New Issues

New Issue:ENB FixedReset, 4.40%+264

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell ten million Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on May 22, 2014.

The holders of Series 11 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding March 1, 2020. The first quarterly dividend payment date is scheduled for September 1, 2014. The dividend rate will reset on March 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.64 per cent. The Series 11 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2020 and on March 1 of every fifth year thereafter.

The holders of Series 11 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 12 (the “Series 12 Preferred Shares”), subject to certain conditions, on March 1, 2020 and on March 1 of every fifth year thereafter. The holders of Series 12 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.64 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional two million Series 11 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by Scotiabank, CIBC, RBC Capital Markets, and TD Securities.

They announced shortly afterwards:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”), the size of the offering has been increased to 20 million shares. The aggregate gross proceeds will be C$500 million. Closing of the offering is expected on May 22, 2014.

This issue is virtually identical to ENB.PF.A, a FixedReset 4.40%+266, which commenced trading March 13, 2014, with a first Exchange date of 2019-12-1. That issue closed Friday at 25.60-65 and closed today at 25.30-39 … the new price is not an indicator of expensiveness because it goes ex-dividend tomorrow.

Update, 2015-05-15: DBRS rates Pfd-2(low).

Issue Comments

DFN.PR.A To Get Bigger

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) is pleased to announce that it has filed a preliminary short form prospectus in each of the provinces of Canada with respect to an offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC, RBC Capital Markets and will also include BMO Capital Markets, TD Securities Inc., GMP Securities L.P. and Canaccord Genuity Corp.

The Class A Shares will be offered at a price of $12.00 per Class A Share to yield 10.0% on the issue price and the Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% on the issue price. The closing price on the TSX of each of the Class A Shares and Preferred Shares on May 9, 2014 was $12.17 and $10.26, respectively.

Since the Company commenced on March 16, 2004, it has exceeded its distribution objectives. The aggregate dividends paid on Class A shares have been $15.60 per share, representing 121 regular consecutive monthly distributions, plus six special distributions. The Preferred Shares have received a total of $5.31 per share for a combined total distribution of $20.91 per unit paid by the Company. All distributions have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the secondary offering will be used by the Company to invest in an actively managed portfolio of dividend yielding common shares which includes each of the 15 Canadian companies listed below:

Bank of Montreal Enbridge Inc. TELUS Corporation
The Bank of Nova Scotia Manulife Financial Corp. Thomson-Reuters Corporation
BCE Inc. National Bank of Canada The Toronto-Dominion Bank
Canadian Imperial Bank of Commerce Royal Bank of Canada TransAlta Corporation
CI Financial Corp. Sun Life Financial Inc. TransCanada Corporation

The Company’s investment objectives are:

Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of $0.04375 per Preferred Share to yield 5.25% per annum on the original issue price; and
ii. on or about December 1, 2019, to pay the holders of the Preferred Shares the original issue price of those shares.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends initially targeted to be $0.10 per Class A; and
ii. on or about December 1, 2019, to pay the holders of Class A Shares at least the original issue price of those shares.

The sales period of this overnight offering will end at 9:00 a.m. (Toronto time) on May 13, 2014.

A preliminary short form prospectus containing important information relating to the Class A and Preferred Shares has been filed with securities commissions or similar authorities in all provinces of Canada. The preliminary short form prospectus is still subject to completion or amendment. Copies of the preliminary short form prospectus may be obtained from your registered financial advisor using the contact information for such advisor, or from representatives of the underwriters listed above. There will not be any sale or any acceptance of an offer to buy the Class A or Preferred Shares until a receipt for the final short form prospectus has been issued.

Given that the fund’s April 30 Valuation was $20.52, the matched units are hardly a bargain! Flip quickly, boys!!

DFN.PR.A was last mentioned on PrefBlog when they did a secondary offering last September. DFN.PR.A is tracked by PrefBlog, but relegated to the Scraps index on credit concerns.

PrefLetter

May PrefLetter Released!

The May, 2014, 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 regular appendices reporting on DeemedRetractibles and FixedResets are included.

PrefLetter may now be purchased by all Canadian residents.

Until further notice, the “Previous Edition” will refer to the May, 2014, issue, while the “Next Edition” will be the June, 2014, issue, scheduled to be prepared as of the close June 13 and eMailed to subscribers prior to market-opening on June 16.

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.

It appears that the server problems that have bedevilled the site recently have been solved … well, perhaps, not so much ‘solved’ as ‘worked around’. If you deserve a link but did not get a link, please let me know.

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.

Issue Comments

MFC.PR.D To Be Redeemed

Manulife Financial Corporation has announced:

its intention to redeem all of its outstanding 18,000,000 Non-cumulative Rate Reset Class A Shares Series 4 (“Series 4 Preferred Shares”) for cash on June 19, 2014. The Series 4 Preferred Shares are redeemable at Manulife’s option on June 19, 2014, at a redemption price per Series 4 Preferred Share equal to C$25.00 for an aggregate total of C$450 million. Formal notice will be delivered to holders of Series 4 Preferred Shares in accordance with the terms outlined in the share provisions for the Series 4 Preferred Shares.

Separately from the redemption price, the final quarterly dividend of C$0.4125 per Series 4 Preferred Share will be paid in the usual manner on June 19, 2014 to shareholders of record on May 13, 2014. After the Series 4 Preferred Shares are redeemed, holders of Series 4 Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price.

MFC.PR.D is a FixedReset, 6.60%+456, and given the size of the Issue Reset Spread there is no surprise regarding the redemption call. The issue commenced trading 2009-3-4 after being announced 2009-2-24.

Market Action

May 9, 2014

Two stories today made me laugh about how 20th century structures are irrelevant to modern technology. The first was about taxis:

London’s taxis are planning a 10,000-cab protest next month, as professional drivers across Europe demonstrate growing opposition to Uber Technologies Inc.’s app.
…
The controversial app, which helps private drivers and professionals charge for rides, has met with protests in several markets from the taxi industry, whose drivers often pay steep fees for licenses and permits and complain that San Francisco-based Uber’s cars are given an unfair advantage.
…
Uber markets itself as a way for drivers to start their own businesses, showing profiles of top drivers on its website who include a student who used the app to make money on weekends, a single mother who started her own business and a man who quit his job to drive passengers around San Francisco. That means it can draw drivers from outside of the professional chauffeuring industry who may hold different licenses or qualifications. That’s a key difference from similar apps like Hailo, which recruit taxi drivers.

Cars in Brussels that use the app will be subject to a 10,000-euro ($13,863) fine after a local court ruled against Uber cars last month. European Commission Vice President Neelie Kroes called the ban “crazy” and anti-competitive.

In Berlin, the taxi association said that Uber hurt competition by violating rules that force limousine drivers to return to a base after delivering customers. In April, a court banned taxi services that use the app, though the injunction wasn’t enforced at the time.

Microjobs are coming. Deal with it. The second example was about guns:

Yoshitomo Imura, a 27-year-old Japanese man, has been arrested for allegedly possessing a collection of guns made with a 3D printer, according to The Japan Times.

Police say that two of the five recovered handguns are capable of firing, though no bullets were discovered at the man’s home in Kawasaki, south of Tokyo.

Imura, an employee of Shonan Institute of Technology in Fujisawa, is reported to have made the weapons using a commercial 3D printer he bought online for 60,000 yen (£349/$590) in conjunction with plans he downloaded from file-sharing sites.

