BNA Dividends Still Not Declared

August 19th, 2009

The recent infusion of riches doesn’t seem to have improved BAM Split’s ability to service its preferred shareholders to any great extent.

I have estimated that the ex-date of the current dividend should be tomorrow, August 20, but it has still not been declared.

The company has made something of a fetish of forgetting to declare dividends and at one point declared dividends on some, but not all, of their issues outstanding

I have sent an inquiry to the company at ir@brookfield.com. Readers may also wish to contact BAM Investments and ask why a company they control is so screwed up.

BAM Split Corp. has the following preferred issues outstanding: BNA.PR.B, BNA.PR.C & BNA.PR.D. All are tracked by HIMIPref™.

Update, 2009-8-20: The TSX is now reporting that the ex-Dividend date for the current distribution was yesterday, August 19.

Yesterday, of course, they were reporting only the last ex-Date, 2009-5-20.

Anybody who bought yesterday in expectation of receiving the current distribution has cause for complaint to the company – it won’t get you very far, mind you, but you can complain.

Update, 2009-08-21: I have received a communication from BNA claiming that the dividends were declared in May and included a dividend payable on BNA.PR.A, which has been redeemed.

I have responded seeking clarification regarding the dividend payable on the redeemed security, and asking why the TSX is reporting a declaration date of 8/18.

August 18, 2009

August 18th, 2009

Dealbreaker is a gossipy tabloid style website billing itself as a tabloid – most of the offerings are vapid commentaries on topics as diverse as Bernie Madoff’s pants and the amount of cleavage being shown by business news commentators. Every now and then, though, they come up with something good; today there is an interesting post on the Nigerian banking system.

If anything, the preferred share market rally is accellerating, with PerpetualDiscounts up 75bp today, while FixedResets were down 14bp. Volume continued high, well spread out amongst the various classes.

