Category: Market Action

Lapdog Carney has been replaced:

Finance Minister Jim Flaherty shocked Bay Street Thursday, shunning the obvious choice to follow Mark Carney as governor of the Bank of Canada, and instead naming Stephen Poloz.

The top comment on the Globe story is:

Oh, this has all the markings of a power grab by the PMO, who don’t want another strong, independent governor of BoC. Very scary.

It was a good day for the Canadian preferred share market, with PerpetualPremiums up 11bp, FixedResets winning 21bp and DeemedRetractibles gaining 3bp. Volatility was minimal. Volume was low.

There were no surprises in today’s FOMC statement:

The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.
…
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

The feds are continuing their efforts to expand the secret police:

The finance committee recommended few major changes to existing practices, but endorsed the creation of a new whistleblower program, promised in the recent federal budget, that would allow the Canada Revenue Agency to pay rewards to people who provide tips about tax evasion.

It also proposed that financial entities covered by money-laundering laws be required to “take reasonable measures to ascertain” ownership information from customers that are corporations, trusts or other entities to make it easier to understand who is moving money offshore.

OSFI has published another laughable effort at self-justification by surveying 50 CEOs and CFOs of deposit taking institutions regulated by OSFI. So tell me, what does a sensible person say when asked how his regulator is doing – even when confidentiality is assured? “Oh, wonderful job, wonderful job.”

It was a modestly positive day for the Canadian preferred share market, with PerpetualPremiums and DeemedRetractibles both gaining 5bp and FixedResets up 6bp. Volatility was minimal. Volume was slightly below average.

PerpetualDiscounts now yield 4.87%, equivalent to 6.33% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.05% (!) so the interest-equivalent pre-tax spread is now about 230bp, a marked rise from the 220bp reported April 24.

Bureaucrats scored a huge win in Ontario today:

The legislation would also crack down on fraud by giving FSCO the right to oversee health clinics that invoice insurers.

It would also expand FSCO’s right to investigate fraudsters.

Ah, regulation! I’ve been following the chemotherapy drug scandal with keen interest – so keen, in fact, that I have written to the Ministry of Health for more information:

I understand that your response to the chemotherapy drug scandal is to demand an increase in employment of regulators.

I do not understand this. It appears that the supplies were used by the (regulated, hospital-based) pharmacies involved as a stock solution, even though there was no concentration listed on the label, that the contract with the supplier quite clearly indicated that concentration was irrelevant, and that – evidently – concentration of the supplied solutions was not checked irregardless of the label.

Please advise me how many individuals employed by London Health Sciences Centre, Windsor Regional Hospital, Lakeridge Health and Peterborough Regional Health Centre will be losing (or have already lost) their jobs over this gross incompetence.

Themis Trading was quoted today in the wake of the Symantec silliness:

Approximately 504,000 Symantec shares were traded in a three-second period that saw the stock dive from $24.40 to a low of $21.93 before it was halted.
…
Before the prevalence of high-frequency trading, “a series of market makers would have filled this mistake with substantially less carnage,” said Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey.

“Today’s market structure is perfectly set up to take advantage of any and all missteps in the most efficient manner … if you were day-trading this, or had a stop-loss order in, then you got hit not because of your thesis, but because of a market structure issue.”

Shares of Symantec resumed trading five minutes after being halted, and bounced back above $24. They fell 1.3 per cent to $24.26 in midday trading.

I take issue with Mr. Arnuk’s comments. If you were day-trading this, then you were acting as a market-maker; and if you’re not very good at market making, you may well have lost some money. If you had a stop-loss order in, then you got hit because you’re an idiot.

Banking crises continue to nibble away at the margins of the EU:

Slovenia, the first former Communist nation in the euro zone, is facing a typically capitalist dilemma: whether to protect creditors of big banks.

Rising loan losses resulting from a housing bust and a second recession in two years have left a hole of about 7.5 billion euros ($9.9 billion) at Slovenia-based lenders, investment bank Keefe Bruyette & Woods estimates. That’s a lot for a 35 billion-euro economy: A bank bailout would push government debt above 70 percent of economic output.

Even after a successful domestic debt sale two weeks ago, the country may need assistance from the European Union, and holders of bank bonds, including the most senior creditors, could be forced to take losses, according to Raoul Ruparel, head of research at London-based Open Europe. Such a bail-in, which would be the second in the euro zone, after Cyprus, risks deepening divergence in the monetary union by keeping borrowing costs higher in economically weak nations.