Decentralized manufacturing is also coming. Deal with that, too.

Ian Lee provides us with a good reason to avoid Carleton University’s Sprott School of Business. His contribution to the so-called debate over voter ID and vouching may be summed up as:

This empirical research reveals that multiple federal and provincial government agencies are required by law to record and often monitor citizens in multiple overlapping digital identification databases – with identity cards numbering well in excess of 200 million for 18 million voters (excluding millions of monthly utility bills) – from health care cards to driver’s licenses to student ID cards to employee cards to birth certificates to passports to SIN cards to auto ownership cards to library cards to debit cards to credit cards to Aboriginal ID cards to title deeds to tenancy agreements.

His argument is that since 200-million cards have been issued – not all of which are valid identification under the current act, but never mind that – for 18-million voters, therefore every voter actually possesses valid ID. To my relief, he’s being ripped apart in the comments, showing that not all Canadians are completely incapable of formulating an actual argument.

I don’t have any opinion on voter ID, by the way. I have very little interest in the topic anyway, and when I do stumble across some reference to the so-called debate, it’s all pure garbage such as Ian Lee’s article.

Speaking of incompetent educators:

The Alberta task force noted that in 10 years, not one teacher has lost his or her job because of ineffectiveness – this, in a province that employs 35,000 full-time K-12 educators. That is a mind-boggling statistic and an indictment of both the government and the union. It’s not much different in most Canadian provinces. In British Columbia, just 16 teachers have been terminated or resigned in the past decade over incompetence-related issues. The province employs more than 30,000 K-12 teachers.

Talk to any teacher and they’ll identify at least one or two colleagues who shouldn’t be instructing kids for a living. That shouldn’t come as a great surprise. The teaching profession isn’t immune from the basic rules of the working world; 5 to 10 per cent of those making up any work force should probably be doing something else for a living. In the private sector, it’s much easier to push these people out the door and toward another direction. (And often, the departed are later happy they did.) In a unionized environment, where the mandate is frequently to protect the status quo, it’s much more difficult.

David Parkinson in the Globe comments on Canada’s bleak employment situation:

But the fact is that jobs have now declined in three of the past five months – during which time the Canadian labour market has actually lost nearly 8,000 jobs. If anything looks like a statistical outlier here, is was the big March gain, not the April fall.

Consider other disturbing details in the April report. All the job losses were concentrated in full-time positions (indeed, at 31,000, it was more than all of them, offset by a 2,000 job gain in part-time employment). The private sector shed 29,000 jobs while governments shed another 17,000; the only thing propping the job count from an even worse fate was a 17,000-job increase in self-employment, a dubious sign for job quality.

Gee, I wonder what could be driving this. Could it be idiotic energy policies?

“I doubt we’ll add any more plants in Canada,” Magna chief executive officer Don Walker told shareholders Thursday at the company’s annual meeting in Toronto.

The auto parts giant is competitive in Canada, invests about $150-million (U.S.) annually in its existing plants here and has benefited from the recent drop in the value of the Canadian dollar, Mr. Walker noted.

He is worried, however, about the level of vehicle production in Canada, rising electricity costs in Ontario and high transportation costs.

In the last Ontario election, two of the three main candidates knocked on my door personally; I told them both that nobody had my support because not one of the three parties had an electricity policy that made the slightest bit of sense at all. Looks like I’ll be saying the same thing this time ’round; actually, it may be worse because the opposition parties are blathering about a paltry $1-billion gas plant cancellation, which is basically a rounding error:

Solar energy – one of the key pillars of the Green Energy and Economy Act (GEEA) – is casting a dark cloud over Ontario electricity bills and is a big factor in recent and future bill increases. In 2013, solar projects caused electricity bills to be about $550-million higher than they would otherwise have been. For a typical homeowner, this works out to $47 per year. Ontario will have an estimated 1,100 MW of solar installed by year-end and roughly 900 MW will be added in 2014. This addition will cause 2014 electricity bills to increase by another $435-million – equal to a typical homeowner increase of $37 per year. By the end of 2014, solar will be costing Ontarians $1.25-billion per year – while generating a paltry 2% of Ontario’s total electricity requirement.

The TSX is rolling out a new system:

And as with many upgrades in trading technology, there is a debate. There is the usual grousing from Bay Street about the costs to connect to a new system, which requires testing and upgrades by users.

But the bigger question is, who will benefit?

TMX says everybody will, because the market will be faster, spreads will be tighter and speeds will be more consistent.
…
However, critics say that the real beneficiaries will be high frequency traders. That’s because some work that used to be done in the TMX trading engine will now have to be done by users.

The anonymous critics are missing a trick there. According to the Exchange:

Who will be impacted by the TMX Quantum XA upgrade? Anyone with a direct
connection to TSX, TSX Venture, or TMX Select with a certified order entry
application will be impacted and required to make changes as a result of the TMX
Quantum XA upgrade. This includes, but is not limited to:

  • Service Bureau vendors
  • Participating Organizations, Members, or Subscribers with in-house proprietary systems
  • Software providers
  • DMA customers supporting direct connections

So in other words, barriers to entry are increasing. So, in other words, a big beneficiary of the change will be the big banks. Who also own the Exchange. The changes, in total, may be good; they may be bad; as is usual in Canada, there is no informed debate either way; in large part because associate professors at business schools in Ottawa get more mileage out of spouting utter nonsense to further their political ambitions than in actually analyzing business. But there’s certainly no surprise that one division of the Big Banks is making system changes that will favour other divisions of the Big Banks.

I stumbled across a listing of nascent technologies:

7. Paper-Thin, Flexible Computers and Phones

How would you feel if your smartphone or tablet was as thin as paper and capable of exhibiting the same level of flexibility? Would feel pretty awesome, no? The future has such gadgets for you in store. As of now projects are underway to come up with smartphones and tablets, which will be fully functional yet look just like paper. Papertab was showed in CES 2013 and a collaborative effort is being made by two Canadian and American universities and the project is being called; ‘Paperphone’. Dr. Roel Vertegaal from Queens University says; ‘This is the future. Everything is going to look and feel like this within five years.

Now, this would be useful. Before I buy my first e-Book, or give up on my printed newspaper subscriptions, I want a device that will
i) allow me to read normally
ii) fit in my pocket

There’s a two year old status report available, but there’s a recent newspaper article:

The Human Media Lab is unveiling its revolutionary foldable smartphone technology “Paperfold” in Toronto today at the ACM CHI Conference on Human Factors in Computing Systems.

Queen’s professor Roel Vertegaal and student Antonio Gomes will be demonstrating the smartphone’s ability to fold open up to three flexible displays that allows extra screen space when needed. The three detachable electrophoretic displays allow the compact phone to be connected into a variety of arrangements that can mimic both a notebook computer format or a foldout map.

I’m not too enthusiastic about the 3-D remodelling; but if something like this can be produced for $500, I’m all for it!

The rally in the Canadian preferred share market paused today, with PerpetualDiscounts and DeemedRetractibles both off 6bp, while FixedResets gained 4bp. Hmmm … let’s see … down a bit after a rally … on a Friday … Profit taking! Must be profit taking! That will be $1,000, please. Volatility was muted. Volume was low.

And now it’s time for PrefLetter!

