PrefBlog

5Banc Split Inc., proud issuer of FBS.PR.C, was confirmed at Pfd-2 by DBRS:

The Preferred Shares pay a quarterly fixed, cumulative, preferential distribution of $0.11875 per Preferred Share yielding 4.75% per annum on their initial issue price. Based on the current dividend yields on the underlying banks, the Preferred Share dividend coverage ratio is approximately 2.2 times. Holders of the Capital Shares are expected to receive all excess dividend income after the Preferred Share distributions and other expenses of the Company have been paid.

Since the rating was upgraded in April 2013, the Company’s performance has been positive, with net asset values increasing steadily. Downside protection available to holders of the Preferred Shares was 68.6% as of April 3, 2014.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts gaining 3bp, while FixedResets and DeemedRetractibles were both off 5bp. Volatility was minimal. Volume was low, but the highlights are comprised entirely of FixedResets.

Let’s all give three cheers for increased regulation:

New rules aimed at making the world safer from blowups in the $693 trillion derivatives market are poised to drive up costs so much for retirement funds and other users that bankers say they do just the opposite.

The toughened standards, hatched five years ago after derivative losses almost crashed the global economy, are meant to safeguard trades and bring more openness to a market whose secrecy and sheer size overwhelmed regulators in 2008. Where swaps had been one-on-one deals before, now they would be backstopped by third parties in clearinghouses that ensure everyone can pay, with the aim of avoiding emergency bailouts and panic.

Rules being finalized by the Basel Committee on Banking Supervision in Switzerland will require banks to set aside more money in the event the swaps go bad. And not just a little bit more — as much as 92 times, or 9,100 percent, more, according to calculations by three banks shared with Bloomberg News. The higher costs in turn may cause market participants to flee rather than take advantage of the clearinghouses, making it more difficult for those third-party guarantors.
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Since banks act as customers’ gatekeepers to the clearinghouses, the Basel committee wants them to protect themselves — and the global financial system — by matching every dollar they contribute to the default fund with a dollar of capital.

If the rules were adopted, swaps dealers say that only the wealthiest investors would be able to use clearinghouses. Fewer members would mean eroded financial support for the clearinghouses, which are the last backstop before losses are borne by taxpayers.
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Executives in a bank’s treasury department don’t allocate the firm’s money to trading desks without a guarantee that the profit on it will be about 10 percent to 15 percent a year after taxes, depending on the bank. In many cases, banks earn these returns by charging fees to clients.

In one bank’s internal model, a $100 million interest-rate swap between a dealer and its customer prior to the new Basel proposal would have meant that, before taxes, $14,750 in capital had to be set aside.

When the bank’s trading desk asks the firm’s treasury for $14,750 as part of the trade, the traders would have to earn $3,404 per year before taxes for as long as the swap was active. That’s in the old days.

The same $100 million swap would look different under the new proposal. As part of accepting that trade, the clearinghouse would require the bank to deposit $1.2 million into its default fund. Under the Basel committee proposal, the bank would have to have $1.2 million more capital.

According to the dealer bank, it would be required to generate more than $276,000 a year before taxes for that amount of capital. When charges such as the cost of funding and others are added to the trade, the tab balloons to $307,327 a year, the dealer said.

Fortunately, these new rules have been softened:

The Basel Committee on Banking Supervision’s final rule, released today, would require swaps dealers to hold less cash to protect against defaults than did a proposal published last year. The plan now applies a minimum 20 percent risk weighting to money deposited at clearinghouses, which are third parties that guarantee the transactions, down from 1,250 percent in the original proposal. The change takes effect on Jan. 1, 2017.

But central clearing is still a dumb idea.

Here’s yet another indicator that the HFT panic is a marketing gimmick:

Royal Bank has emerged as a leader against predatory high-frequency trading at a time of increasing scrutiny from both regulators and the public after the release of Lewis’s book, which claims the stock market is “rigged” against investors. The bank is described by Lewis as fostering an “RBC nice” culture with its “no asshole rule” on hiring.

High-frequency trading isn’t inherently good or bad, Mills said. The problem arises when certain market players use technology to take advantage of others.

“That’s what we need as an industry, to see regulation mature to the point where it can begin to eliminate those predatory practices, and that’s where we’ll level the playing field,” Mills said in a telephone interview yesterday.

