March 22, 2012

Moody’s has a good idea:

Governments, which have been criticizing credit-rating companies over sovereign-debt downgrades, should start a competing firm, according to Moody’s Corp. (MCO) Chief Executive Officer Ray McDaniel.

“Public institutions that have both the expertise and credibility among market participants should provide credit views on sovereigns,” McDaniel wrote today in a paper called “A Solution for the Credit Rating Agency Debate” that was posted on the New York-based company’s website.

European lawmakers have blamed Moody’s, Standard & Poor’s and Fitch Ratings for complicating efforts to resolve the region’s debt crisis by cutting countries’ ratings, leading the European Union to adopt tougher regulations. While some have considered prohibiting the companies from publishing their opinions, that won’t stop investors from speculating on creditworthiness, McDaniel said.

Looking to see how much credibility and influence a government-run CRA would have would be a hoot!

Spend-Every-Penny said something sensible today:

“I find it a bit odd that some of the bank executives are taking the position that the minister of finance or the government somehow should tell them how to run their business,” Flaherty said during an appearance in Stittsville, Ont., just west of Ottawa.

“We have bank executives in Canada going and saying ‘really, the rules on insured mortgages should be tightened up.’ They must forget that they are actually the ones that issue the mortgages. It’s their market. It’s not my market. They decide what they want to charge in interest rates.

“They’re the ones that make the profits out of this business, so I do find it a bit much when some of the bank executives turn to the government … and say ‘you ought to change the rules and make it tighter.’ It’s very interesting commentary from them.”

Downtown members of Toronto Shitty Council were able to record a political victory today over Mayor Rob Ford. All they had to do was throw Scarborough under the bus streetcar LRT and destroy city finances! Bargain! In related news, daredevil Star reporter Kate Allen was able to drive 6.5 km along St. Clair in only twenty minutes! I’m surprised she didn’t get a ticket!

It was another down day for the Canadian preferred share market, with PerpetualPremiums losing 19bp, FixedResets off 1bp and DeemedRetractibles down 9bp. However, the Performance Highlights table is fairly short. Volume was on the low side of average.

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 0.0191 % 2,399.8
FixedFloater 4.54 % 3.93 % 38,000 17.38 1 0.0000 % 3,432.2
Floater 3.01 % 2.98 % 45,171 19.77 3 0.0191 % 2,591.1
OpRet 4.93 % 3.34 % 50,517 1.24 6 0.0129 % 2,497.2
SplitShare 5.29 % -3.06 % 83,292 0.73 4 -0.0100 % 2,673.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0129 % 2,283.5
Perpetual-Premium 5.44 % 3.32 % 101,274 1.49 25 -0.1933 % 2,203.5
Perpetual-Discount 5.20 % 5.26 % 190,172 15.06 7 -0.5381 % 2,381.8
FixedReset 5.07 % 3.21 % 194,921 2.25 67 -0.0057 % 2,375.0
Deemed-Retractible 4.98 % 4.07 % 209,887 3.08 46 -0.0892 % 2,289.1
Performance Highlights
Issue Index Change Notes
CIU.PR.A Perpetual-Premium -2.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-03-22
Maturity Price : 23.67
Evaluated at bid price : 23.94
Bid-YTW : 4.83 %
BAM.PR.N Perpetual-Discount -2.49 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-03-22
Maturity Price : 22.02
Evaluated at bid price : 22.33
Bid-YTW : 5.32 %
BAM.PR.P FixedReset 1.02 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-09-30
Maturity Price : 25.00
Evaluated at bid price : 26.85
Bid-YTW : 3.86 %
RY.PR.Y FixedReset 1.09 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-11-24
Maturity Price : 25.00
Evaluated at bid price : 26.90
Bid-YTW : 3.32 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.N FixedReset 78,478 TD crossed 25,000 at 26.50. Scotia bought two blocks of 10,000 each from National at 26.50, then crossed 25,000 at 26.51.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-24
Maturity Price : 25.00
Evaluated at bid price : 26.52
Bid-YTW : 3.25 %
TD.PR.Y FixedReset 66,301 TD crossed 64,000 at 26.15.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-10-31
Maturity Price : 25.00
Evaluated at bid price : 26.06
Bid-YTW : 2.86 %
BAM.PF.A FixedReset 55,170 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-03-22
Maturity Price : 23.08
Evaluated at bid price : 24.97
Bid-YTW : 4.45 %
ENB.PR.F FixedReset 43,619 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 3.93 %
RY.PR.T FixedReset 31,159 RBC crossed 25,000 at 26.90.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-08-24
Maturity Price : 25.00
Evaluated at bid price : 26.92
Bid-YTW : 3.17 %
RY.PR.R FixedReset 28,621 RBC crossed 24,900 at 26.60.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-24
Maturity Price : 25.00
Evaluated at bid price : 26.60
Bid-YTW : 3.08 %
There were 27 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
FTS.PR.E OpRet Quote: 26.25 – 27.11
Spot Rate : 0.8600
Average : 0.6410

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-06-01
Maturity Price : 25.75
Evaluated at bid price : 26.25
Bid-YTW : 3.34 %

PWF.PR.O Perpetual-Premium Quote: 26.20 – 26.69
Spot Rate : 0.4900
Average : 0.3246

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-10-31
Maturity Price : 25.00
Evaluated at bid price : 26.20
Bid-YTW : 5.12 %

RY.PR.L FixedReset Quote: 26.27 – 26.54
Spot Rate : 0.2700
Average : 0.1631

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-24
Maturity Price : 25.00
Evaluated at bid price : 26.27
Bid-YTW : 3.11 %

SLF.PR.E Deemed-Retractible Quote: 22.41 – 22.64
Spot Rate : 0.2300
Average : 0.1428

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.41
Bid-YTW : 5.92 %

GWO.PR.L Deemed-Retractible Quote: 25.52 – 25.77
Spot Rate : 0.2500
Average : 0.1734

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-12-31
Maturity Price : 25.25
Evaluated at bid price : 25.52
Bid-YTW : 5.38 %

BAM.PR.N Perpetual-Discount Quote: 22.33 – 22.58
Spot Rate : 0.2500
Average : 0.1736

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-03-22
Maturity Price : 22.02
Evaluated at bid price : 22.33
Bid-YTW : 5.32 %

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