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 0.1416 % 2,456.4
FixedFloater 4.58 % 3.81 % 32,361 17.82 1 -1.8440 % 3,752.2
Floater 2.97 % 3.09 % 52,568 19.47 4 0.1416 % 2,652.2
OpRet 4.36 % -5.35 % 34,006 0.15 2 0.3794 % 2,710.2
SplitShare 4.78 % 4.06 % 66,274 4.18 5 0.1502 % 3,107.2
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.3794 % 2,478.2
Perpetual-Premium 5.50 % -11.01 % 96,991 0.09 15 0.0287 % 2,403.7
Perpetual-Discount 5.28 % 5.30 % 121,023 14.93 21 -0.0564 % 2,549.0
FixedReset 4.50 % 3.33 % 208,346 4.28 75 0.0368 % 2,573.8
Deemed-Retractible 4.97 % -6.98 % 142,717 0.13 42 -0.0631 % 2,531.2
FloatingReset 2.65 % 2.30 % 179,682 4.06 6 0.0527 % 2,496.5
Performance Highlights
Issue Index Change Notes
BAM.PR.G FixedFloater -1.84 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 21.46
Evaluated at bid price : 20.76
Bid-YTW : 3.81 %
PWF.PR.P FixedReset 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 23.55
Evaluated at bid price : 24.72
Bid-YTW : 3.30 %
MFC.PR.F FixedReset 1.97 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.21
Bid-YTW : 3.60 %
Volume Highlights
Issue Index Shares
Traded		 Notes
MFC.PR.A OpRet 229,545 RBC crossed 223,000 at 25.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.25
Evaluated at bid price : 25.55
Bid-YTW : -10.25 %
FTS.PR.G FixedReset 57,121 RBC crossed 28,200 at 25.30.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 23.27
Evaluated at bid price : 25.16
Bid-YTW : 3.68 %
ENB.PR.B FixedReset 50,975 Scotia crossed 40,000 at 25.30.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 23.46
Evaluated at bid price : 25.25
Bid-YTW : 3.92 %
BNS.PR.Z FixedReset 28,765 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.74
Bid-YTW : 3.33 %
GWO.PR.H Deemed-Retractible 23,121 TD crossed 15,000 at 24.05.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.95
Bid-YTW : 5.47 %
BAM.PF.E FixedReset 22,488 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 23.18
Evaluated at bid price : 25.20
Bid-YTW : 4.14 %
There were 20 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
GWO.PR.L Deemed-Retractible Quote: 26.05 – 26.34
Spot Rate : 0.2900
Average : 0.1878

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-12-31
Maturity Price : 25.25
Evaluated at bid price : 26.05
Bid-YTW : 4.84 %
CIU.PR.C FixedReset Quote: 21.40 – 21.98
Spot Rate : 0.5800
Average : 0.4931

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 21.40
Evaluated at bid price : 21.40
Bid-YTW : 3.59 %
CU.PR.E Perpetual-Discount Quote: 24.15 – 24.45
Spot Rate : 0.3000
Average : 0.2198

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-09
Maturity Price : 23.77
Evaluated at bid price : 24.15
Bid-YTW : 5.06 %
SLF.PR.A Deemed-Retractible Quote: 23.73 – 23.96
Spot Rate : 0.2300
Average : 0.1663

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.73
Bid-YTW : 5.47 %
MFC.PR.B Deemed-Retractible Quote: 22.96 – 23.20
Spot Rate : 0.2400
Average : 0.1792

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.96
Bid-YTW : 5.64 %
BMO.PR.M FixedReset Quote: 25.30 – 25.50
Spot Rate : 0.2000
Average : 0.1403

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-08-25
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 3.07 %
Market Action

May 8, 2014

The possibility of Saskatchewan entering the national securities regulation framework has led to calls for Nova Scotia to join the happy throng:

Nova Scotia treats its regulator as a bit of a cash cow. It takes in $15.8 million in yearly revenue and spends $2.7 million on programs. Finance Minister Diana Whalen has cited loss of this revenue, and of provincial control, as reasons for Nova Scotia not joining the voluntary initiative by Ottawa, Ontario and B.C. to set up a co-operative regulator after the courts said Ottawa could not do it alone.

These are parochial reasons to deny Nova Scotians better investor protection and to stymie creation of stronger national safeguards against system-wide risks.

We will surely have more real influence if we are early participants in this initiative. It can be designed to provide a share of fee income and appropriate regulation for local initiatives like Nova Scotia’s Community Economic Development Investment Funds. Nova Scotia should get on board and play a role in ensuring first-rate national regulation is also sensitive to local and regional needs.

But:

Andrew Preeper, a spokesman for the province’s Finance Department, said “the possibility of taking part in a co-operative regulator is being discussed and considered, but no decision has been made.” He said that Nova Scotia Finance and Treasury Board Minister Diana Whalen wants to have more talks with industry stakeholders.

Meanwhile, in Europe:

European Central Bank president Mario Draghi surprised the markets by saying the bank’s governing council is “comfortable” in launching measures next month to fight falling inflation and the rising euro, a strong signal that the ECB thinks the euro zone recovery is in jeopardy if no action is taken.

While the ECB, as expected, left the benchmark interest rate intact at a record low of 0.25 per cent, Mr. Draghi repeatedly highlighted the dangers of falling inflation and the rising euro. In his press conference, he said: “The strengthening of the exchange rate in the context of low inflation is cause for serious concern in the view of the governing council.”

But Mr. Draghi did not say which easing measures the ECB is prepared to take to tackle disinflation and the rising euro. Options include forms of quantitative easing tailored to the European markets, negative interest rates (charging banks to park funds at the ECB) or a cut that would take rates to zero. The ECB could also intervene in the foreign exchange markets to put downward pressure on the euro.

Many will be interested in the recent Economist article titled Maple, resting on laurels, but unfortunately it’s slap-dash bilge. They say, for instance:

the World Economic Forum anointed Canada’s banking system the soundest in the world

Bullshit. They obviously have not read my post What the WEF Report Really Says about Canadian Banks. They also repeat the claim…:

The latest calculations from The Economist suggest that house prices in Canada are overvalued by 76% and 31% when measured against long-term average rents and incomes respectively.

… without addressing the methodological problems discussed in How to Dissect a Housing Bubble. It’s very disappointing so see such crap spouting out of the Economist.

You want to see some layoffs? Barclays Bank can show you some layoffs:

Britain’s Barclays reined in its ambitions to be a Wall Street powerhouse on Thursday and signalled a return to its retail roots with a plan to hive off much of its investment bank and axe one in four jobs at the division.

Chief Executive Antony Jenkins, in his second strategic review in as many years, will cut 19,000 jobs in the next three years, 7,000 of them at the investment bank, and park 400 billion pounds of assets in a new “bad bank”.

Some bond ETFs are benefitting from price reductions:

The cost of owning an ETF tracking the S&P/TSX composite index has fallen from 0.27 per cent to 0.05 per cent this year, and U.S. and international fund fees have fallen significantly as well. But, with only a couple of exceptions, bond ETFs have for the most part been exempt from this price competition.

One of those exceptions is the iShares High Quality Canadian Bond Index ETF (CAB), which holds a portfolio that is 60 per cent weighted to government bonds and 40 per cent weighted to corporate bonds. All bonds in the portfolio have a credit rating of A or higher, which is where the “high quality” name for this ETF comes from. The fee for CAB has fallen to 0.12 per cent from 0.3 per cent, which makes it a low-cost leader for ETF investors. Other broad Canadian bond ETFs have fees in the 0.23 to 0.33 per cent range.