Royal Bank, along with seven partners, owns a stake in and helped found Aequitas, a market with similar goals to IEX. The Toronto-based bank is Canada’s second-largest lender by assets.

“One thing that’s clear is that RBC is the common denominator between IEX and Aequitas,” said Jos Schmitt, chief executive officer at Toronto-based Aequitas, in an April 1 interview at the company’s headquarters in Royal Bank Plaza. “It tells you something about where they come from, what they stand for and what they seek to achieve. They translated that to being the spark in a change on Wall Street and on Bay Street.”

High-frequency trading firms have been accused of ripping off investors in the $22 trillion U.S. stock market by using tactics including paying for the right to trade in dark pools and placing their servers as close to the exchange as possible to speed up trading.

Royal Bank saw what its competitors were doing and decided to go in a different direction, Mills said.

I’ve been saying for a while that the economy’s still no good, and that while government yields are clearly unsustainable, there is not yet a clear trigger of impending doom. Looks like there’s some support for that idea:

Federal Reserve Chair Janet Yellen and her international counterparts are suffering from a case of what psychologists call confirmation bias: They keep insisting inflation will accelerate even as it continues to ebb.

That’s the diagnosis of Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. He says central bankers are seeing what they want to see by blaming subpar inflation in their countries on temporary, partly home-grown forces. That risks ignoring more lasting, global influences ranging from weak worldwide demand and more emerging-market competition to cheap labor in developing nations, cooling commodity prices and technological breakthroughs.

“There is much lower-than-expected inflation showing up in too many places in the world to dismiss it as transitory,” said Allen Sinai, chief executive officer at consultant Decision Economics Inc. in New York.

Almost two-thirds of the 121 economies tracked by Bloomberg are experiencing smaller gains in consumer prices than a year ago, with many undershooting their goals. Global inflation was just 2 percent in February, the lowest since late 2009, when the world was struggling with recession, according to a tally by economists at JPMorgan Chase & Co.

Greece and Ireland were in the bond market today:

Italian bonds gained for a second day and Belgian, French and German securities also rallied. Greek bonds fell, pushing 10-year yields up from near the lowest level since February 2010, as the nation agreed to sell 3 billion euros ($4.17 billion) of five-year notes via banks. Greece received about 600 orders for a total of around 20 billion euros, a person familiar with the sale said. Ireland auctioned 1 billion euros of 10-year debt at a record-low yield.

“Bond markets have woken up on a positive note on the back of a dovish set of Fed minutes,” said Richard McGuire, a fixed-income strategist at Rabobank International in London. “This is a classic case of an improving liquidity outlook raising all boats. The strong demand for Greece’s five-year issue is symptomatic of a positive liquidity outlook trumping more fundamental concern.”

It was another positive day for the Canadian preferred share market, with PerpetualDiscounts winning 16bp, FixedResets up 5bp and DeemedRetractibles gaining 2bp. It is interesting to note that the median YTW on DeemedRetractibles remained negative for the second straight day and the fifth time on record, joining 2012-12-28, 2013-1-4 and 2013-1-10. Volatility was negligible. Volume was below average.

Nothing happened today.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts off 3bp, FixedResets up 12bp and DeemedRetractibles gaining 11bp. Volatility was only technically existent. Volume was a little below average.

PerpetualDiscounts now yield 5.42%, equivalent to 7.05% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.5%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 255bp, a slight (and perhaps spurious) decline from the 260bp reported April 2)
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This could get interesting:

Expectations are building that TMX is getting close to unveiling its plans for a network. TMX has acknowledged that microwaves are a priority but so far the company has not given any specifics.

“We do know that microwaves [are] an important opportunity out there and we have to bring that to this marketplace, we’re just trying to figure out how,” TMX chief executive officer Tom Kloet said in a recent interview.
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The speed advantage of microwaves is significant. Because of that, the owner would be able to charge speed-focused traders a high price for access. That’s especially true if there are only a small number of spots on the microwave network.

A microwave link between the TMX Group’s Toronto Stock Exchange data centre in suburban Toronto and the U.S. stock market data centres in New Jersey would be as much as 5 milliseconds faster than a fibre-optic link because microwaves travel more quickly and have a more direct route through the air, ITG Canada estimated in a report earlier this year.