Don’t know why they’re worried. Ten billion isn’t even a big bond deal:

Apple Inc. wowed the debt markets on Tuesday with the largest non-bank bond deal in history, offering a whopping $17-billion (U.S.) for sale as the U.S. computer giant switches strategy to placate restless shareholders.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums off 3bp, FixedResets down 7bp and DeemedRetractibles gaining 2bp. Volatility fails to arouse interest. Volume was average.

Deutsche Bank is raising some capital:

Deutsche Bank AG (DBK), continental Europe’s biggest bank, will raise as much as 4.8 billion euros ($6.3 billion) to increase capital as first-quarter profit climbed.

The company will issue 2.8 billion euros in stock, or as many as 90 million new shares, with full dividend entitlement for 2012, as part of the plan, the Frankfurt-based bank said in a statement today. Deutsche Bank has already received enough orders for the sale, according to the term sheet.
…
The share sale will increase Deutsche Bank’s core Tier 1 capital adequacy ratio under Basel III rules, a key measure of financial strength, to about 9.5 percent from 8.8 percent at the end of March, it said.

Veresen, proud issuer of VSN.PR.A, was confirmed at Pfd-3(high) by DBRS:

The Preferred Shares are confirmed at Pfd-3 (high). All trends are Stable. The confirmation reflects (1) relatively stable cash distributions from the Company’s regulated Pipeline businesses, which accounted for approximately 49% of Veresen’s 2012 cash distributions received from its subsidiaries and investments; (2) improved cash flow diversification as result of the acquisition of the Hythe/Steeprock complex (the Acquisition) from Encana Corporation (rated BBB); and (3) solid cash flow-interest coverage and cash flow-to-debt metrics (non-consolidated). The confirmation is also based on DBRS’s expectation that the currently high debt leverage (as a result of the Acquisition) at the parent level will improve over the medium term.
…
As a result of the Acquisition ($920 million), the parent debt increased significantly in 2012. The non-consolidated debt-to-capital ratio increased to over 40% in 2012 from 35.7% in 2011, which is viewed as aggressive. DBRS recognizes that Veresen benefits from owning a large non-debt and diverse asset base, which allows the Veresen to carry more non-consolidated debt than a pure holding company.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 1bp, FixedResets off 2bp and DeemedRetractibles up 10bp. Volatility was minimal. Volume was average.

It has become easier (for some) to buy (some) foreign securities:

Offerings of securities in other jurisdictions are frequently extended to purchasers in Canada on a private placement basis. However, it is generally necessary to include with the foreign offering document a Canadian wrapper that contains disclosure required under the securities legislation of the various Canadian jurisdictions where the offering is made. Also, it may be necessary to obtain relief from certain Canadian securities regulators in order to permit specified disclosure contained in the foreign offering document, such as a listing representation, that is not permitted under local rules. Since most investors in such offerings are sophisticated institutional investors, the value of this additional disclosure and prohibition is questionable. Furthermore, the time and expense associated with preparing a Canadian wrapper has been cited as a significant deterrent to extending foreign offerings to Canadian purchasers.

The Ontario Securities Commission has (a) granted relief to a group of dealers and (b) proposed amendments to the applicable requirements in Ontario that would allow such offerings to be made available to sophisticated investors without a Canadian wrapper.

PROPOSED ONTARIO AMENDMENTS
The proposed amendments apply to the offering of “designated foreign securities”, which include:

• • securities offered primarily in a foreign jurisdiction
• • securities issued by an issuer that is
  • o created under the laws of a foreign jurisdiction
  • o not a reporting issuer in Canada, and
  • o has its head office or principal executive offices outside of Canada, or
• • securities that are issued or guaranteed by the government of a foreign jurisdiction.

…The proposed amendments are open for comment until July 24, 2013 and are available here.
The OSC decision document providing the above relief is available here.

Why is it that self-proclaimed “consumer advocates” are always the ones who oppose the flow of information?

U.S. Securities and Exchange Commission chairman Mary Jo White is pushing to adopt a rule allowing hedge funds to advertise in a move consumer advocates say could fail to protect unsophisticated investors, according to two people familiar with the matter.