Another bond fund to benefit from fee cuts is the BMO Short Corporate Bond Index ETF (ZCS), which falls to 0.12 per cent from 0.30 per cent. The previous floor for this type of ETF had been about 0.15 per cent.

And … in one of PrefBlog’s least surprising links … Canadian banks are extending their hegemony over the financial system:

DBRS has today confirmed the Issuer Rating, Medium-Term Notes and Debentures ratings of Canadian Tire Corporation, Limited (CTC or the Company) at BBB (high), and its Commercial Paper rating at R-2 (high), all with Stable trends. This rating action follows CTC’s announcement earlier today of a far-reaching strategic partnership with Scotiabank, under which Scotiabank will acquire 20% of the equity interest in Canadian Tire’s financial services business for $500 million in cash (the Transaction).

Julie Dickson gave a self-congratulatory valedictory. She did not mention OSFI’s botching of the Life Insurance Regulatory Framework, that she has kicked down the road to her successor.

The Canadian preferred share market reignited today, with PerpetualDiscounts winning 32bp, FixedResets gaining 3bp and DeemedRetractibles up 17bp. Volatility was muted. Volume was above average.

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 -0.4229 % 2,452.9
FixedFloater 4.49 % 3.72 % 31,695 17.97 1 1.8786 % 3,822.6
Floater 2.97 % 3.09 % 53,050 19.48 4 -0.4229 % 2,648.4
OpRet 4.35 % -1.65 % 33,681 0.15 2 -0.3468 % 2,699.9
SplitShare 4.78 % 4.07 % 66,639 4.18 5 0.0000 % 3,102.6
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.3468 % 2,468.8
Perpetual-Premium 5.51 % -8.62 % 97,080 0.09 15 0.1122 % 2,403.0
Perpetual-Discount 5.28 % 5.30 % 122,690 14.93 21 0.3195 % 2,550.4
FixedReset 4.50 % 3.31 % 209,792 4.14 75 0.0297 % 2,572.8
Deemed-Retractible 4.96 % -7.23 % 137,905 0.13 42 0.1684 % 2,532.8
FloatingReset 2.67 % 2.36 % 186,427 4.06 6 -0.0066 % 2,495.2
Performance Highlights
Issue Index Change Notes
PWF.PR.A Floater -1.86 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-08
Maturity Price : 19.51
Evaluated at bid price : 19.51
Bid-YTW : 2.68 %
IAG.PR.A Deemed-Retractible 1.09 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.20
Bid-YTW : 5.59 %
BAM.PR.G FixedFloater 1.88 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-08
Maturity Price : 21.67
Evaluated at bid price : 21.15
Bid-YTW : 3.72 %
Volume Highlights
Issue Index Shares
Traded		 Notes
PWF.PR.P FixedReset 105,900 TD crossed three blocks: 45,000 shares, 35,000 and 10,000, all at 24.50.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-08
Maturity Price : 23.44
Evaluated at bid price : 24.47
Bid-YTW : 3.35 %
TD.PR.R Deemed-Retractible 104,604 RBC crossed blocks of 71,600 and 25,000, both at 26.69.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-07
Maturity Price : 25.75
Evaluated at bid price : 26.65
Bid-YTW : -32.07 %
ENB.PR.B FixedReset 69,747 Scotia crossed 60,000 at 25.30.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.32
Bid-YTW : 3.83 %
BMO.PR.Q FixedReset 53,815 TD crossed 12,800 and 25,000, both at 25.05.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 25.06
Bid-YTW : 3.08 %
RY.PR.X FixedReset 49,291 RBC crossed 17,300 and 20,800, both at 25.30.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-08-24
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 1.25 %
IFC.PR.A FixedReset 47,385 RBC crossed 39,600 at 24.85.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.81
Bid-YTW : 3.82 %
There were 40 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
PWF.PR.A Floater Quote: 19.51 – 19.99
Spot Rate : 0.4800
Average : 0.3372

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-08
Maturity Price : 19.51
Evaluated at bid price : 19.51
Bid-YTW : 2.68 %
CIU.PR.C FixedReset Quote: 21.46 – 21.96
Spot Rate : 0.5000
Average : 0.3977

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-08
Maturity Price : 21.46
Evaluated at bid price : 21.46
Bid-YTW : 3.59 %
SLF.PR.B Deemed-Retractible Quote: 23.96 – 24.19
Spot Rate : 0.2300
Average : 0.1474

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.96
Bid-YTW : 5.41 %
CGI.PR.D SplitShare Quote: 25.01 – 25.25
Spot Rate : 0.2400
Average : 0.1623

YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2023-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.01
Bid-YTW : 3.84 %
BNA.PR.E SplitShare Quote: 25.87 – 26.16
Spot Rate : 0.2900
Average : 0.2211

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2017-12-10
Maturity Price : 25.00
Evaluated at bid price : 25.87
Bid-YTW : 4.07 %
MFC.PR.B Deemed-Retractible Quote: 23.30 – 23.47
Spot Rate : 0.1700
Average : 0.1126

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.30
Bid-YTW : 5.61 %
Issue Comments

SLF.PR.F To Be Redeemed

Sun Life Financial Inc. has announced:

its intention to redeem all of its $250,000,000 Class A Non-Cumulative 5-Year Rate Reset Preferred Shares Series 6R (the “Series 6R Shares”) on June 30, 2014.

The Series 6R Shares are redeemable at Sun Life Financial Inc.’s option on June 30, 2014 (the “Redemption Date”) at a redemption price of $25.00 per share, together with all declared and unpaid dividends on such share to but excluding the Redemption Date. Notice will be delivered to the holders of the Series 6R Shares in accordance with the terms governing the Series 6R Shares.

Separately from the payment of the redemption price, the final quarterly dividend of $0.375 per share for the Series 6R Shares will be paid in the usual manner on June 30, 2014, to shareholders of record on May 28, 2014.

This comes as no surprise, since SLF.PR.F is a 6.00%+379 FixedReset that commenced trading 2009-5-20 after being announced 2009-5-8.

Market Action

May 7, 2014

We can hope that Saskatchewan’s flirtation with the national securities regulator gets consummated:

The federal government is close to signing up a third province for its voluntary national securities regulator, with Saskatchewan’s government now “optimistic” that it can reach an agreement to join Ontario and British Columbia.
…
And now, Saskatchewan is poised to become the next province, giving needed momentum to the project by adding a province that had long held a neutral stance regarding the idea.

“We are still working on it, and believe we will come to an agreement,” Saskatchewan government spokeswoman Kathy Young said in response to questions, adding, “we are certainly optimistic.”

The Canadian preferred share market kept the rally going – barely! – today, with PerpetualDiscounts gaining 1bp, FixedResets up 8bp and DeemedRetractibles flat. Floaters did very well, dominating the good part of the Performance Highlights table. Volume was slightly above average.

PerpetualDiscounts now yield 5.32%, equivalent to 6.92% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.4% (maybe just a smidgen over) so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 250bp, a slight (and perhaps spurious) widening from the 245bp reported April 30.

