PrefBlog

Market Action

What is a ‘Canada call’ and why was my bond redeemed early?

John Heinzl was kind enough to mention me in his recent article What is a ‘Canada call’ and why was my bond redeemed early?:

In April of 2009, I purchased a 10-year Manulife bond that yields 7.768 per cent and matures on April 8, 2019. However, in early October, I looked at my discount brokerage account and was surprised to see that Manulife had “redeemed” the bond. I have never heard of a bond being redeemed at the behest of the issuer. Is this legal?

…
“That’s known in the business as a Canada call and it’s very common,” said James Hymas, president of Hymas Investment Management. “One of the very important things to do when investing in corporate debt is to look at the call provisions, because they will almost always be there somewhere.”

Generally, companies will only redeem bonds when it is in their best interests (or when required because of the terms of the issue). When Government of Canada bond yields were at historic lows, it wasn’t advantageous for Manulife to redeem the notes because it would have had to pay a steep price. But when government yields started to spike several months ago – and as the maturity date approached – redemption became attractive, Mr Hymas said.
…
Manulife announced on Aug. 15 that it intended to redeem the notes and, on Oct. 3 it said the redemption price would be $1,073.81 (per $1,000 face amount) plus accrued interest of $38.52. The redemption price was based on the second option in the prospectus, as it was higher than par. This equates to a yield to maturity (YTM) of 2.73 per cent, Mr. Hymas said. (If you’re wondering why the YTM is lower than the 7.768-per-cent coupon rate, it’s because the notes were trading above par.)
…
“They essentially bought back their old debt at a yield of 2.73 per cent and were able to replace that with an extension of term of more than five years and with debt that was actually subordinated and that’s a good deal for them. They’re only paying about 32 basis points [in additional yield] and that’s a bargain,” he said. (Subordinated debt, with its higher risk from a bondholder’s perspective, would normally carry a higher interest rate than senior debt.)

Issue Comments

LCS.PR.A Upgraded to Pfd-3(low) by DBRS

DBRS has announced that it has:

upgraded the rating of the Preferred Shares issued by Brompton Lifeco Split Corp. (the Company) to Pfd-3 (low) from Pfd-4 (high).
…
Based on the dividend yields of the underlying companies in the Portfolio and after management fees and other expenses have been paid, the dividend coverage ratio stands at 0.6x.

The main form of credit enhancement available to the Preferred Shares is a buffer of downside protection. Downside protection corresponds to the percentage decline in market value of the Portfolio that must be experienced before the Preferred Shares would be in a loss position. Since the last review, the amount of downside protection available to the Preferred Shares has increased to 39.8% posting a 5.4% gain as of October 12, 2017. The growth in downside protection was a combination of a price appreciation and a dividend payout increase of the underlying shares of the Portfolio as well as additional income generated from option writing.

Brompton Group was quick to highlight the upgrade:

As a result of improving portfolio performance, DBRS Limited (“DBRS”) issued a press release on Thursday, October 19, 2017 announcing that the preferred share rating for Brompton Lifeco Split Corp. has been upgraded from Pfd-4(high) to Pfd-3(low). For a full copy of the DBRS press release please visit their website at www.dbrs.com.

This is quite the turnaround from the dark days of 2012 when the issue was downgraded to Pfd-5(high) and a notch better than its December 2013 upgrade to Pfd-4(high).

The Whole Unit NAVPU as of 2017-10-12 was 16.71. Income coverage in 2016 was, by my calculation, 65%. The total assets of the fund, including Capital Units, were $86-million as of 2017-9-30.

LCS.PR.A is tracked by HIMIPref™ but relegated to the Scraps index on both credit concerns and volume concerns.

Market Action

PerpetualDiscounts now yield 5.32%, equivalent to 6.92% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 3.95% so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 295bp, a significant widening from the 285bp reported October 11.