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 0.7720 % 1,435.8
FixedFloater 6.12 % 4.39 % 56,289 18.08 1 1.1959 % 2,509.4
Floater 3.18 % 3.20 % 136,351 19.19 2 0.7720 % 1,793.8
OpRet 4.85 % -10.33 % 136,471 0.09 15 0.2041 % 2,279.4
SplitShare 5.69 % 6.40 % 99,361 4.08 3 0.0982 % 2,039.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2041 % 2,084.3
Perpetual-Premium 5.75 % 5.42 % 74,244 2.63 4 0.2296 % 1,869.2
Perpetual-Discount 5.69 % 5.68 % 187,388 14.34 67 0.7534 % 1,805.6
FixedReset 5.48 % 3.99 % 505,945 4.15 40 -0.1361 % 2,107.8
Performance Highlights
Issue Index Change Notes
POW.PR.C Perpetual-Discount -1.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 23.69
Evaluated at bid price : 24.02
Bid-YTW : 6.11 %
BMO.PR.N FixedReset -1.39 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-27
Maturity Price : 25.00
Evaluated at bid price : 27.71
Bid-YTW : 3.90 %
SLF.PR.C Perpetual-Discount 1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.02
Evaluated at bid price : 20.02
Bid-YTW : 5.65 %
CM.PR.P Perpetual-Discount 1.01 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 22.94
Evaluated at bid price : 24.00
Bid-YTW : 5.73 %
BNS.PR.L Perpetual-Discount 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.72
Evaluated at bid price : 20.72
Bid-YTW : 5.49 %
TD.PR.P Perpetual-Discount 1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 23.56
Evaluated at bid price : 23.75
Bid-YTW : 5.57 %
W.PR.H Perpetual-Discount 1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 22.67
Evaluated at bid price : 23.50
Bid-YTW : 5.89 %
CM.PR.I Perpetual-Discount 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.78
Evaluated at bid price : 20.78
Bid-YTW : 5.71 %
TD.PR.O Perpetual-Discount 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 22.36
Evaluated at bid price : 22.51
Bid-YTW : 5.43 %
RY.PR.G Perpetual-Discount 1.12 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.70
Evaluated at bid price : 20.70
Bid-YTW : 5.47 %
BAM.PR.G FixedFloater 1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 25.00
Evaluated at bid price : 17.77
Bid-YTW : 4.39 %
SLF.PR.A Perpetual-Discount 1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.31
Evaluated at bid price : 21.31
Bid-YTW : 5.66 %
GWO.PR.I Perpetual-Discount 1.30 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.26
Evaluated at bid price : 20.26
Bid-YTW : 5.64 %
SLF.PR.F FixedReset 1.33 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-30
Maturity Price : 25.00
Evaluated at bid price : 27.49
Bid-YTW : 4.14 %
RY.PR.F Perpetual-Discount 1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.57
Evaluated at bid price : 20.57
Bid-YTW : 5.44 %
RY.PR.C Perpetual-Discount 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.13
Evaluated at bid price : 21.13
Bid-YTW : 5.47 %
BMO.PR.J Perpetual-Discount 1.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.95
Evaluated at bid price : 20.95
Bid-YTW : 5.40 %
RY.PR.A Perpetual-Discount 1.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.69
Evaluated at bid price : 20.69
Bid-YTW : 5.41 %
HSB.PR.C Perpetual-Discount 1.38 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 23.31
Evaluated at bid price : 23.52
Bid-YTW : 5.49 %
BAM.PR.N Perpetual-Discount 1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 18.21
Evaluated at bid price : 18.21
Bid-YTW : 6.64 %
PWF.PR.I Perpetual-Discount 1.44 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-05-30
Maturity Price : 25.00
Evaluated at bid price : 25.31
Bid-YTW : 5.67 %
CM.PR.D Perpetual-Discount 1.50 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 24.75
Evaluated at bid price : 25.05
Bid-YTW : 5.78 %
BAM.PR.M Perpetual-Discount 1.62 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 18.24
Evaluated at bid price : 18.24
Bid-YTW : 6.63 %
BNS.PR.K Perpetual-Discount 1.63 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.52
Evaluated at bid price : 21.83
Bid-YTW : 5.54 %
CM.PR.H Perpetual-Discount 1.72 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.27
Evaluated at bid price : 21.27
Bid-YTW : 5.70 %
BNS.PR.M Perpetual-Discount 1.85 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.88
Evaluated at bid price : 20.88
Bid-YTW : 5.44 %
CM.PR.G Perpetual-Discount 2.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 23.58
Evaluated at bid price : 23.81
Bid-YTW : 5.72 %
GWO.PR.H Perpetual-Discount 2.23 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.89
Evaluated at bid price : 22.01
Bid-YTW : 5.59 %
RY.PR.W Perpetual-Discount 2.53 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 22.54
Evaluated at bid price : 22.71
Bid-YTW : 5.41 %
GWO.PR.G Perpetual-Discount 4.09 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 23.66
Evaluated at bid price : 23.90
Bid-YTW : 5.51 %
HSB.PR.D Perpetual-Discount 4.52 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 22.93
Evaluated at bid price : 23.11
Bid-YTW : 5.48 %
Volume Highlights
Issue Index Shares
Traded
Notes
BAM.PR.O OpRet 112,125 RBC crossed 85,200 at 24.85. TD crossed 17,100 at the same price.
YTW SCENARIO
Maturity Type : Option Certainty
Maturity Date : 2013-06-30
Maturity Price : 25.00
Evaluated at bid price : 25.00
Bid-YTW : 5.23 %
BNS.PR.O Perpetual-Discount 61,200 RBC crossed 27.000 at 25.00.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 24.69
Evaluated at bid price : 24.91
Bid-YTW : 5.67 %
HSB.PR.E FixedReset 55,750 Nesbitt crossed 35,000 at 27.95.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-30
Maturity Price : 25.00
Evaluated at bid price : 27.90
Bid-YTW : 4.25 %
RY.PR.C Perpetual-Discount 42,629 National crossed 30,000 at 20.90.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 21.13
Evaluated at bid price : 21.13
Bid-YTW : 5.47 %
RY.PR.T FixedReset 34,685 TD bought 10,000 from RBC at 27.75. RBC crossed 22,200 at 27.70.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-09-23
Maturity Price : 25.00
Evaluated at bid price : 27.71
Bid-YTW : 3.91 %
CM.PR.I Perpetual-Discount 33,745 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-18
Maturity Price : 20.78
Evaluated at bid price : 20.78
Bid-YTW : 5.71 %
There were 45 other index-included issues trading in excess of 10,000 shares.