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 1.9546 % 2,463.3
FixedFloater 4.58 % 3.81 % 30,411 17.83 1 0.2899 % 3,752.2
Floater 2.96 % 3.08 % 53,642 19.49 4 1.9546 % 2,659.7
OpRet 4.34 % -2.89 % 34,055 0.15 2 0.2124 % 2,709.3
SplitShare 4.78 % 4.35 % 67,715 4.18 5 0.2060 % 3,102.6
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2124 % 2,477.4
Perpetual-Premium 5.51 % -10.92 % 96,426 0.09 15 -0.0261 % 2,400.3
Perpetual-Discount 5.30 % 5.32 % 124,133 14.91 21 0.0091 % 2,542.3
FixedReset 4.50 % 3.39 % 210,763 4.14 75 0.0819 % 2,572.1
Deemed-Retractible 4.97 % -6.00 % 139,428 0.13 42 0.0028 % 2,528.6
FloatingReset 2.67 % 2.34 % 146,838 4.20 6 -0.0724 % 2,495.4
Performance Highlights
Issue Index Change Notes
FTS.PR.F Perpetual-Discount -1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 23.72
Evaluated at bid price : 24.00
Bid-YTW : 5.18 %
BAM.PR.Z FixedReset -1.20 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.32
Bid-YTW : 3.41 %
ELF.PR.G Perpetual-Discount 1.24 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 21.66
Evaluated at bid price : 22.05
Bid-YTW : 5.42 %
BAM.PR.X FixedReset 1.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 22.30
Evaluated at bid price : 22.81
Bid-YTW : 3.98 %
BAM.PR.B Floater 2.29 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 16.98
Evaluated at bid price : 16.98
Bid-YTW : 3.11 %
BAM.PR.K Floater 2.29 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 16.94
Evaluated at bid price : 16.94
Bid-YTW : 3.12 %
BAM.PR.C Floater 2.82 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 17.14
Evaluated at bid price : 17.14
Bid-YTW : 3.08 %
Volume Highlights
Issue Index Shares
Traded		 Notes
TD.PR.Q Deemed-Retractible 204,990 Scotia crossed three blocks;; 35,000 shares, 100,000 and 68,800, all at 26.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-06
Maturity Price : 25.75
Evaluated at bid price : 26.51
Bid-YTW : -26.76 %
HSE.PR.A FixedReset 131,570 Nesbitt crossed 25,000 and 100,000, both at 23.50.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-07
Maturity Price : 23.09
Evaluated at bid price : 23.45
Bid-YTW : 3.71 %
ENB.PR.B FixedReset 101,434 Scotia crossed 25,300 and 60,000, both at 25.30.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.33
Bid-YTW : 3.81 %
NA.PR.L Deemed-Retractible 101,099 TD crossed 50,000 at 25.35; Nesbitt crossed 42,700 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.35
Bid-YTW : -9.32 %
RY.PR.A Deemed-Retractible 85,308 TD crossed 83,100 at 25.80.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-23
Maturity Price : 25.25
Evaluated at bid price : 25.72
Bid-YTW : -11.20 %
BNS.PR.B FloatingReset 82,200 Nesbitt crossed 80,000 at 25.25.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-10-25
Maturity Price : 25.00
Evaluated at bid price : 25.21
Bid-YTW : 2.33 %
There were 39 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BAM.PF.A FixedReset Quote: 26.17 – 27.00
Spot Rate : 0.8300
Average : 0.4668

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-09-30
Maturity Price : 25.00
Evaluated at bid price : 26.17
Bid-YTW : 3.47 %
MFC.PR.K FixedReset Quote: 25.34 – 26.16
Spot Rate : 0.8200
Average : 0.4623

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-09-19
Maturity Price : 25.00
Evaluated at bid price : 25.34
Bid-YTW : 3.60 %
IFC.PR.A FixedReset Quote: 24.59 – 24.98
Spot Rate : 0.3900
Average : 0.2360

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.59
Bid-YTW : 3.92 %
RY.PR.I FixedReset Quote: 25.86 – 26.23
Spot Rate : 0.3700
Average : 0.2430

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-02-24
Maturity Price : 25.00
Evaluated at bid price : 25.86
Bid-YTW : 2.72 %
MFC.PR.F FixedReset Quote: 24.01 – 24.34
Spot Rate : 0.3300
Average : 0.2174

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.01
Bid-YTW : 3.83 %
BNA.PR.E SplitShare Quote: 25.63 – 25.88
Spot Rate : 0.2500
Average : 0.1456

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2017-12-10
Maturity Price : 25.00
Evaluated at bid price : 25.63
Bid-YTW : 4.35 %
Market Action

May 6, 2014

The scheduled European hyperinflation has been postponed:

Lower inflation forecasts from the European Commission will put more pressure on the European Central Bank to launch measures to prevent falling prices from destabilizing the weak economic revival.

The EC, the executive arm of the 28-country European Union, predicted on Monday morning that euro zone’s inflation rate will land at 0.8 per cent this year and 1.2 per cent next year. Both figures are well below the ECB’s target rate of close to 2 per cent Less than three months ago, the EC had forecast inflation this year at 1 per cent, and at 1.5 per cent next year. The downward revisions came as more evidence emerged that the euro zone’s deflationary pressures are still fully intact, in spite of rock-bottom interest rates, the end of the euro zone’s recession and slightly lower jobless figures.

So there’s one reason to be bond-bullish. But it takes two to make a market!

Junk-bond investors are accepting yields that are 0.74 percentage point lower than the earnings yield on the Standard & Poor’s 500 index, a measure of profit as a percentage of equity prices.

Historically, debt rated below investment grade has yielded an average 4.2 percentage points more than stocks since March 1995. That relationship has been turned on its head.

Could be a little ‘reaching for yield’ is going on. That always ends in tears.

Meanwhile the feds continue to micro-manage the Canadian economy:

The Conservative government’s bid to ease a multibillion-dollar backlog of Prairie grain is one step closer to becoming law, despite ongoing questions about its details and complaints by Canada’s two major railways.

Bill C-30 was tabled March 26 in an urgent bid to force railways to ship more grain after a bumper crop, and passed third reading in the House of Commons on Monday. That came after a weeks-long delay caused by a complaint over a government error, whereby a committee went too far in altering the bill by adding an amendment the Speaker ruled was out of bounds.

Bill C-30 is aimed at easing a backlog by expanding government power to set minimum shipping levels for railways. It also expands grain sellers’ power to choose a different railway – many had just one choice – and creates a new process for the Canadian Transportation Agency (CTA) to force a railway that fails to hold up its end of a deal to repay certain costs to grain shippers.

I was a little puzzled by the “many had just one choice” part. Apparently:

In most cases, shippers’ grain elevators have nearby access to only one of the two major Canadian railways. And by law, they may not transfer grain to the other railroad unless the elevator is within 30 kilometres of them. Yes, that’s anti-competitive. The bill would raise that limit to 160 km, giving more choice to growers and shippers.

The origins of these regulations on “interswitching” go back to 1904. It’s a relic of the long history of heavy-handed government power over grain and railroads, which included fixed freight rates.

Sounds like a pretty crazy law to me. To at least some extent it’s just another form of protectionism:

“A 160 km interchange limit would open up the southern portion of CNR and CP’s network to competition from U.S. carriers, especially BNSF,” [RBC Capital Markets analyst Walter] Spracklin said in a note to clients.
…
Mr. Spracklin noted that unlike market share shifts between Canadian railways that might also result from the interswitching rule changes, the market share losses to U.S. competitors would be more permanent because there are no reciprocal interchange provisions in the U.S.

“Accordingly, cargo losses to U.S. carriers would disappear from the Canadian supply chain altogether weakening all stakeholders’ positions (ports, trucks, etc),” Mr. Spracklin said.