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	-0.0168 %	2,421.6
FixedFloater	0.00 %	0.00 %	0	0.00	0	-0.0168 %	4,443.6
Floater	3.77 %	3.92 %	34,731	17.60	4	-0.0168 %	2,560.9
OpRet	0.00 %	0.00 %	0	0.00	0	0.0660 %	3,072.2
SplitShare	4.75 %	4.73 %	72,414	4.37	6	0.0660 %	3,668.8
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.0660 %	2,862.6
Perpetual-Premium	5.35 %	1.21 %	62,163	0.20	17	-0.0370 %	2,821.4
Perpetual-Discount	5.33 %	5.32 %	60,858	14.96	19	0.0788 %	2,953.8
FixedReset	4.24 %	4.21 %	149,735	4.54	99	0.0784 %	2,481.2
Deemed-Retractible	5.08 %	5.54 %	98,703	6.00	30	-0.1049 %	2,899.3
FloatingReset	2.80 %	2.87 %	44,857	4.04	8	0.1796 %	2,676.4

Performance Highlights
Issue	Index	Change	Notes
HSE.PR.A	FixedReset	-1.14 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-18 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 4.72 %
MFC.PR.K	FixedReset	1.15 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.85 Bid-YTW : 5.45 %
GWO.PR.N	FixedReset	1.54 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.82 Bid-YTW : 7.88 %

Volume Highlights
Issue	Index	Shares Traded	Notes
TRP.PR.K	FixedReset	196,079	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.01 Bid-YTW : 4.11 %
MFC.PR.R	FixedReset	129,455	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.91 Bid-YTW : 4.06 %
BAM.PF.J	FixedReset	101,414	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.52 Bid-YTW : 4.42 %
MFC.PR.I	FixedReset	64,200	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-09-19 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 4.46 %
BMO.PR.C	FixedReset	64,000	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-25 Maturity Price : 25.00 Evaluated at bid price : 25.57 Bid-YTW : 4.13 %
TD.PF.G	FixedReset	57,066	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.65 Bid-YTW : 3.46 %
There were 22 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
GWO.PR.R	Deemed-Retractible	Quote: 22.99 – 23.35 Spot Rate : 0.3600 Average : 0.2725 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.99 Bid-YTW : 6.27 %
CU.PR.G	Perpetual-Discount	Quote: 21.70 – 22.00 Spot Rate : 0.3000 Average : 0.2198 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-18 Maturity Price : 21.42 Evaluated at bid price : 21.70 Bid-YTW : 5.24 %
BAM.PF.G	FixedReset	Quote: 24.30 – 24.48 Spot Rate : 0.1800 Average : 0.1070 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-18 Maturity Price : 23.16 Evaluated at bid price : 24.30 Bid-YTW : 4.65 %
CU.PR.H	Perpetual-Discount	Quote: 25.10 – 25.39 Spot Rate : 0.2900 Average : 0.2201 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-18 Maturity Price : 24.67 Evaluated at bid price : 25.10 Bid-YTW : 5.28 %
BNS.PR.Y	FixedReset	Quote: 23.07 – 23.29 Spot Rate : 0.2200 Average : 0.1583 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.07 Bid-YTW : 4.15 %
MFC.PR.M	FixedReset	Quote: 23.65 – 24.02 Spot Rate : 0.3700 Average : 0.3150 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.65 Bid-YTW : 4.99 %

Market Action

October 17, 2017

The Boston Fed has published a fascinating paper by Daniel H. Cooper, María José Luengo-Prado and Jonathan A. Parker titled The Local Aggregate Effects of Minimum Wage Increases:

As part of the Fair Labor Standards Act, the federal government initiated a national minimum wage in 1938, which has since been raised 22 times, the latest increase in 2009 going to $7.25 per hour. State-level minimum wage increases have occurred with much greater frequency, especially quite recently, with 17 states raising minimum wages in 2016 and 19 states doing so in 2017. In total, there have been 247 changes in the minimum wage on the federal and state level between 1999 and 2014, resulting in substantial variation in current minimum wages across the United States. The policy intent behind minimum wage laws is to raise the return to employment for low-wage workers; indeed, the idea of a $15 per hour “living wage” has been growing—in 2016 California and New York passed legislation to gradually raise their minimum wages to this level (Seattle enacted a similar gradual $15 per hour increase in 2014), while other states are enacting more modest multi-year raises.

