PrefBlog

Credit markets are recovering on the back of credit markets:

Banks are increasing lending to buyers of high-yield company loans and mortgage bonds at what may be the fastest pace since the credit-market debacle began in 2007.

Credit Suisse Group AG and Scotia Capital, a unit of Canada’s third-largest bank, said they’re offering credit to investors who want to purchase loans. SunTrust Banks Inc., which left the business last year, is “reaching out to clients” to provide financing, said Michael McCoy, a spokesman for the Atlanta-based bank. JPMorgan Chase & Co. and Citigroup Inc. are doing the same for loans and mortgage-backed securities, said people familiar with the situation.

Spend-Every-Penny announced his plan to profit from a stronger CAD:

The Honourable [Spend-Every-Penny], Minister of Finance, today announced that the Government of Canada plans to issue a US-dollar-denominated global bond in the near future, subject to market conditions. This will be the Government’s first foreign currency global bond issue in more than a decade.

The US-dollar bond issue will provide funds to supplement Canada’s foreign exchange reserves and to meet foreign currency requirements to support current and anticipated lending by the International Monetary Fund.

Canada holds its foreign exchange reserves in the Exchange Fund Account (EFA). EFA assets provide foreign currency liquidity and support the promotion of orderly conditions for the Canadian dollar in foreign exchange markets. Funds for the EFA can be raised through cross-currency swaps of Canadian-dollar borrowings, foreign-currency-denominated debt issues and outright purchases of foreign currency. In recent years, the Government has relied primarily on cross-currency swaps to finance the EFA. The global bond issue will prudently diversify the Government’s sources of foreign currency financing.

I have nothing against diversification of financing, but the timing of this issue is a little odd, given all the weeping and wailing over CAD strength.

Volume slowed down a little today, but the market continued its winning ways, with PerpetualDiscounts up 20bp, leading FixedResets which finished up 6bp.

This entry was posted on Saturday, August 29th, 2009 at 12:25 am and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.