Trial attorney Jim Kidney of the SEC is retiring … but he gave a farewell speech:

The revolving door is a very serious problem. I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket. They mouthed serious regard for the mission of the Commission, but their actions were tentative and fearful in many instances. You can get back to Wall Street by acting tough, by using the SEC publicity apparatus to promote yourself as tough, and maybe even on a few occasions being tough, if you pick your targets carefully. But don’t appear to fail. Don’t take risks where risk would count. That is not the intended message from the ticket punchers, of course, but it is the one I got on the occasions when I was involved in a high profile case or two. The revolving door doesn’t push the agency’s enforcement envelope very often or very far.

The attitude trickles down the ranks. Combined with the negative views of the civil service promoted by politicians and the beatings we take from the public, it is no surprise that we lose our best and brightest as they see no place to go in the agency and eventually decide they are just going to get their own ticket to a law firm or corporate job punched.
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Please don’t tell me we account for other factors in our management of cases. We think about them, of course, but we all see cases frequently to which we offer a head scratching response. Really? The SEC spent time and money on that? These cases have no significant impact and the conduct is of minimal or no harm to the investing public. But the investigation has been intense and expensive. Could no one in management exercise judgment and call the investigation to a halt? Of course not! Bringing the case is a stat!

The metric [quantity] we have now is built into the soul of the Division. It has to be removed root and branch.

Jonathan Weil of Bloomberg wants to make Jim Kidney a commissioner [link now broken? What’s up with that?]; the speech has attracted some press notice:

The SEC also sued Fabrice Tourre, who was vice president on the team that put together the deal at issue in the SEC case, known as Abacus 2007-AC1. A federal jury found Tourre liable last year, and he was ordered in March to pay $825,000 in penalties and other costs.

Kidney, who was part of the initial team that was building the Goldman Sachs case, pressed his bosses in the enforcement division to go higher up the chain. He later took himself off the team after being given a lesser role, according to people familiar with the matter.

In particular, the people said, Kidney argued that the commission should sue Tourre’s boss, Jonathan Egol. Kidney also wanted to bring a case against Paulson & Co. or some executives at the hedge fund, which helped pick the portfolio of securities that were underlying the Abacus vehicle and then bet against it.

The SEC ultimately decided not to sue Egol, the Paulson firm or any individuals from the hedge fund.
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While Kidney declined to comment on the Goldman case in particular, much of his role is laid out in a September 2010 report by the agency’s inspector general’s office, which reviewed whether the SEC succumbed to political pressure in bringing the enforcement action. Kidney’s name is blacked out in the report.

He sounds like an honourable man. It seems clear that if there was in fact anything bad about the Abacus deal – Assiduous Readers will remember that I don’t think there was – then Fabrice Tourre should have been only a minor target.

It was a good day for the Canadian preferred share market, with PerpetualDiscounts winning 28bp, FixedResets gaining 8bp and DeemedRetractibles up 21bp. Volatility was minimal. Volume was below average.

There are some interesting statistics from electronic bond trading:

Traders trying to purchase investment-grade notes are failing about 46 percent of the time, close to the worst rate in more than four years as measured by activity on MarketAxess Holdings Inc.’s electronic platform. On the flip side, investors trying to sell the debt are having the easiest time on record, with an 85 percent success rate.

Bond buyers are showing an unwillingness to part with their holdings as a rally fueled by more than five years of unprecedented Federal Reserve stimulus refuses to die. Ironically, it’s harder than ever to find securities for sale even though the U.S. corporate-debt market has grown 53 percent since 2008, with companies selling $6.9 trillion of notes since then, according to data compiled by the Securities Industry and Financial Markets Association and Bloomberg.

“Right now, everyone’s a buyer,” said Edward Meigs, who manages $1.6 billion of debt assets at First Eagle Investment Management in Baltimore. “There’s a marked level of complacency.”

Traders will submit offers to buy or sell bonds on MarketAxess’s platform within a set period of time. The transaction is considered to fail when time runs out with no takers. New York-based MarketAxess is the most-active electronic venue for trading corporate bonds in the U.S.