A voluminous empirical literature has largely found that within the range of the increases historically experienced in the United States, higher minimum wages have minimal employment effects. However, this literature has largely overlooked the fact that through general equilibrium adjustments that go beyond the labor market, the level of the minimum wage should affect prices and consumer spending. Moreover, higher minimum wages may cause fluctuations as local economic conditions adjust to the changed regulations. This paper addresses these less-studied issues by exploiting the variation in minimum wages across the United States and the fact that labor markets are defined by commuting distances. The authors compile a dataset of state-level minimum wage changes for the 1999–2014 period and use city-level price data from metropolitan statistical areas to measure the dynamic effects that minimum wage increases have on annual changes in city-level prices (inflation) and consumer spending.
…
In particular, a 10 percent increase in the minimum wage is associated with an overall (all-items) inflation rate that is 8 basis points higher relative to the preceding year. This effect is not precisely estimated and is quite small, especially given that a 10 percent minimum wage increase is nearly double the average MWPC in our sample. However, the increase in inflation is not evenly distributed across all goods and services. In particular, minimum wage changes have the largest measured impact on food prices — especially food away from home (column 8). A 10 percent increase in the minimum wage leads to prices on food away from home that are about 0.3 percent higher.
…
Consistent with our findings for prices, we find the largest, most precisely estimated effects of a minimum wage increase on food away expenditures. In particular, a 10 percent increase in the minimum wage raises nominal food away consumption by nearly 0.8 percentage point. There are also relatively large and positive, but imprecisely estimated, impact effects for nondurables, and food and beverages consumed at home. In addition, the cumulative increase in food at home consumption is precisely estimated and of similar magnitude to the impact (and cumulative) effect for food away. Consumption of services also increases slightly.
…
In addition, the food away and food at home consumption effects are much larger than the respective food price effects, suggesting that nominal food consumption increases more than the amount that would be implied by higher prices alone. That is, consumers appear to adjust the quantity of food that they consume when the minimum wage rises, with the effect on food away from home being more immediate and the effect on food at home occurring over time.

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	0.2025 %	2,422.0
FixedFloater	0.00 %	0.00 %	0	0.00	0	0.2025 %	4,444.3
Floater	3.77 %	3.91 %	36,085	17.63	4	0.2025 %	2,561.3
OpRet	0.00 %	0.00 %	0	0.00	0	-0.1055 %	3,070.2
SplitShare	4.75 %	4.72 %	74,789	4.37	6	-0.1055 %	3,666.4
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.1055 %	2,860.7
Perpetual-Premium	5.35 %	1.53 %	61,456	0.21	17	0.0115 %	2,822.4
Perpetual-Discount	5.34 %	5.30 %	59,902	14.97	19	-0.1125 %	2,951.5
FixedReset	4.24 %	4.21 %	152,026	4.39	99	0.1385 %	2,479.3
Deemed-Retractible	5.07 %	5.57 %	100,750	6.00	30	-0.0207 %	2,902.4
FloatingReset	2.80 %	2.80 %	46,699	4.05	8	0.0000 %	2,671.6

Performance Highlights
Issue	Index	Change	Notes
MFC.PR.F	FixedReset	1.11 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.25 Bid-YTW : 7.54 %
MFC.PR.J	FixedReset	1.16 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 4.72 %
MFC.PR.N	FixedReset	1.17 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.25 Bid-YTW : 5.18 %
HSE.PR.A	FixedReset	2.34 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-17 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 4.67 %

