December 6, 2010

Germany is convinced that European investments are a risky proposition:

European officials voiced divisions over the steps needed to stop the sovereign debt crisis as Germany opposes increasing the 750 billion-euro ($1 trillion) bailout fund and the introduction of joint European bonds.

Belgian Finance Minister Didier Reynders told reporters on Dec. 4 that the fund might be expanded if ministers decide to introduce a larger permanent facility when the current temporary one expires, breaking ranks with German Chancellor Angela Merkel and France’s Nicolas Sarkozy. Luxembourg and Italy today called for the creation of joint European bonds, a move rebuffed by Germany Finance Minister Wolfgang Schaeuble.

Today’s meeting comes after Luxembourg Finance Minister Jean-Claude Juncker and Italian counterpart Giulio Tremonti wrote a letter to the FT calling for the introduction of a joint European government bond.

“E-Bonds” would be sold by a European Debt Agency, which could be created as early as this month and finance as much as 50 percent of the issuances by EU members to create a deep market, they said. A switch would also be offered between E- Bonds and current government bonds.

German Deputy Finance Minister Joerg Asmussen on Dec. 3 rejected such a move because it wouldn’t encourage countries to fix their finances.

It was a muted day overall on the Canadian preferred share market, with PerpetualDiscounts up 6bp and FixedResets losing 5bp. There was some decent volatility, as shown on the performance highlights, and volume remained high.

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 0.0996 % 2,278.8
FixedFloater 4.73 % 3.20 % 28,454 19.05 1 0.0000 % 3,559.0
Floater 2.61 % 2.36 % 53,667 21.36 4 0.0996 % 2,460.5
OpRet 4.79 % 3.16 % 68,773 2.38 8 0.2163 % 2,378.9
SplitShare 5.46 % 1.39 % 119,715 1.00 3 0.1472 % 2,464.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2163 % 2,175.3
Perpetual-Premium 5.69 % 5.44 % 153,990 5.38 27 0.1252 % 2,013.5
Perpetual-Discount 5.36 % 5.38 % 284,090 14.78 51 0.0611 % 2,031.8
FixedReset 5.23 % 3.48 % 352,034 3.13 52 -0.0511 % 2,259.3
Performance Highlights
Issue Index Change Notes
GWO.PR.J FixedReset -3.35 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-01-30
Maturity Price : 25.00
Evaluated at bid price : 26.00
Bid-YTW : 4.47 %
BNS.PR.P FixedReset -1.60 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-05-25
Maturity Price : 25.00
Evaluated at bid price : 25.75
Bid-YTW : 3.90 %
RY.PR.N FixedReset -1.20 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.27
Bid-YTW : 3.38 %
MFC.PR.B Perpetual-Discount 1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-12-06
Maturity Price : 20.88
Evaluated at bid price : 20.88
Bid-YTW : 5.59 %
MFC.PR.E FixedReset 1.16 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-19
Maturity Price : 25.00
Evaluated at bid price : 26.98
Bid-YTW : 3.36 %
BNS.PR.X FixedReset 1.22 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.45
Bid-YTW : 3.49 %
BAM.PR.I OpRet 2.67 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2011-01-05
Maturity Price : 25.50
Evaluated at bid price : 25.80
Bid-YTW : 3.16 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.X FixedReset 65,687 Nesbitt crossed 50,000 at 27.54.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-09-23
Maturity Price : 25.00
Evaluated at bid price : 27.50
Bid-YTW : 3.53 %
SLF.PR.D Perpetual-Discount 53,626 TD crossed 25,000 at 20.40.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-12-06
Maturity Price : 20.35
Evaluated at bid price : 20.35
Bid-YTW : 5.48 %
BNS.PR.T FixedReset 52,678 Nesbitt crossed 50,000 at 27.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.50
Bid-YTW : 3.41 %
CL.PR.B Perpetual-Premium 51,300 Called for redemption.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2011-01-30
Maturity Price : 25.00
Evaluated at bid price : 24.94
Bid-YTW : 5.06 %
TRP.PR.C FixedReset 46,039 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-12-06
Maturity Price : 25.24
Evaluated at bid price : 25.29
Bid-YTW : 3.98 %
GWO.PR.N FixedReset 45,715 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-12-06
Maturity Price : 24.42
Evaluated at bid price : 24.47
Bid-YTW : 3.72 %
There were 53 other index-included issues trading in excess of 10,000 shares.

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