And given the difficulty in buying bonds, guess what’s making a comeback?:

Commercial real-estate investor H/2 Capital Partners bundled a hodge podge of its holdings — from bonds tied to skyscrapers and malls to junk-rated bank loans — into about $400 million of securities. The deal, similar to the pre-crisis transactions known as collateralized debt obligations, included one portion that Moody’s Investors Service gave its highest rating of Aaa.

The investment firm is seizing on a revival of the types of transactions that fueled the property boom in 2006 and 2007, showing the lengths to which investors are going to bolster skimpy yields across credit markets. Such offerings are giving commercial-property investors a wider range of options to fund acquisitions, according to Richard Hill, a debt analyst at Morgan Stanley.

The war on markets continues:

U.S. Attorney General Eric Holder promised Congress a thorough investigation into whether high-frequency trading violates laws against insider trading.

Holder said he is responding to concerns being raised about whether the practice creates an uneven playing field for investors.

“The department is committed to ensuring the integrity of our financial markets, and we are determined to follow this investigation wherever the facts and the law may lead,” Holder said in testimony today at a hearing of the House Appropriations subcommittee that oversees the Justice Department.

With respect to my remarks about High Frequency Trading on April 3, Assiduous Reader PL writes in and says:

OK, I see your point. James you are like PT Barnum. But for you there is a sucker born every millisecond.

This is not strictly true. My objection to rules about spoofing and layering and all the other little tactical games that speculators play is twofold:

• They seek to protect speculators from the consequences of their own actions, and
• They are completely arbitrary

With respect to the first point – anybody who buys a stock at 20.55 simply because there’s a big bid at 20.50 is taking his chances. He is speculating and he knows he’s speculating. As a matter of public policy, there is no reason to worry over-much about the consequences that might befall speculators; speculators are of interest solely because they provide liquidity to real money players.

That big bid at 20.50 is valuable to real-money players seeking to sell – putting in a spoof order is a dangerous game and can easily blow up in the face of Mr. Clever if somebody else has a well timed pounce algorithm or otherwise hits that bid. Mr. Clever – whose actual goal is to sell a few shares at 20.55 – is now behind the eight-ball and has to sell more shares in order to break even. Mr. Clever has actually supplied liquidity to the market, which is exactly what speculators are supposed to do (although he might have to take some liquidity as he squares his books).

There will doubtless be a lot of whimpering about Granny and her purchase of 500 shares. I don’t really care much about Granny and her 500 shares, either. A stock exchange is life in the raw. If Granny wants professional management of her portfolio, she should hire a professional – last time I checked, there were still lots of them around. We do not insist that hospitals provide facilities and diagrams for amateur brain surgeons; why should we insist that stock exchanges provide a straight-forward and predictable environment for amateur stock traders? Granny’s best bet is an ETF, mutual fund or other arrangement to hire a professional to handle her investment needs.

The concern for Granny is all crocodile tears. It comes from incompetent institutional traders who simply aren’t very good at trading; who find themselves in a horrifying world where anybody – just anybody! – with a bit of capital and computer skills can eat their lunch. The controversy regarding HFT is fuelled by monopolists who are watching their monopoly erode and aren’t very happy about it.

The other point is regarding the arbitrary nature of the anti-spoofing, et cetera, rules and I will introduce that point by quoting again from the SEC press release I quoted on April 4:

“The fair and efficient functioning of the markets requires that prices of securities reflect genuine supply and demand,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office. “Traders who pervert these natural forces by engaging in layering or some other form of manipulative trading invite close scrutiny from the SEC.”

This is total bullshit and reveals that Sanjay Wadhwa doesn’t have a clue about trading strategies (he’s only a lawyer-accountant – I see no evidence that he’s ever traded a single thing in his life. He is “nurturing” though, and golly, isn’t “nurturing” better than “competent” and “knowledgeable” nowadays?).