Volume Highlights
Issue	Index	Shares Traded	Notes
RY.PR.Z	FixedReset	240,600	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-17 Maturity Price : 23.19 Evaluated at bid price : 23.60 Bid-YTW : 4.20 %
TD.PR.Y	FixedReset	116,600	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 3.47 %
RY.PR.I	FixedReset	100,380	YTW SCENARIO Maturity Type : Call Maturity Date : 2019-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.09 Bid-YTW : 3.65 %
NA.PR.A	FixedReset	91,760	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-15 Maturity Price : 25.00 Evaluated at bid price : 26.30 Bid-YTW : 3.84 %
TD.PF.H	FixedReset	90,462	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.11 Bid-YTW : 3.63 %
BNS.PR.R	FixedReset	60,550	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 3.65 %
There were 33 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
MFC.PR.G	FixedReset	Quote: 24.31 – 24.92 Spot Rate : 0.6100 Average : 0.4430 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.31 Bid-YTW : 4.71 %
ELF.PR.G	Perpetual-Discount	Quote: 22.16 – 22.84 Spot Rate : 0.6800 Average : 0.5342 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-17 Maturity Price : 21.92 Evaluated at bid price : 22.16 Bid-YTW : 5.38 %
HSE.PR.E	FixedReset	Quote: 24.70 – 24.97 Spot Rate : 0.2700 Average : 0.1845 YTW SCENARIO Maturity Type : Call Maturity Date : 2020-03-31 Maturity Price : 25.00 Evaluated at bid price : 24.70 Bid-YTW : 5.15 %
W.PR.K	FixedReset	Quote: 26.25 – 26.50 Spot Rate : 0.2500 Average : 0.1854 YTW SCENARIO Maturity Type : Call Maturity Date : 2021-01-15 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 3.64 %
W.PR.M	FixedReset	Quote: 26.57 – 26.75 Spot Rate : 0.1800 Average : 0.1159 YTW SCENARIO Maturity Type : Call Maturity Date : 2021-10-15 Maturity Price : 25.00 Evaluated at bid price : 26.57 Bid-YTW : 3.53 %
BMO.PR.Y	FixedReset	Quote: 24.90 – 25.24 Spot Rate : 0.3400 Average : 0.2772 YTW SCENARIO Maturity Type : Call Maturity Date : 2020-08-25 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 4.18 %

Market Action

October 16, 2017

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	-0.2693 %	2,417.1
FixedFloater	0.00 %	0.00 %	0	0.00	0	-0.2693 %	4,435.4
Floater	3.78 %	3.92 %	33,404	17.60	4	-0.2693 %	2,556.1
OpRet	0.00 %	0.00 %	0	0.00	0	0.2047 %	3,073.4
SplitShare	4.75 %	4.63 %	72,317	4.37	6	0.2047 %	3,670.3
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.2047 %	2,863.7
Perpetual-Premium	5.35 %	1.37 %	61,306	0.13	17	0.0717 %	2,822.1
Perpetual-Discount	5.33 %	5.31 %	61,761	14.96	19	0.1984 %	2,954.8
FixedReset	4.25 %	4.22 %	153,955	4.51	99	-0.0253 %	2,475.8
Deemed-Retractible	5.07 %	5.54 %	99,082	6.00	30	0.0456 %	2,903.0
FloatingReset	2.80 %	2.79 %	48,250	4.05	8	-0.2930 %	2,671.6