Research: Credit Spreads and Default Risk

August 18th, 2009

It is a common fallacy that Corporate bonds yield more than Governments due solely to the potential for default. Not true! There are other factors.

Look for the research link!

stocktrends.ca Recommends CPD

August 18th, 2009

Skot Kortje of StockTrends.ca has published a piece in the Globe and Mail touting CPD that, sadly, shows more of the perils of slipshod research and technical analysis (“technical analysis” is its own pejoritive) than anything else:

Although smart investors will scour for premium preferred shares with a fine-toothed comb, looking for the most secure issues with the best yield, trading the general strength of this broad group of secured securities is more easily facilitated by exchange traded funds that allow for a diversified position. In Canada, the Claymore S&P/TSX Canadian Preferred Share ETF has been trading on the Toronto Stock Exchange since the spring of 2007

As has been mentioned here before, CPD no longer reflects the broad preferred share market; it is heavily overweight in FixedResets and lower-quality retractibles. An investor might prefer this asset mix, to be sure, but the implicit claim that CPD reflects the broad group of preferred shares is simply false.

As of the close last night, CPD had a weighting of 25% in OperatingRetractibles, which doesn’t reflect any broad group of preferred shares I’ve heard of lately. Its 19% weighting in issues rate Pfd-3(high) or lower doesn’t ring any bells either.

Currently yielding 4.9 per cent, CPD …

Technically true, if we care about Current Yield – which we shouldn’t. With over 50% of the portfolio in instruments – OperatingRetractibles and FixedResets – which have a Current Yield well in excess of their Yield-to-Worst, it should be clear that today’s Current Yield is not sustainable.

Nevertheless, as the banks go, so goes CPD.

Nonsense. The correlation of preferred shares with financial common equity is pretty low – about 0.2. It rises in times of financial stress – like August 1998 and November 2009 – but the correlations of a great many asset classes rises in times of financial stress. A much more defensible statement would be ‘As the corporate bond markets go, so goes CPD’.

None of this should be taken as implying that CPD is a bad investment. It can be very useful for many investors and presents its own selection of attributes with varying degrees of desirability … none of which are discussed in the article at issue.

August 17, 2009

August 17th, 2009

Themis Trading published a white paper on High Frequency Trading (hat tip: Financial Webring Forum) that is most interesting:

This paper will explain how these traders – namely liquidity rebate traders, predatory algorithmic traders, automated market makers, and program traders – are exploiting the new market dynamics and negatively affecting real investors. We conclude with suggestions on what can be done to mitigate or reduce these effects.

The number of quote changes has exploded. The reason is high frequency traders searching for hidden liquidity. Some estimates are that these traders enter anywhere from several hundred to one million orders for every 100 trades they actually execute.

For the life of me, I was unable to find any real public policy concerns in this paper. Smart traders are making money at the expense of dumb traders, which sounds very right and proper to me. A dumb trader with algorithmic trading software … is a fast dumb trader.

A lot of the kerfuffle, I am convinced, is simply an replay of the floor-traders fight of about 20 years ago. Remember? All those floor traders who’d gotten fat and comfortable with their sinecures suddenly found out that computers had made their jobs obsolete. Nowadays, there are a lot of prop traders at dealerships (not to mention buy-side traders) who are finding out the same thing … and they’re trying to hold back the tide with whatever scare stories a credulous public will swallow.

Unfortunately, the piece was written before the controversy on flash orders (last mentioned August 5), so there is no enlightenment on this issue from that source. The Themis Trading Blog, though, has a lot of good information on HFT in general and has been added to the Blogroll.

CIT has declared that its tender offer was successful:

today announced the expiration and successful completion of its tender offer (the “Offer”) for its $1 billion of Floating Rate Senior Secured Notes due August 17, 2009 (the “Notes”). The Offer expired at 12:00 midnight, New York City time, at the end of August 14, 2009. The completion of this tender offer is another important milestone as the Company continues to make progress on the development and execution of a comprehensive restructuring plan.

As of the expiration date, 59.81% of the total Notes outstanding were validly tendered and not withdrawn, an amount in excess of the minimum condition. In accordance with the terms and conditions of the Offer, CIT will accept tendered Notes for payment on August 17, 2009, the settlement date, at a purchase price of $875 per $1,000 principal amount of Notes. CIT will pay amounts due on Notes that have matured but were neither tendered in, nor subject to the Offer in accordance with the terms of those Notes.