White, who became SEC chairman on April 10, has suggested the commission pass the existing plan without major changes and add additional protections later, said the people, who declined to be identified because the deliberations are private. The approach would placate congressional Republicans who have complained the SEC has slow-walked the rule, which was required to be completed by July 2012.

Approving the regulation would allow White to make good on a promise she made in her Senate confirmation hearing to prioritize rules mandated by the Jumpstart Our Business Startups Act, which was designed to boost capital-raising and job creation. At the same time, it could anger advocates for small investors and at least one Democratic commissioner.

“It would be a very bad sign — a cause for grave concern about the substance of the issue and process of how investor protection concerns are addressed,” Barbara Roper, director investor protection at the Washington-based Consumer Federation of America, said in a phone interview. Roper said she discussed the rule with White and other SEC officials on April 23.

It was an uneven day for the Canadian preferred share market, with PerpetualPremiums gaining 1bp, FixedResets winning 23bp and DeemedRetractibles off 1bp. Volatility was minor. Volume was average.

Assiduous Reader JP sends in a clipping detailing the interesting defence to the fraud charges against S&P:

Now, lawyers defending the company against the Justice Department’s recent civil lawsuit say that statements about independence and objectivity are “puffery” and were never meant to be taken at face value by investors.
…
In its formal defense filed Monday, S&P pointed to two earlier court decisions where judges ruled that such statements by the firm were puffery and therefore can’t form the basis for a fraud claim.
…
“Even if it’s a viable legal argument, it’s a pretty unattractive argument for S&P to be putting forward since they’re basically in the business of charging clients for their reputation,” said Samuel Buell, a law professor at Duke University and a former federal prosecutor. “What they’re saying here is, ‘When we’re talking to investors about our own reputation, we’re engaging in meaningless puffery.’ ”

“That’s the whole point of the rating agencies, their seal of approval,” Mr. Buell said.

I disagree with Mr. Buell’s characterization of ‘the whole point of the rating agencies’. They don’t provide a “seal of approval” to anything – they provide an opinion on the credit-worthiness of the firm, or instrument. Since the issuers use this opinion to help sell their product, it can be fairly characterized as puffery, although not entirely meaningless.

The CRAs do not do anything a competent analyst cannot do – except, of course, for using material non-public information in the course of their work, a provision of Canadian and US securities laws I despise. Their value is: at least it’s a reasonably consistent opinion across companies; their 100-year track record is excellent (they are being blamed for the credit crisis – that’s like blaming the weatherman for Hurricane Sandy); and they serve as a public flash-point for concerns about creditworthiness that may spur action when times are tough.

It was an inconsequential day on the Canadian preferred share market, with PerpetualPremiums down 5bp, FixedResets off 4bp and DeemedRetractibles gaining 2bp. Volatility was low. Volume was on the high side of average.

The Globe was enthralled with the new Air Canada equipment financing:

Air Canada said on Wednesday it plans to acquire five new Boeing 777-300ER series aircraft with funds raised through offering two tranches of enhanced equipment trust certificates (EETCs) worth a total of
$606.3 million.

The EETC market has been one of the main sources of funding that U.S. carriers have used to fund aircraft purchases in the
last two decades.

This market has been off limits to airlines in Canada until late last year, when the Canadian government signed an accord that now allows domestic airlines to seek funding from this market, which offers lower interest rates than other forms of
aircraft financing.

My interest was further piqued by S&P’s rating announcement – which noted that the rating was “(sf)” – structured finance:

The pass-through certificates will be issued by pass-through trusts that will hold equipment notes issued by Loxley Aviation Ltd. Loxley Aviation is a newly formed company whose assets will consist of the aircraft to be financed, in part, with the proceeds of this offering and contract rights under its conditional sale agreements for the aircraft with Air Canada. We will assign final ratings after concluding a legal review of the documentation.

We base the preliminary ‘B'(sf) rating on the credit quality of Air Canada (B-/Stable/–); substantial collateral coverage by good-quality aircraft; and the legal and structural protections available to the pass-through certificates. The company will use proceeds of this offering and those of the 2013-1 class A and class B series to finance 2013 and 2014 deliveries of five Boeing B777-300ER aircraft to be acquired by Loxley Aviation and conditionally sold to Air Canada. Each aircraft’s equipment notes are cross-collateralized and cross-defaulted under the indentures, and cross-collateralized and cross-defaulted to the conditional sale agreements, which we believe increases the likelihood that Air Canada would cure any defaults and agree to perform its future obligations, including its payment obligations, under the conditional sale agreements in an insolvency-related event of the airline.