Performance Highlights
Issue	Index	Change	Notes
HSE.PR.A	FixedReset	-1.44 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 17.10 Evaluated at bid price : 17.10 Bid-YTW : 4.78 %
PWF.PR.A	Floater	-1.09 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 16.38 Evaluated at bid price : 16.38 Bid-YTW : 3.45 %
BIP.PR.C	FixedReset	-1.04 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : 4.71 %
BMO.PR.Y	FixedReset	-1.00 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 23.31 Evaluated at bid price : 24.75 Bid-YTW : 4.34 %
HSE.PR.C	FixedReset	1.04 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 23.23 Evaluated at bid price : 24.25 Bid-YTW : 4.93 %
CU.PR.G	Perpetual-Discount	1.12 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 21.45 Evaluated at bid price : 21.74 Bid-YTW : 5.23 %
PVS.PR.E	SplitShare	1.12 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.15 Bid-YTW : 4.63 %
CU.PR.E	Perpetual-Discount	1.20 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 23.41 Evaluated at bid price : 23.68 Bid-YTW : 5.23 %
MFC.PR.B	Deemed-Retractible	1.51 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.80 Bid-YTW : 6.27 %

Volume Highlights
Issue	Index	Shares Traded	Notes
TD.PF.C	FixedReset	100,875	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 22.78 Evaluated at bid price : 23.40 Bid-YTW : 4.18 %
TRP.PR.K	FixedReset	86,651	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.02 Bid-YTW : 4.10 %
TRP.PR.G	FixedReset	76,901	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 23.00 Evaluated at bid price : 24.10 Bid-YTW : 4.69 %
NA.PR.W	FixedReset	68,700	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 22.62 Evaluated at bid price : 23.15 Bid-YTW : 4.24 %
NA.PR.C	FixedReset	56,019	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-11-15 Maturity Price : 25.00 Evaluated at bid price : 25.43 Bid-YTW : 4.02 %
RY.PR.Q	FixedReset	55,394	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-24 Maturity Price : 25.00 Evaluated at bid price : 26.86 Bid-YTW : 3.54 %
There were 25 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
PWF.PR.R	Perpetual-Premium	Quote: 25.30 – 25.63 Spot Rate : 0.3300 Average : 0.1945 YTW SCENARIO Maturity Type : Call Maturity Date : 2020-04-30 Maturity Price : 25.25 Evaluated at bid price : 25.30 Bid-YTW : 5.30 %
MFC.PR.G	FixedReset	Quote: 24.34 – 24.72 Spot Rate : 0.3800 Average : 0.2599 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.34 Bid-YTW : 4.69 %
PWF.PR.P	FixedReset	Quote: 17.45 – 17.80 Spot Rate : 0.3500 Average : 0.2334 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 17.45 Evaluated at bid price : 17.45 Bid-YTW : 4.52 %
MFC.PR.N	FixedReset	Quote: 22.98 – 23.29 Spot Rate : 0.3100 Average : 0.1947 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.98 Bid-YTW : 5.37 %
MFC.PR.J	FixedReset	Quote: 24.22 – 24.71 Spot Rate : 0.4900 Average : 0.3833 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.22 Bid-YTW : 4.91 %
ELF.PR.G	Perpetual-Discount	Quote: 22.17 – 22.65 Spot Rate : 0.4800 Average : 0.3743 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-16 Maturity Price : 21.94 Evaluated at bid price : 22.17 Bid-YTW : 5.38 %

PrefLetter

October PrefLetter Released!

The October, 2017, edition of PrefLetter has been released and is now available for purchase as the “Previous edition”. Those who subscribe for a full year receive the “Previous edition” as a bonus.

PrefLetter may now be purchased by all Canadian residents.

Until further notice, the “Previous Edition” will refer to the October, 2017, issue, while the “Next Edition” will be the November, 2017, issue, scheduled to be prepared as of the close November 10 and eMailed to subscribers prior to market-opening on November 13.

PrefLetter is intended for long term investors seeking issues to buy-and-hold. At least one recommendation from each of the major preferred share sectors is included and discussed.

Note: My verbosity has grown by such leaps and bounds that it is no longer possible to deliver PrefLetter as an eMail attachment – it’s just too big for my software! Instead, I have sent passwords – click on the link in your eMail and your copy will download.

