.50 – 16.45
Spot Rate : 0.9500
Average : 0.6964

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2050-07-22
Maturity Price : 15.50
Evaluated at bid price : 15.50
Bid-YTW : 4.75 %

One Response to “July 22, 2020”

  1. Joel A says:

    It seems that there are few people who can deal with plain talk anymore. Here is my opinions regarding LRCNs and forty years of involvement in markets as a private investor and as a licensed broker:
    – Risk has dramatically accelerated for the average small investor.
    – The Money Men are dangerously in control of the banking system and have slanted the game from every angle.
    – Balance sheets are being crammed at the top over the instruments that are typically available to ordinary investors , this includes the ‘salting’ of ETFs with all the garbage into small investors private hands. These are the very same tax payers that guarantee the government who hand out the favors to the top.
    – Why can’t I buy the 4.5 % Notes? It’s packed above Main Street and a guarantee to Bay and Wall Street with seniority and security.
    – The safety and assured existence of the biggest banks and the casino money system is NOT worth responsible foresight and actions of a reliable Boards of Directors which involves the good of the greater society.
    – The regulatory bodies that have allowed and condoned risk-barreling into a system that is ONLY SAFE for those at the top is now shown that they have no prudence in their activities in adequately placing needed controls and limits to the Frat House mindset.
    – Risk has NEVER been higher. There seems to be NO WILL to do the right things and there will be widespread fallout.

    In earnest, Joel A.

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