Category: Market Action

I was pleased to see that Atlantic Power ‘fessed up to their error regarding the reset rate for AZP.PR.B. Very impressive! It isn’t “making no errors” that makes you good; errors happen all the time. It’s recognizing, acknowledging and fixing errors that makes you good.

I just wish Husky Energy was as prompt! I have used their online form to contact Investor Relations:

I would appreciate greater detail regarding the reset rate for HSE.PR.C announced December 2, specifically the Government of Canada 5-Year Bond Yield used as the basis for this calculation.

Can you please tell me the effective date and time that the Government of Canada 5-Year Bond Yield was measured for the purpose of this calculation?

Sincerely,

I urge anybody who has a spare minute today to similarly contact the company to ask this question. This is a brief, simple question regarding a matter of fact and while I appreciate that they have a lot going on at the moment, this is my third eMail to them. First be polite, then be annoying, that’s my motto!

Shaw Communications issued 30-Year Notes today:

Shaw Communications Inc. (“Shaw” or the “Corporation”) announced today the terms of an offering of C$800 million of senior notes, comprised of C$500 million principal amount of 3.30% senior notes due 2029 (the “2029 Notes”) and C$300 million principal amount of 4.25% senior notes due 2049 (the “2049 Notes”, and together with the 2029 Notes, the “Notes”).

SJR.PR.A currently yields 6.59% (equivalent to interest of 8.57%) and SJR.PR.B yields 6.89% (equivalent to interest of 8.96%), based on GOC yields of 1.54% and 1.66% respectively. A Straight Perpetual would probably yield a little less, given the current state of the markets, but that’s quite a spread! No wonder that they – and nobody else, either – aren’t issuing new preferreds!

There was nothing particularly surprising in the Bank of Canada’s policy rate announcement this morning:

The Bank of Canada today maintained its target for the overnight rate at 1 ¾ percent. The Bank Rate is correspondingly 2 percent and the deposit rate is 1 ½ percent.

The Bank’s October projection for global economic growth appears to be intact. There is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years. Financial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front. Indeed, ongoing trade conflicts and related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook. In this context, commodity prices and the Canadian dollar have remained relatively stable.

Growth in Canada slowed in the third quarter of 2019 to 1.3 percent, as expected. Consumer spending expanded moderately, underpinned by stronger wage growth. Housing investment was also a source of strength, supported by population growth and low mortgage rates. The Bank continues to monitor the evolution of financial vulnerabilities related to the household sector. As expected, exports contracted, driven by non-energy commodities. However, investment spending unexpectedly showed strong growth, notably in transportation equipment and engineering projects. The Bank will be assessing the extent to which this points to renewed momentum in investment.

CPI inflation in Canada remains at target, and measures of core inflation are around 2 percent, consistent with an economy operating near capacity. Inflation will increase temporarily in the coming months due to year-over-year movements in gasoline prices. The Bank continues to expect inflation to track close to the 2 percent target over the next two years.

Based on developments since October, Governing Council judges it appropriate to maintain the current level of the overnight rate target. Future interest rate decisions will be guided by the Bank’s continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy – notably consumer spending and housing activity. Fiscal policy developments will also figure into the Bank’s updated outlook in January.

David Parkinson of the Globe reminds us that:

The Bank of Canada noted that last week’s third-quarter gross domestic product report, which pegged growth at a modest 1.3-per-cent annualized rate, showed strength in consumer spending, wage growth and housing investment.

But it said it remains concerned about the high household debts that have contributed to that strength. Those have been fed by low borrowing rates, the result of a slump in global bond yields over the summer amid escalating China-U.S. trade hostilities.

Alberta got downgraded:

Alberta’s credit rating has been downgraded by Moody’s, with the agency citing the volatility in the province’s dependence on oil and continued fiscal pressures.

The province’s rating was downgraded to Aa2 stable from Aa1 negative on Tuesday.

The downgrade, the agency states, reflects Moody’s “opinion of a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources … and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently with no near-term expectation of a significant rebound in oil-related investments.”

The agency’s rating stated that continued spending cuts will be needed for the government to balance the budget by its set target of 2022.

It’s kind of a pity that those hard-nosed conservatives in Alberta don’t have some kind of Heritage Savings Trust Fund, eh? But all the oil money got blown on low taxes and high spending.

PerpetualDiscounts now yield 5.39%, equivalent to 7.01% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.26%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened slightly (and perhaps spuriously) to 375bp from the 370bp reported November 27.

PerpetualDiscounts now yield 5.39%, equivalent to 7.01% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.31%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remained at 370bp, unchanged from that reported November 20.

This is cool … a way for retail to earn stock loan income from Interactive Brokers:

Earn extra income on the fully-paid shares of stock held in your account by joining IBKR’s Stock Yield Enhancement Program. This plan allows IBKR to borrow shares from you in exchange for cash collateral, and then lend the shares to traders who want to sell them short and are willing to pay interest to borrow them. Each day that your stock is on loan, you will be paid interest on the cash collateral posted to your account for the loan based on market rates.

IBKR pays you 50% of the income it earns from lending the shares.

The program is available to eligible IBKR clients who have been approved for a margin account, or who have a cash account with equity greater than 50,000 USD.

OK, so here’s some consumer advice …

Back in July, I started getting notifications from Enbridge Gas that my on-line bill was ready … just a bit of spam, I thought. No problem, I’ll ignore it and when my real bill comes by snail mail, I’ll throw it in the pile and pay it during my monthly bill-paying frenzy. No problem.

But the bill didn’t come. And it didn’t come again and it didn’t come again.

So in October I figured there was a definite problem and asked their social media team on Facebook how to switch it back. They told me:

Thanks for the question. Go into My Account, and then go to your Bill Delivery preferences and switch there. That should do it.

… and I subsequently told them:

There does not appear to be any such option.

I attempted to update my billing preferences via [screenshot 1].

This screen claims I am enrolled in eBill – I have no recollection of enrolling in this and it was certainly never intended. However, I clicked “Update Billing Preferences” and arrived at [screenshot 2, below].

Ha-ha! So much for easy on-line account management! I have to call a number. After guessing my way through a very poorly designed menu, I eventually spoke to somebody who identified herself only as “Deb”. She claimed not to have a rep ID number or anything along the lines of what was expected.

“Deb” claims that paper billing is no longer an option. She disclaims any knowledge of what Enbridge has told me on its own website and on Facebook.

What is going on?

Click for Big

Click for Big

They asked me to contact them privately and I refused. Why should I? Why was the answer such a big secret?

Eventually, after I made it clear to them that I was going to make a public nuisance of myself, they gave me the real answer:

James, if you are in an area formerly served by Union Gas, please call 1-877-362-7434. If you are in an Enbridge Gas area, please call 416-495-6155.

So I called the number … and it turned out to be the number of their internal ombudsman! I left a message … and nothing happened. So about ten days later, I left another message.

Today, a very pleasant and weary-sounding woman from Enbridge told me that my account had been reset to snail-mail delivery, past bills would be re-printed and sent to me and all late-fees would be cancelled. She apologized for the delay – apparently they have been getting a lot of calls.

So it seems to me that Enbridge was trying to pull a fast one. Change everybody’s billing option to electronic without notification and make everybody who liked things just fine as they were go through an arduous and incomprehensible process (ending up with the ombudsman!) to get it reset.

Pretty sleazy move, Enbridge.