Note: The PrefLetter website has a Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter eMails sometimes runs afoul of spam filters. If you have not received your copy within fifteen minutes of a release notice such as this one, please double check your (company’s) spam filtering policy and your spam repository – there are some hints in the post Sympatico Spam Filters out of Control. If it’s not there, contact me and I’ll get you your copy … somehow!

Note: There have been scattered complaints regarding inability to open PrefLetter in Acrobat Reader, despite my practice of including myself on the subscription list and immediately checking the copy received. I have had the occasional difficulty reading US Government documents, which I was able to resolve by downloading and installing the latest version of Adobe Reader. Also, note that so far, all complaints have been from users of Yahoo Mail. Try saving it to disk first, before attempting to open it.

Note: There have been other scattered complaints that double-clicking on the links in the “PrefLetter Download” email results in a message that the password has already been used. I have been able to reproduce this problem in my own eMail software … the problem is double-clicking. What happens is the first click opens the link and the second click finds that the password has already been used and refuses to work properly. So the moral of the story is: Don’t be a dick! Single Click!

Note: Assiduous Reader DG informs me:

In case you have any other Apple users: you need to install a free App from the apple store called “FileApp”. It comes with it’s own tutorial and allows you to download and save a PDF file.

However, Assiduous Reader Adrian informs me in the comments to the January 2015 release:

Some nitpicking for DG:
FileApp costs $1.19 in the Apple Store.

But Adrian2 now advises:

Well, as of now, FileApp is free (again?).

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	0.3045 %	2,435.6
FixedFloater	0.00 %	0.00 %	0	0.00	0	0.3045 %	4,469.1
Floater	3.76 %	3.90 %	33,819	17.62	4	0.3045 %	2,575.6
OpRet	0.00 %	0.00 %	0	0.00	0	-0.0066 %	3,074.4
SplitShare	4.74 %	4.79 %	69,166	4.35	6	-0.0066 %	3,671.5
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.0066 %	2,864.6
Perpetual-Premium	5.34 %	4.15 %	61,823	0.19	17	0.0415 %	2,826.5
Perpetual-Discount	5.28 %	5.19 %	62,723	14.92	19	0.3828 %	2,981.4
FixedReset	4.23 %	4.20 %	150,636	4.38	99	0.0458 %	2,487.5
Deemed-Retractible	5.05 %	5.48 %	101,141	5.99	30	0.0991 %	2,913.3
FloatingReset	2.74 %	2.80 %	46,587	4.03	8	-0.0651 %	2,676.9

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	0.7958 %	2,428.2
FixedFloater	0.00 %	0.00 %	0	0.00	0	0.7958 %	4,455.6
Floater	3.76 %	3.90 %	34,329	17.62	4	0.7958 %	2,567.8
OpRet	0.00 %	0.00 %	0	0.00	0	0.0923 %	3,074.6
SplitShare	4.74 %	4.78 %	72,019	4.35	6	0.0923 %	3,671.7
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.0923 %	2,864.8
Perpetual-Premium	5.35 %	2.02 %	61,662	0.19	17	0.1456 %	2,825.4
Perpetual-Discount	5.30 %	5.25 %	60,781	15.00	19	0.1278 %	2,970.0
FixedReset	4.23 %	4.21 %	148,918	4.38	99	0.0488 %	2,486.4
Deemed-Retractible	5.06 %	5.53 %	101,091	5.99	30	0.1931 %	2,910.4
FloatingReset	2.74 %	2.75 %	46,380	4.03	8	0.1904 %	2,678.6