Genuine supply and demand? Spoofing works – when it does work! – because when there’s a big order on one side of the market, many speculators will back away from it, reasoning that whoever put that order in will end up moving the market (with more confidence, you can then take the orders that didn’t back away. It was exploitation of this behaviour that got Dondero into trouble – see April 4). So, for instance, if trader M. T. Head of Bozo Corp has an order to sell 10,000 shares of XYZ, the market may well evolve as follows:

• Market before Order: 21.50-60, 10×10
• Market immediately after order: 21.50-59, 10×100
• Market shortly after order: 21.40-59, 10×100

So after this happens a few times, Mr. Head wises up a little, and only puts in an order to sell 1,000 shares intending to feed the rest of his 10,000 shares into the market as he gets filled; so the market evolves like this:

• Market before Order: 21.50-60, 10×10
• Market immediately after order: 21.50-59, 10×10
• Market shortly after order: 21.50-59, 10×10

This has a couple of overall effects – spreads have narrowed (from a dime to nine cents) and execution sizes are reduced (since the 10,000 shares will be sold in pieces). In fact, this is exactly what we have seen in the market over the last twenty years.

But, to the chagrin of Sanjay Wadhwa of the SEC, the market prices no longer reflect genuine supply and demand! Oh, the horror! There is true supply of 10,000 shares, but only 1,000 shares are being advertised! Quick, to the lamp-posts! String up the social misfit of a trader who is keeping 9,000 shares secret! He is perverting the natural forces that Sanjay Wadhwa is sworn to defend!

The situation gets even more ridiculous when we remember that iceberg orders are institutionalized and available on many exchanges: M. T. Head could well have put in an iceberg order, giving the exchange an order for 10,000 shares with instructions to show only 1,000 shares at a time … and now it is the exchange that is perverting the natural forces of supply and demand. For some odd reason, Sanjay Wadhwa doesn’t seem particularly offended by this.

He does, however, have hysterics if M. T. Head takes another step to execute his client’s order at a good price, and puts in a spoof buy for 2,000 shares at 20.51, making the complete evolution of the market like this:

• Market before Order: 21.50-60, 10×10
• Market immediately after order: 21.50-59, 10×10
• Market shortly after order: 21.50-59, 10×10
• Market after spoof: 21.51-59, 20×10 ILLEGAL, ILLEGAL ILLEGAL!!! Call the gendarmes!

Mr. Head, as mentioned, is taking a bit of chance here, because his bid for 2,000 at 21.51 could get hit, and if it is he’s got 12,000 shares to sell instead of 10,000. But that’s his problem. But maybe it will work; somebody will see the big bid at 21.51 and consider this to be a good reason to buy 1,000 at 21.59; it’s the same principle as backing off on your orders when you see a big order on the other side. If M. T. Head’s good enough at the game his winnings will exceed his losses, he’ll get more clients and take home more money, which is exactly how the system should be working. In the mean-time, we observe that the spoof order increased market depth and decreased market spread. Why is this wrong? Regrettably, as discussed on April 4, this is exactly what got Joseph Dondero into trouble.

However, a good argument can be made that allowing spoofing will actually improve the market for naïve real money. As noted above, speculative bidders will drop their bids in the face of a large offer, believing that it is a naïve seller who will eventually execute at any price he can get (and vice versa for naïve buyers, of course). Along comes Granny, with her market order to sell 100 shares and hits one of those reduced bids and gets less money than she would have had there not been a large seller in the market at that time. If, however, spoofing is allowed, then there will be less certainty regarding the future course of prices, which should result in the speculative bidders not dropping their prices so much – or perhaps not dropping them at all. So the bid-offer spread is not so adversely impacted and Granny gets a better price. Isn’t that good? There’s no evidence that I know of that this will actually be the case; but there is no evidence I know of that it doesn’t, either; it would be interesting to see a few controlled experiments, but the SEC is more interested in grandstanding.

Another example of supply-and-demand uncertainty is a case where I have a client who has 10,000 shares of XYZ and 10,000 shares of ABC, both of which are trading around $20, which – as far as I can tell – is fair value. My client asks me to raise $20,000 because he wants to buy a car. So, wishing to do the best for my client, I put in two orders:

• Sell 1,000 XYZ at 20.10, and
• Sell 1,000 ABC at 20.10

Two orders! I’m trying to do the best for my client and get him the best price possible … if I get can sell 1,000 shares at 20.10, he’ll have $100 more than if he sold them at $20.00 … maybe $100 isn’t all that much, but given the choice between $100 in my client’s pocket and $100 in somebody else’s client’s pocket, I know what I like best – and it’s my job to get best execution for my client.