But he said market share losses are not the only issue that might result from the new rules. They also threaten to raise costs for Canadian railways by introducing added complexity to their networks and may require extra infrastructure to be added.

The carriers hate the change:

CN said amended interswitching rules would allow U.S. railroads to poach Canadian rail traffic, erode the rate structure and economic viability of Canadian railways and drive traffic to U.S. ports, thus reducing traffic and employment at Canadian ports.


In a March 28 news release, Canadian Pacific Railway said it was disappointed with Ottawa’s decision to introduce legislation that does nothing to improve grain movement but has the potential to cause “great damage” to the Canadian rail transportation system.


“CP … believes that the expansion of regulated interswitching could seriously impact Canada’s competitiveness, as it effectively transfers traffic that normally would move over Canadian railways and ports to U.S. railroads and ports,” it said.


“Interswitching will also lead to double handling of grain shipments, which will slow down the grain supply chain, negatively impacting transit times.”


Federal officials say there are 18 interswitch locations on the Canadian Prairies.


Only 14 primary elevators in Western Canada are affected by interswitching under the current 30 km provisions.


Increasing the interswitch distance to 160 km would give 150 elevators potential access to service by more than one railway, including U.S. railways.

I’m prepared to listen, but it seems to me that in situations in which ‘natural monopoly’ conditions exist – such as railways, telecommunications and pipelines – interswitching should be mandatory, but at premium rates (so that, for instance, somebody who built a network and rented it out in toto could make a very good profit on the deal).

Of course, such mandatory carriage has its detractors:

While economic theory suggests that more competition always benefits the consumer, that may not be true in Canada’s telecom industry, where concentration in the hands of BCE, Rogers and Telus is good for customers, argue authors Martin Masse and Paul Beaudry in a 60-page report released Tuesday.

“It may be preferable for financial resources … to be concentrated in the hands of a few strong players willing to invest in new technologies and services rather than scattered among several small and feeble competitors trying to survive by selling at prices barely above marginal costs,” the report said.
…
The government, it added, has “lost sight of the ultimate goal of promoting the development of a dynamic, efficient industry.”

For example, Ottawa should drop all remaining foreign ownership restrictions, including in broadcasting, as well as allow the transfer of existing wireless spectrum licenses, the authors said. Even the threat that a major foreign player entering Canada would lead to better service, Mr. Masse said.

The government should also “gradually abandon” so-called mandatory access policies, which allow new entrants to piggy-back on the networks of established players at favourable rates.

I’m all in favour of dropping all remaining foreign ownership restrictions!

It was another (slightly!) positive day for the Canadian preferred share market, with PerpetualDiscounts gaining 2bp, FixedResets winning 11bp and DeemedRetractibles up 3bp. The Performance Highlights table is lengthy again, with a few losses indicating that some of the recent gains are considered to be out of whack; FixedResets dominated the winners. Volume was quite 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 0.2449 % 2,416.1
FixedFloater 4.59 % 3.82 % 30,666 17.81 1 0.7299 % 3,741.3
Floater 3.02 % 3.17 % 53,500 19.28 4 0.2449 % 2,608.7
OpRet 4.34 % -2.09 % 33,697 0.15 2 0.0580 % 2,703.6
SplitShare 4.79 % 4.38 % 62,701 4.18 5 -0.0158 % 3,096.2
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0580 % 2,472.2
Perpetual-Premium 5.51 % -9.60 % 97,017 0.09 15 0.0914 % 2,401.0
Perpetual-Discount 5.29 % 5.34 % 119,890 14.93 21 0.0222 % 2,542.0
FixedReset 4.50 % 3.32 % 210,334 4.14 75 0.1130 % 2,570.0
Deemed-Retractible 4.97 % -5.69 % 138,328 0.14 42 0.0293 % 2,528.5
FloatingReset 2.67 % 2.30 % 135,928 4.21 6 0.0066 % 2,497.2
Performance Highlights
Issue Index Change Notes
TRP.PR.A FixedReset -1.44 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-06
Maturity Price : 23.33
Evaluated at bid price : 24.01
Bid-YTW : 3.72 %
PWF.PR.P FixedReset -1.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-06
Maturity Price : 23.98
Evaluated at bid price : 24.31
Bid-YTW : 3.43 %
FTS.PR.F Perpetual-Discount -1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-06
Maturity Price : 24.01
Evaluated at bid price : 24.31
Bid-YTW : 5.11 %
CU.PR.E Perpetual-Discount 1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-06
Maturity Price : 24.40
Evaluated at bid price : 24.81
Bid-YTW : 5.00 %
BAM.PR.Z FixedReset 1.45 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.64
Bid-YTW : 3.04 %
GWO.PR.N FixedReset 1.46 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.59
Bid-YTW : 3.75 %
SLF.PR.G FixedReset 1.54 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.71
Bid-YTW : 3.84 %
BAM.PR.X FixedReset 1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-06
Maturity Price : 22.04
Evaluated at bid price : 22.42
Bid-YTW : 4.06 %
Volume Highlights
Issue Index Shares
Traded		 Notes
SLF.PR.F FixedReset 450,280 TD crossed two blocks of 225,000 each, both at 25.34.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-30
Maturity Price : 25.00
Evaluated at bid price : 25.33
Bid-YTW : 1.04 %
BNS.PR.P FixedReset 118,819 RBC crossed 113,700 at 25.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-04-25
Maturity Price : 25.00
Evaluated at bid price : 25.50
Bid-YTW : 2.84 %
MFC.PR.A OpRet 111,793 RBC crossed 107,200 at 25.90.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.25
Evaluated at bid price : 25.80
Bid-YTW : -9.22 %
BNS.PR.Z FixedReset 100,461 Scotia bought 20,100 from RBC at 24.75 and crossed 10,800 at 24.80.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.76
Bid-YTW : 3.32 %
MFC.PR.D FixedReset 91,954 RBC crossed 78,000 at 25.40.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-19
Maturity Price : 25.00
Evaluated at bid price : 25.41
Bid-YTW : 0.18 %
ENB.PR.B FixedReset 62,798 TD crossed 50,000 at 25.32.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.32
Bid-YTW : 3.82 %
There were 50 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
MFC.PR.I FixedReset Quote: 26.31 – 26.75
Spot Rate : 0.4400
Average : 0.2482

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-09-19
Maturity Price : 25.00
Evaluated at bid price : 26.31
Bid-YTW : 2.95 %
PWF.PR.G Perpetual-Premium Quote: 25.50 – 25.94
Spot Rate : 0.4400
Average : 0.2529

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-05
Maturity Price : 25.00
Evaluated at bid price : 25.50
Bid-YTW : -16.34 %
MFC.PR.J FixedReset Quote: 25.98 – 26.43
Spot Rate : 0.4500
Average : 0.2844

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-03-19
Maturity Price : 25.00
Evaluated at bid price : 25.98
Bid-YTW : 3.07 %
IFC.PR.C FixedReset Quote: 26.06 – 26.43
Spot Rate : 0.3700
Average : 0.2419

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 26.06
Bid-YTW : 2.56 %
TD.PR.Q Deemed-Retractible Quote: 26.50 – 26.84
Spot Rate : 0.3400
Average : 0.2316

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-05
Maturity Price : 25.75
Evaluated at bid price : 26.50
Bid-YTW : -26.52 %
RY.PR.A Deemed-Retractible Quote: 25.75 – 26.03
Spot Rate : 0.2800
Average : 0.1874

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-23
Maturity Price : 25.25
Evaluated at bid price : 25.75
Bid-YTW : -11.81 %
Market Action

May 5, 2014

Interesting cat-fight in CRA-land:

Standard & Poor’s underestimated the risk of mortgage-backed securities it had planned to rate before the deal was postponed, according to competitor Fitch Ratings.