Performance Highlights
Issue	Index	Change	Notes
RY.PR.Z	FixedReset	-1.20 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-23 Maturity Price : 23.51 Evaluated at bid price : 23.91 Bid-YTW : 4.12 %
BMO.PR.S	FixedReset	-1.07 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-23 Maturity Price : 23.62 Evaluated at bid price : 24.01 Bid-YTW : 4.22 %
MFC.PR.B	Deemed-Retractible	1.07 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.75 Bid-YTW : 6.32 %
MFC.PR.K	FixedReset	1.08 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.40 Bid-YTW : 5.04 %
BMO.PR.Z	Perpetual-Premium	1.16 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2024-08-25 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 4.96 %
TRP.PR.F	FloatingReset	1.52 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-23 Maturity Price : 20.10 Evaluated at bid price : 20.10 Bid-YTW : 3.53 %
BAM.PR.C	Floater	2.92 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-23 Maturity Price : 14.45 Evaluated at bid price : 14.45 Bid-YTW : 3.90 %

Volume Highlights
Issue	Index	Shares Traded	Notes
NA.PR.Q	FixedReset	292,577	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-12-15 Maturity Price : 25.00 Evaluated at bid price : 24.97 Bid-YTW : 3.00 %
CM.PR.R	FixedReset	138,117	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : 4.04 %
TD.PF.I	FixedReset	81,710	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.72 Bid-YTW : 3.86 %
HSB.PR.D	Deemed-Retractible	72,200	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-11-22 Maturity Price : 25.00 Evaluated at bid price : 25.25 Bid-YTW : -3.29 %
BMO.PR.C	FixedReset	56,450	YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-25 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : 4.11 %
RY.PR.M	FixedReset	51,500	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-23 Maturity Price : 23.26 Evaluated at bid price : 24.70 Bid-YTW : 4.21 %
There were 18 other index-included issues trading in excess of 10,000 shares.

Performance Highlights
Issue	Index	Change	Notes
BMO.PR.Z	Perpetual-Premium	-1.57 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 24.58 Evaluated at bid price : 25.01 Bid-YTW : 5.05 %
BAM.PR.C	Floater	-1.40 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 14.04 Evaluated at bid price : 14.04 Bid-YTW : 4.02 %
TRP.PR.F	FloatingReset	-1.39 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 19.80 Evaluated at bid price : 19.80 Bid-YTW : 3.65 %
TRP.PR.D	FixedReset	-1.26 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 22.33 Evaluated at bid price : 22.71 Bid-YTW : 4.49 %
IAG.PR.G	FixedReset	-1.18 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.35 Bid-YTW : 5.20 %
GWO.PR.N	FixedReset	1.01 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.00 Bid-YTW : 7.73 %
CU.PR.G	Perpetual-Discount	1.01 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 21.59 Evaluated at bid price : 21.92 Bid-YTW : 5.19 %
MFC.PR.G	FixedReset	1.10 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2021-12-19 Maturity Price : 25.00 Evaluated at bid price : 24.72 Bid-YTW : 4.30 %
TRP.PR.B	FixedReset	1.11 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 16.43 Evaluated at bid price : 16.43 Bid-YTW : 4.42 %
MFC.PR.N	FixedReset	1.15 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.70 Bid-YTW : 4.88 %
MFC.PR.L	FixedReset	1.24 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.87 Bid-YTW : 5.40 %
PWF.PR.L	Perpetual-Discount	1.38 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 24.03 Evaluated at bid price : 24.28 Bid-YTW : 5.26 %
MFC.PR.M	FixedReset	1.40 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.98 Bid-YTW : 4.77 %
MFC.PR.C	Deemed-Retractible	1.76 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.02 Bid-YTW : 6.70 %
CU.PR.C	FixedReset	2.01 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 21.88 Evaluated at bid price : 22.32 Bid-YTW : 4.44 %
RY.PR.Z	FixedReset	2.11 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-20 Maturity Price : 23.83 Evaluated at bid price : 24.20 Bid-YTW : 4.10 %

PrefBlog

October 24, 2017

October 23, 2017

October 20, 2017

What is a ‘Canada call’ and why was my bond redeemed early?

LCS.PR.A Upgraded to Pfd-3(low) by DBRS

October 19, 2017

October 18, 2017

October 17, 2017

October 16, 2017

October PrefLetter Released!

Archives

Of Interest