The preferred share market just kept on keeping on today, with PerpetualDiscounts up just over 41bp, leaving the FixedReset return of +2bp looking a little sad. Volume continued high.

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 -0.0812 % 1,424.8
FixedFloater 6.19 % 4.46 % 51,857 17.99 1 1.2104 % 2,479.8
Floater 3.20 % 3.22 % 137,005 19.14 2 -0.0812 % 1,780.0
OpRet 4.86 % -8.27 % 141,132 0.09 15 -0.0586 % 2,274.7
SplitShare 5.70 % 6.48 % 93,371 4.08 3 0.0000 % 2,037.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0586 % 2,080.0
Perpetual-Premium 5.77 % 5.57 % 72,837 2.63 4 -0.2887 % 1,864.9
Perpetual-Discount 5.73 % 5.72 % 181,706 14.25 67 0.4145 % 1,792.1
FixedReset 5.48 % 3.97 % 510,550 4.16 40 0.0202 % 2,110.7
Performance Highlights
Issue Index Change Notes
PWF.PR.I Perpetual-Discount -1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 24.65
Evaluated at bid price : 24.95
Bid-YTW : 6.06 %
ELF.PR.F Perpetual-Discount 1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 19.40
Evaluated at bid price : 19.40
Bid-YTW : 6.93 %
SLF.PR.A Perpetual-Discount 1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 21.04
Evaluated at bid price : 21.04
Bid-YTW : 5.74 %
BMO.PR.J Perpetual-Discount 1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 20.67
Evaluated at bid price : 20.67
Bid-YTW : 5.47 %
BAM.PR.G FixedFloater 1.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 25.00
Evaluated at bid price : 17.56
Bid-YTW : 4.46 %
TD.PR.O Perpetual-Discount 1.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 22.13
Evaluated at bid price : 22.26
Bid-YTW : 5.49 %
NA.PR.K Perpetual-Discount 1.41 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.15
Bid-YTW : 5.67 %
SLF.PR.E Perpetual-Discount 1.57 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 20.01
Evaluated at bid price : 20.01
Bid-YTW : 5.71 %
IAG.PR.C FixedReset 1.67 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-01-30
Maturity Price : 25.00
Evaluated at bid price : 27.38
Bid-YTW : 4.07 %
SLF.PR.B Perpetual-Discount 1.71 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 21.37
Evaluated at bid price : 21.37
Bid-YTW : 5.71 %
HSB.PR.C Perpetual-Discount 2.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 23.00
Evaluated at bid price : 23.20
Bid-YTW : 5.57 %
PWF.PR.E Perpetual-Discount 2.35 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 22.90
Evaluated at bid price : 24.00
Bid-YTW : 5.73 %
Volume Highlights
Issue Index Shares
Traded
Notes
SLF.PR.B Perpetual-Discount 53,690 Nesbitt crossed 23,000 at 21.17.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 21.37
Evaluated at bid price : 21.37
Bid-YTW : 5.71 %
MFC.PR.C Perpetual-Discount 52,553 Nesbitt crossed 28,600 at 20.15.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 20.01
Evaluated at bid price : 20.01
Bid-YTW : 5.63 %
ELF.PR.F Perpetual-Discount 51,053 Desjardins crossed 46,300 at 19.40.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2039-08-17
Maturity Price : 19.40
Evaluated at bid price : 19.40
Bid-YTW : 6.93 %
BNS.PR.P FixedReset 46,750 Nesbitt crossed 30,000 at 26.05.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-05-25
Maturity Price : 25.00
Evaluated at bid price : 25.95
Bid-YTW : 3.98 %
RY.PR.N FixedReset 34,940 Nesbitt crossed 30,000 at 27.55.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-03-26
Maturity Price : 25.00
Evaluated at bid price : 27.50
Bid-YTW : 3.86 %
GWO.PR.X OpRet 31,962 TD bought 29,000 from Nesbitt at 26.88.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2009-10-30
Maturity Price : 26.00
Evaluated at bid price : 26.65
Bid-YTW : -4.65 %
There were 50 other index-included issues trading in excess of 10,000 shares.