S&P’s preliminary rankings, which were pulled yesterday after the issuer said it would delay the sale, relied on optimistic home values, Fitch said today in a report. S&P said in a statement yesterday it had asked for more information from issuer Bayview Asset Management LLC after releasing the planned grades as the deal started to be marketed.

Based on the property-price estimates of realty brokers instead of the computer models relied on by S&P, Fitch said the loans exceed current home values by more than 45 percent. That would increase projections for defaults by about 20 percent and the size of losses after foreclosures by 30 percent, Fitch said in its statement.

The $184.9 million transaction, called Bayview Opportunity Master Fund IIIa Trust 2014-9RPL, would be the first sale since the financial crisis of publicly rated securities backed by once-delinquent mortgages, according to Fitch. Similar deals without credit grades have been completed as recently as July 2013, GlobalCapital reported April 28 on its website.

Ed Sweeney, a spokesman for S&P, declined to comment. S&P said in a statement yesterday that Bayview sought to delay the sale after the ratings company requested more information about property valuations and loss severities.

Supply and demand? Schmupply and Schmemand! The best way to lower long term interest rates is to change the rules:

In a world awash with U.S. government bonds, buyers of the longest-term Treasuries are facing a potential shortage of supply.

Excluding those held by the Federal Reserve, Treasuries due in 10 years or more account for just 5 percent of the $12.1 trillion market for U.S. debt. New rules designed to plug shortfalls at pension funds may now triple their purchases of longer-dated Treasuries, creating $300 billion in extra demand over the next two years that would equal almost half the $642 billion outstanding, Bank of Nova Scotia estimates.

Fewer available bonds, along with a lack of inflation and increased foreign buying, help to explain why longer-term Treasuries are surging this year even as the Fed pares its own bond purchases. The demand has pushed down yields on 30-year government debt by more than a half-percentage point to 3.37 percent, the most since 2000, data compiled by Bloomberg show.
…
Pensions that closed deficits are pouring into Treasuries and exiting stocks to reduce volatility after a provision in the Budget Act of 2013 raised the amount underfunded plans are required to pay in insurance premiums over the next two years. It also imposed stiffer fees on those with shortfalls.

In the next 12 months alone, buying from private pensions will create $150 billion in demand for longer-maturity Treasuries, based on Bank of Nova Scotia’s estimates. That compares with the $40 billion in all maturities of U.S. government debt that the plans bought last year.

There’s a little good news out of CMHC:

The Canada Mortgage and Housing Agency said on Monday that it expects the amount of insurance in force to continue to decline in 2014 to $545-billion, down 2.2 per cent from $557-billion in 2013 and 3.9 per cent from a high of $567-billion in 2011, at the height of the post-recession housing expansion.
…
CMHC senior vice-president Steven Mennill said the decline was part of a normal repayment pattern and comes as the agency trims the value of new insurance it is prepared to write on the mortgages Canada’s lenders – mostly the nation’s biggest banks – offer to home buyers trying to get into the booming market.

“One of the factors that is important in this is we have reduced the total amount of portfolio insurance that we are prepared to underwrite in any given year – the insurance provided to lenders on a post-facto basis for portfolio, low-ratio loans – from $11-billion to $9-billion, in 2014,” Mennill told reporters on a conference call.

It’s not much of a cut, but it’s a start.

One of the great tensions in regulation right now is the role of underwriters in IPOs. Are they there so they can get a good deal for their beloved clients? Or are they just thinking – When then ducks quack, feed them?:

Wall Street is in business to make money; when investors want to buy something (such as an initial public offering), that something is offered for sale. It doesn’t make any difference if Wall Street knows in its heart of hearts that that something (such as an IPO) is overpriced.

“When the ducks quack, feed them” is a Wall Street proverb cited in print from at least 1991. The adage became especially popular with internet IPOs in the 1990s.

I hadn’t heard that one before, but the principle should be obvious – but, of course, some don’t get it.

Along those lines, Barry Richoltz of Bloomberg argues for a Treasury Fifty:

4. The U.S. now funds long-term obligations with shorter-term financing. If we learned anything during the credit crisis, this is a recipe for disaster. Bringing the length of financing into closer alignment with our obligations simply is good financial stewardship.

5. The private sector is showing the way: Fixed-income investors have been lining up to purchase 30-year bonds from Bank of America, Apple, IBM, General Electric, Wal-Mart, Novartis, Pemex and others. Financial firms such as Morgan Stanley and JPMorgan Chase have been issuing perpetual notes with a fixed rate for 10 years, which then become Libor-plus bonds.

I’m pleased to see that a milestone has been reached on solar-powered fuel production:

Several notable research organizations from academia through to industry (ETH Zürich, Bauhaus Luftfahrt, Deutsches Zentrum für Luft- und Raumfahrt (DLR), ARTTIC and Shell Global Solutions) have explored a thermochemical pathway driven by concentrated solar energy. A new solar reactor technology has been pioneered to produce liquid hydrocarbon fuels suitable for more sustainable transportation.

“Increasing environmental and supply security issues are leading the aviation sector to seek alternative fuels which can be used interchangeably with today’s jet fuel, so-called drop-in solutions”, states Dr. Andreas Sizmann, the project coordinator at Bauhaus Luftfahrt. “With this first-ever proof-of-concept for ‘solar’ kerosene, the SOLAR-JET project has made a major step towards truly sustainable fuels with virtually unlimited feedstocks in the future.

The SOLAR-JET project demonstrated an innovative process technology using concentrated sunlight to convert carbon dioxide and water to a so-called synthesis gas (syngas). This is accomplished by means of a redox cycle with metal-oxide based materials at high temperatures. The syngas, a mixture of hydrogen and carbon monoxide, is finally converted into kerosene by using commercial Fischer-Tropsch technology.

I’m a bit surprised that it’s thermochemical / catalytic instead of bio-engineering / enzymatic, but hey – a step forward is a step forward!

Atlantic Power Preferred Equity preferreds (AZP.PR.A and AZP.PR.B) have had a little zip in them since Friday noon, due to a report that they have hired advisors:

  • Atlantic Power (AT) spiked to a 9.5% gain this afternoon after SparkSpread reported the power producer has hired advisers to explore a potential merger or sale.
  • Atlantic Power reportedly tapped Goldman Sachs and Greenhill to help it consider whether a sale or merger makes sense and can be negotiated.

Today the company commented:

Atlantic Power Corporation (TSX: ATP; NYSE: AT) (the “Company” or “Atlantic Power”) owns and operates a diverse fleet of power generation assets in the United States and Canada. As previously disclosed, the Company continues to focus on how to best position itself to maximize value for its shareholders. In that framework, the Company is considering the relative merits of additional debt reduction, investment in accretive growth opportunities (both internal and external), and other allocation of its available cash. Consistent with the objective of acting in the best interests of the Company, its shareholders and its other stakeholders, the Company, as also previously disclosed, is committed to evaluating a broad range of potential options. These potential options include further selected asset sales or joint ventures to raise additional capital for growth or potential debt reduction, the acquisition of assets, including in exchange for shares, the dividend level, as well as broader strategic options, including a sale or merger of the Company. The Company has engaged Goldman, Sachs & Co. and Greenhill & Co., LLC to assist the Company in its evaluation of these potential options. No assurance can be given as to how the evaluation of any such potential options may evolve. The Company does not intend to comment further on its evaluation of potential options until it otherwise deems further disclosure is appropriate or required.