So, I wonder, what’s the deal with these things? How are they different from a normal mortgage bond, which is to say, debt secured by a physical asset?

Nothing on SEDAR.

A little digging and I learn that it’s a private placement:

The certificates are being offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. The certificates have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws. The certificates have not been and will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of the certificates in Canada will be made on a basis that is exempt from the prospectus requirement of such securities laws.

Let us all thank the bureaucracy for protecting us from the debt markets!

It was another modestly good day for the Canadian preferred share market, with PerpetualPremiums up 8bp, FixedResets winning 9bp and DeemedRetractibles gaining 2bp. Volatility was average. Volume continued high.

PerpetualDiscounts now yield 4.84%, equivalent to 6.29% interest at the standard conversion factor of 1.3x. Long corporates now yield a little under 4.1%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 220bp, unchanged from April 17.

Well, that was interesting:

The S&P 500 was up about 1 percent at about 1,578 at 1:07 p.m. New York time today when a posting on the Associated Press Twitter account said there had been explosions at the White House and President Barack Obama had been injured. The benchmark gauge for American stocks erased almost the entire gain, falling as low as 1,563.03 by 1:10 p.m. The index recovered from the plunge within three minutes as the news service said its Twitter account had been hacked and there were no explosions. The S&P 500 ended the session up 1 percent at 1,578.78.

Who says Asian financial markets are backward? When yields are horribly low, the vendors raise commissions:

Borrowers in Asia have stepped up the use of rebates to get wealthy individual investors to buy their dollar-denominated bonds, underscoring weakness in the market as returns dwindle to an 18-month low.

At least 24 percent of the deals in the region last quarter provided a monetary incentive for private banks whose clients bought the offerings, more than double the same period of 2011, according to FIL Ltd., a global fund manager known as Fidelity Worldwide Investment that oversees $248.2 billion. While the practice is legal, it’s only common in Asia, lawyers say.
…
Billionaire Mukesh Ambani’s Reliance Industries Ltd. (RIL) sold 53 percent of its $800 million offering to private banks, according to a company statement on Jan. 29. The Mumbai-based issuer offered a 50 cent discount to private banks per $100 of bonds purchased, said a person with knowledge of the matter, who asked not to be identified without authorization to speak publicly.

Singapore-based CapitaLand Ltd. (CAPL) sold $400 million of 10- year bonds in September in part by offering a 25-cent rebate to private banks for every $100 of bonds they bought, said Arthur Lang, the group chief financial officer at Southeast Asia’s biggest property developer.

Maybe Canadian bond salesmen can learn from Asia:

“Since the beginning of the year, most institutional clients have been net buyers of credit,” said credit trader Julian Pope at Desjardins Securities. “What we’ve noticed in the past 10 to 12 trading sessions has been a reversal of that trend.” In a recent report, he referred to the trend as the possibility of an emerging “buyers strike.”

No doubt, deals are still selling. However, the word on Bay Street is that there are a lot more “full fills” for many new issues, which means institutional buyers are often getting the full amounts that they request. For a hot deal, they may only get a fraction of what they request because the order book is oversubscribed.

You can also see a cool down of sorts in the spreads for investment grade Canadian issuers over their government benchmarks, because these spreads are starting to widen. For now it amounts to just a few basis points on average, but even that has caught some people offside because the spreads only moved tighter for so long.

Because the trend is so nascent, the voracious appetites for new debt could very well roar back. But the current pause is at least forcing people to bonder if fixed-income supply truly has the legs to stay hot for another full year.

Toronto take note! Casinos in Macau are generating ancillary investment:

Casino companies in Macau, the world’s biggest gambling hub, will gain from expanding family entertainment as the city seeks to become China’s top leisure spot, said Templeton Emerging Markets Group’s Mark Mobius.

The Macau gaming industry is growing at a “fast rate,” said Mobius, the group’s executive chairman, after a visit to the Chinese city. Templeton will continue to hold and buy Macau gambling stocks, he said in an e-mail response to questions, declining to give specific recommendations.

So much for civil rights …:

A vote on Harper government legislation that would curb civil rights in the fight against terrorism is being delayed until Wednesday.
…
The bill would also allow authorities to imprison a Canadian for up to 12 months if the person refuses to testify in front of a judge at an investigative hearing.