I’m taking a bit of a chance: maybe both offers will get lifted, I’ll have raised too much money, and I’ll have to reinvest the excess, possibly taking a loss on that part of the transaction. Well – that’s my problem. It’s my job to take calculated risks on behalf of my clients – isn’t that what investment is all about? – and in my judgement, for this package of transactions, given market conditions and my evaluation of fair value, this is a calculated risk worth taking.

“But”, shrieks Sanjay Wadhwa, spittle dribbling from his chin, “what about the Holy Supply and Demand? You are putting offers for 2,000 shares on the market when you really only wanting to supply 1,000 shares! Evil, evil, evil! To the lamp-posts!”

So I have to explain that there’s nothing actually illegal about my actions; they happen to be on the right side of an idiotic arbitrary line.

So the result of these precious little anti-spoofing rules are:

• increased spreads
• decreased depth
• lots of arbitrary rules for traders to remember
• lots of employment for lawyers, accountants, lawyer-accountants and other box-tickers to enforce these rules
• the occasional ‘Gotcha!’ when the authorities find a technical violation and decide to enforce these rules

You don’t believe in ‘Gotcha!’? Ask David Berry about ‘Gotcha!’. He only got off because (i) He had enough money to fight the case, and (ii) There was enough at stake to make it worthwhile fighting the case. Ask Fabulous Fab about ‘Gotcha!’.

It’s a pretty screwy system, if you ask me.

Rob Carrick of the Globe wrote an article recently titled Real estate or stocks – which will make you richer?, concluding that as an investment, stocks are better, based in part on the following figures:

He also notes that:

Property taxes, furnishings, maintenance, improvements, insurance and mortgage interest all have to be factored into calculations of how much money is being made on housing.

There’s also a cost to investing, of course. But it’s much more contained and predictable than a house, where costly repairs could be needed at any time. A do-it-yourself investor might pay 0.5 per cent of the value of her account assets in fees and commissions per year, while an investor with an adviser might pay 1 to 1.5 per cent. Even if you lower stock market returns by this amount, you still get a better result than housing.

He neglected to factor in taxes, but this was addressed in the comments. I’ll also point out that national average housing price figures are suspect due to quality improvements.

In the end, I take the view that a house is not an investment. It’s a place to live. All in, if owning makes sense for you – i.e, you can afford it, you have enough stability in your life that you can settle down, that sort of thing – you should own. Then you can paint when you feel like painting. In the long run, house prices aren’t going to appreciate more than people’s salaries improve, although one might get fancy and specify that the price of a house in your price bracket will appreciate according to the improvement in salaries of the people who can afford to buy it, which is a much different thing what with income inequality and all. I have a friend who bought an entry level condo ten years ago, visions of immense riches dancing in her eyes … she’s now sold it in disgust, as it has appreciated in price by about as much as the improvement in salaries of people who buy entry level condos, which ain’t much.

The big value to a house, as far as I can tell, is that the mortgage represents forced saving. Every month you pay $1,500 on your mortgage, $1,000 of that is reducing principal and represents saving; by the time you’ve done this for 25 years, you have something worth having, especially since you’ve kept pace with inflation – however defined – on the entire value. Mind you, that might be an old-fashioned thought, nowadays, what with people taking out lines of credit … it’s even easier than selling part of your portfolio when you need some cash for something important.

DBRS confirmed BCE at Pfd-3(high):

It should be noted that BCE’s ratings are based primarily on the ratings of Bell Canada and reflect the structural subordination of debt (currently none outstanding) and its preferred share obligations relative to Bell Canada.
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In terms of financial profile, DBRS expects Bell Canada’s leverage to be appropriate for the current rating category by mid-2015, following modest debt reduction and low-single-digit growth in EBITDA. DBRS expects Bell Canada to use the majority of its free cash flow and ~$700 million of proceeds from the Astral divestitures toward spectrum auction purchases and debt reduction. As such, DBRS forecasts Bell Canada’s gross debt-to-EBITDA will stand at approximately 2.1x at the end of 2014. DBRS continues to expect the Company to reduce its gross debt-to-EBITDA ratio to below 2.0x by mid-2015. DBRS notes that failure by Bell Canada to deleverage as expected could result in a negative rating action.

It was a positive day for the Canadian preferred share market, with PerpetualDiscounts up 8bp, FixedResets winning 11bp and DeemedRetractibles gaining 5bp. Volatility was modest. Volume was low.