CBW.PR.A: DBRS Discontinues Coverage

August 17th, 2009

DBRS has announced that it:

has today discontinued its rating on the Preferred Shares issued by Copernican World Banks Split Corp. at the request of AIC Investment Services Inc. (the Promoter).

This may be related to the AIC deal with Manulife.

CBW.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-5 by DBRS. CBW.PR.A is not tracked by HIMIPref™.

New Issue: ETC FixedReset 7.25%+453

August 17th, 2009

Equitable Trust has announced:

it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. and GMP Securities L.P. (the “Underwriters”) to issue 1,440,000 Non‐Cumulative 5‐Year Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) at a price of $25.00 per share, on a bought deal basis for gross proceeds of $36 million (the “Prospectus Offering”). The Company also announced that it intends to issue on a private placement basis an additional 360,000 Series 1 Preferred Shares at a price of $25.00 per share for gross proceeds of $9 million (the “Private Placement Offering”). The sole subscriber for the Private Placement Offering will be Canadian Western Bank.

The Series 1 Preferred Shares will yield 7.25% annually, payable quarterly, as and when declared by the Board of Directors of the Company for an initial period ending September 30, 2014. Thereafter, the dividend rate will reset every five years at a level of 4.53% over the then five‐year Government of Canada bond yield. Holders of Series 1 Preferred Shares will, subject to certain conditions, have the option to convert their shares to Non‐Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”) on September 30, 2014 and on September 30 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to a floating quarterly dividend rate equal to the 90‐day Canadian Treasury Bill Rate plus 4.53%, as and when declared by the Board of Directors of the Company.

There is no word on whether the issue will be rated or not. It appears from the balance sheet that the company’s funding is over 90% GIC based, with a few bank term loans and a sub-debt issue (held by the owners?) thrown in. As they say:

The Guaranteed Investment Certificate (“GIC”)market continues to provide deep and liquid funding for Equitable Trust’s business. As such, the volatility in the credit markets has had less impact on Equitable than on many other mortgage lenders. As an approved seller under the CMB Program, Equitable Trust is also able to transact securitization activities with government-sponsored programs that continue to be available.

Without a rating, the issue will not be tracked by HIMIPref™, as was the case with RF.PR.A and CWB.PR.A, I’m not convinced that without a rating there will be much public pressure on the company to clean up its act, should its act ever need cleaning up.

Update, 2013-3-3: Trades as ETC.PR.A

Themis Trading Added to BlogRoll

August 17th, 2009

I have added the Themis Trading Blog to the blogRoll.

Themis Trading bills itself as:

a leading independent, no conflict agency brokerage firm specializing in trading Listed and OTC equities for Institutions. We specialize in helping our clients navigate the fragmented electronic universe, find liquidity and minimize market impact. By design the Themis business model has no conflicts of interest with our clientele, and we do not make markets or provide investment banking services.

They have a lot of material on High Frequency Trading in the blog and elsewhere on their website. Naturally, it’s in their interest to portray HFT as a Bad Thing that has caused the trading process to be so complicated that poor innocent portfolio managers need a little help to keep ahead of the game … but that’s no bad thing. It certainly appears that they know their stuff … although I would need to do more digging before venturing an opinion on their actual skills and the value of their services, of course.

August Edition of PrefLetter Released!

August 17th, 2009

The August, 2009, 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.

The August edition contains a relatively long appendix which discusses the analysis of FixedResets, specifically the use of scenario analysis and the spread to Canadas on reset to quantify the chance of the issue being called – and the ill effects if markets change sufficiently that it isn’t.

As previously announced, PrefLetter is now available to residents of Alberta, British Columbia and Manitoba, as well as Ontario and to entities registered with the Quebec Securities Commission.

Until further notice, the “Previous Edition” will refer to the August, 2009, issue, while the “Next Edition” will be the September, 2009, issue, scheduled to be prepared as of the close September 11 and eMailed to subscribers prior to market-opening on September 14.

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: A recent enhancement to the PrefLetter website is the Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter, being delivered to clients as a large attachment by eMail, 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. 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.

Opinion: Insurer's Risk Transformation

August 16th, 2009

Risk cannot be eliminated, only transformed at great expense. Therefore, insurers should spin off at least a portion of their hedging activity to shareholders.

Look for the opinion link!