The legislation would also make it a federal crime to leave or try to leave Canada for the purpose of committing terrorism or attending a terrorist training camp.

Replace “terrorism” with “the Opposition” in the first sentence and the story would be more accurate.

It was a modestly good day for the Canadian preferred share market, with PerpetualPremiums gaining 3bp, FixedResets winning 8bp and DeemedRetractibles up 6bp. Volatility was average. Volume continued to be at high levels.

I am convinced that Toronto will have a major global competitive advantage in the next century – access to Lake Ontario:

India, the world’s second-most populous nation, is doubling spending on water management to a record as conglomerates from the Tatas to Adani face shortages that the United Nations calls an impending crisis.
…
Disputes with farmers demanding rights to their irrigated land have stalled about $80 billion of investment by companies including Posco and ArcelorMittal (MT) as Prime Minister Manmohan Singh seeks to revive an economy growing at the slowest pace in a decade. Tata Steel Ltd. (TATA), India’s biggest maker of the alloy, is setting annual targets to cut water usage as two-thirds of the country faces a scarcity, H.M. Nerurkar, managing director said in an April 11 interview.

“Water availability is a very big issue and in the coming days this will be a far bigger issue,” A.P. Choudhary, chairman of Rashtriya Ispat Nigam Ltd., India’s second-biggest state-run steelmaker, said in an interview. “Water is critical for the steel industry’s growth and no company is comfortably placed.”

Toronto area real-estate is already pretty expensive, but if I were a speculating kind of guy, I’d be thinking seriously about buying land in places like Cleveland and Detroit, and just trying to get enough current revenue to break even for the next thirty years.

It’s an ill wind that blows nobody any good:

Donald R. Mullen Jr., who helped Goldman Sachs Group Inc. (GS) profit from the U.S. housing crash, is giving the firm and its clients a way to gain from the recovery.

Mullen, 54, has raised almost $1 billion to buy single- family houses to rent since leaving Goldman Sachs last year as head of global credit and mortgages, five years after overseeing the bank’s bet against the imploding subprime home-loan market. His Fundamental REO LLC has already purchased or is close to acquiring almost 2,500 properties through foreclosure auctions, government agencies and even an Arizona non-profit that promotes affordable-home ownership, property records show.

Spend-Every-Penny is explaining why he has to extend his control over, and micromanagement of, the country’s financial system:

he federal budget, released in March, plans to prohibit lenders from selling insured mortgages to investors through any securitization method that is not managed by federally-run Canada Mortgage and Housing Corp . (CMHC).

That bombshell came “without any warning and without any consultation,” said Stephen Smith, president of the largest non-bank lender, First National. Speaking at the National Bank Canadian Financial Services Conference, Mr. Smith said the “collateral damage” to ABCP and smaller lenders “was not fully considered” by government officials.
…
In a statement, a Department of Finance official explained the government’s reasoning as follows:

“The Government is making these changes to increase market discipline in residential lending and reduce taxpayer exposure to the housing sector. Funding channels that use taxpayer-backed insured mortgages should be subject to minimum standards and Canadian oversight in order to promote financial stability.”
…
What the new rules really do is force lenders to sell their mortgages in the specific method dictated by Ottawa, as opposed to potentially lower cost private securitization.

The Central Planners have learnt the lessons of the Credit Crunch well – you can justify any idiocy you like, as long as you chant the magic words: “Hocus Pocus, Financial Stability, Abracadabra!”

Stop the presses! Gensler of the CFTC said something sensible!

Two interest rate benchmarks that banks were fined for rigging should be scrapped and replaced by indicators based on market transactions, a top U.S. regulator said on Monday.

The changes should also include benchmarks linked to gold, oil and other commodities, said Gary Gensler, chairman of the Commodity Futures Trading Commission.

Regrettably, he did not explain how such a ban would be enforced. But doubtless there are lots of levers to use – call it terrorism, for instance. That’s what the Brits do.

We now know why the feds introduced covered bond legislation: it was to give a regulatory advantage to their future employers:

DBRS notes that there appear to be two unintended consequences of the legislation and the Guide, based on discussions with several Canadian issuers over the past few months.

First, as the requirements for continuous disclosure and data compliance required by the Guide are broad, extensive and, at times, onerous, the amount of time and effort required to comply with the mandated standard is substantial, which is also expected to be costly. Therefore, DBRS is of the opinion that lenders other than domestic systemically important banks (DSIBs) are not likely to pursue registration as a covered bond issuer under the legislation, and would therefore be at a disadvantage without the benefit of covered bond funding.

Second, as the legislation explicitly prohibits the issuance of covered bonds without registration, DBRS does not expect to see any coexistence of registered covered bonds and non-registered covered bonds in Canada, except for existing grandfathered covered bond programs.

It was a good day for the Canadian preferred share market, with PerpetualPremiums gaining 3bp, FixedResets winning 32bp and DeemedRetractibles gaining 14bp. Volatility was very good, dominated by winning FixedResets. Volume was quite high.

Civility trumps justice:

Mr. Groia has spoken scathingly about his profession’s “civility movement” and has painted the discipline proceedings as a worrying attack on the ability of all lawyers to mount vigorous defences in high-stakes cases. He has received support from prominent voices in the legal community, including former Conrad Black lawyer Edward Greenspan, who warned of a chill that could see defence lawyers second-guess tough arguments for fear they will be face discipline years later.

DBRS has confirmed Brookfield Canada Office Properties at BBB:

The confirmation is based primarily on BCOP’s steady operating performance and stable financial profile within the context of a relatively inactive year for new investment. The Stable trend reflects DBRS’s expectation that operating performance will remain consistent in the near to medium term, incorporating the potential for moderately higher financial leverage that may be incurred with the refinancing of upcoming debt maturities.
…
BCOP’s operating income increased significantly to $239 million in 2012 from $204 million in 2011, primarily due to a full year of contribution from the 25% interest in the Canadian Office Fund, which was acquired in late 2011. BCOP achieved same-property net operating income growth of 4.8% in 2012, mainly due to higher average rental rates on renewals and a slight improvement in overall occupancy rate (96.9% as at December 31, 2012). The higher rental rates and solid occupancy levels reached by BCOP are reflective of favourable office leasing conditions in its core markets. That said, there has been a lack of suitable supply with attractive valuations in these markets, which contributed to the fact that BCOP did not make any significant new investments or require any material capital raises in 2012.

As such, BCOP’s debt balance and EBITDA interest coverage remained relatively steady in 2012 at 2.19 times (x), versus 2.22x in 2011. DBRS notes that debt-to-capital decreased to 39.9% at December 31, 2012, from 43.1% at the end of 2011, based on higher asset valuations.

This is relevant to BAM investors because:

The Trust is a subsidiary of BPO Properties Ltd. (“BPP”), which owns an aggregate equity interest in the Trust of 83.3% as of December 31, 2012 consisting of 40.5% of the issued and outstanding units of BOX (“Trust Units”) and 100% of the issued and outstanding Class B limited partnership units (“Class B LP Units”) of Brookfield Office Properties Canada LP (“BOPC LP”), a subsidiary of BOX that owns direct interests in the Trust’s investment properties.

… and BPO Properties has proposed to exchange its preferreds for preferreds in it its owner, Brookfield Office Properties, and:

Brookfield Office Properties Inc. (“Brookfield Office Properties” or “the company”) is incorporated under the laws of Canada. The company owns, develops and operates commercial office properties in select cities in North America, Australia and the United Kingdom. The company is a subsidiary of Brookfield Asset Management Inc. (“BAM”), which owns approximately 51% of the company’s voting shares.

DBRS also confirmed Thomson Reuters at A (low), R-1 (low) and Pfd-2 (low), Stable, proud issuer of TRI.PR.B:

The ratings confirmation reflects positive expectations regarding the Company’s enhanced product offerings, particularly in the Financial & Risk segment, along with its stable free cash flow generation over the past year. The ratings continue to be supported by the Company’s entrenched market position, predominantly subscription-based revenue model and the diverse nature of its customer base. The ratings also reflect intensifying competition in key segments as well as risks associated with the Company’s acquisition and divestiture program.

It was another poor day for the Canadian preferred share market, with PerpetualPremiums off 11bp, FixedResets losing 31bp and DeemedRetractibles down 14bp. A relatively lengthy list of Performance Highlights is dominated by losing FixedResets – highly skewed towards those with low Issue Reset Spreads. Volume was extremely high; perhaps related to Monday’s index changes.