Well … any of these potential options will almost certainly improve the credit quality of the preferreds, currently rated Pfd-5(high), Trend Negative by DBRS.

Innergex Renewable Energy Inc., pwoud issuer of INE.PR.A and INE.PR.C, has been confirmed at Pfd-4(high) [Stable] by DBRS:

Innergex’s financial risk profile remains weak and is reflective of a B rating range. While Innergex’s EBITDA and operating cash flow continued to increase due to sustained organic growth, DBRS remains concerned about Innergex’s aggressive financing strategy for its development pipeline, combined with the Company’s high dividend payout. As the Company continued to pursue its growth plans, the Company’s deconsolidated leverage increased to 30.5% as of December 31, 2013, from 24.5% as of December 31, 2010. Furthermore, consolidated leverage increased to 68.3% as of December 31, 2013 (from 56.7% as of December 31, 2010), and could exceed 70% over the next several years, further pressuring the balance sheet. Should the Company’s financial profile deteriorate further, this could result in negative rating action.

It was a superb day (again! But they were a long time coming!) for the Canadian preferred share market, with PerpetualDiscounts winning 35bp, FixedResets gaining 13bp and DeemedRetractibles up 30bp. A lengthy list of winners – dominated, strangely enough, by FixedResets – was marred by only one loser. Volume was average.

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 0.2745 % 2,410.2
FixedFloater 4.62 % 3.86 % 30,458 17.75 1 -0.0972 % 3,714.2
Floater 3.03 % 3.17 % 53,215 19.27 4 0.2745 % 2,602.3
OpRet 4.35 % -2.30 % 33,359 0.16 2 0.0773 % 2,702.0
SplitShare 4.79 % 4.38 % 63,496 4.19 5 -0.0396 % 3,096.7
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0773 % 2,470.7
Perpetual-Premium 5.52 % -6.83 % 98,240 0.09 15 0.1726 % 2,398.8
Perpetual-Discount 5.29 % 5.29 % 119,463 14.93 21 0.3483 % 2,541.5
FixedReset 4.50 % 3.39 % 212,676 4.14 75 0.1275 % 2,567.1
Deemed-Retractible 4.97 % -3.83 % 139,024 0.14 42 0.3048 % 2,527.7
FloatingReset 2.67 % 2.31 % 193,812 4.07 6 0.0857 % 2,497.0
Performance Highlights
Issue Index Change Notes
SLF.PR.H FixedReset -1.46 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.60
Bid-YTW : 3.03 %
PWF.PR.A Floater 1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 19.70
Evaluated at bid price : 19.70
Bid-YTW : 2.66 %
TRP.PR.A FixedReset 1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 23.73
Evaluated at bid price : 24.36
Bid-YTW : 3.67 %
SLF.PR.B Deemed-Retractible 1.05 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.95
Bid-YTW : 5.41 %
BAM.PR.T FixedReset 1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 23.49
Evaluated at bid price : 25.29
Bid-YTW : 3.90 %
POW.PR.B Perpetual-Discount 1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 24.64
Evaluated at bid price : 24.89
Bid-YTW : 5.42 %
BMO.PR.M FixedReset 1.14 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-08-25
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 2.57 %
MFC.PR.C Deemed-Retractible 1.15 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.83
Bid-YTW : 5.69 %
CU.PR.D Perpetual-Discount 1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 24.29
Evaluated at bid price : 24.70
Bid-YTW : 5.02 %
ENB.PR.Y FixedReset 1.27 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 23.08
Evaluated at bid price : 24.81
Bid-YTW : 3.98 %
GWO.PR.P Deemed-Retractible 1.30 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2020-03-31
Maturity Price : 25.25
Evaluated at bid price : 25.70
Bid-YTW : 5.12 %
GWO.PR.N FixedReset 1.31 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.25
Bid-YTW : 3.91 %
W.PR.J Perpetual-Discount 1.33 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-04
Maturity Price : 25.00
Evaluated at bid price : 25.17
Bid-YTW : 1.05 %
SLF.PR.A Deemed-Retractible 1.49 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.80
Bid-YTW : 5.43 %
FTS.PR.H FixedReset 1.61 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 21.66
Evaluated at bid price : 22.08
Bid-YTW : 3.59 %
MFC.PR.F FixedReset 1.70 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.95
Bid-YTW : 3.85 %
TRP.PR.C FixedReset 1.80 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 22.82
Evaluated at bid price : 23.20
Bid-YTW : 3.52 %
Volume Highlights
Issue Index Shares
Traded		 Notes
FTS.PR.H FixedReset 116,368 RBC bought three blocks form ITG Canada Corp (who?); two of 10,000 each and one of 13,700, all at 22.00; then crossed 50,000 at the same price.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 21.66
Evaluated at bid price : 22.08
Bid-YTW : 3.59 %
BMO.PR.S FixedReset 100,001 Recent new issue.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-05-25
Maturity Price : 25.00
Evaluated at bid price : 25.67
Bid-YTW : 3.46 %
BNS.PR.Z FixedReset 73,857 YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.71
Bid-YTW : 3.35 %
POW.PR.D Perpetual-Discount 62,285 Scotia crossed blocks of 24,000 and 30,000, both at 23.80.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 23.50
Evaluated at bid price : 23.80
Bid-YTW : 5.29 %
BMO.PR.R FloatingReset 59,454 Nesbitt crossed 53,000 at 25.12.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-08-25
Maturity Price : 25.00
Evaluated at bid price : 25.12
Bid-YTW : 2.30 %
SLF.PR.I FixedReset 53,105 RBC crossed 50,000 at 26.35.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.32
Bid-YTW : 2.35 %
There were 32 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
TD.PR.Y FixedReset Quote: 25.54 – 25.95
Spot Rate : 0.4100
Average : 0.2355

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-10-31
Maturity Price : 25.00
Evaluated at bid price : 25.54
Bid-YTW : 3.07 %
TRP.PR.B FixedReset Quote: 21.00 – 21.30
Spot Rate : 0.3000
Average : 0.1871

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 21.00
Evaluated at bid price : 21.00
Bid-YTW : 3.58 %
CU.PR.C FixedReset Quote: 26.22 – 26.69
Spot Rate : 0.4700
Average : 0.3905

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-01
Maturity Price : 25.00
Evaluated at bid price : 26.22
Bid-YTW : 2.59 %
BAM.PR.X FixedReset Quote: 22.07 – 22.31
Spot Rate : 0.2400
Average : 0.1712

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-05-05
Maturity Price : 21.79
Evaluated at bid price : 22.07
Bid-YTW : 4.14 %
BNA.PR.C SplitShare Quote: 25.15 – 25.32
Spot Rate : 0.1700
Average : 0.1069

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2019-01-10
Maturity Price : 25.00
Evaluated at bid price : 25.15
Bid-YTW : 4.40 %
SLF.PR.H FixedReset Quote: 25.60 – 25.77
Spot Rate : 0.1700
Average : 0.1081

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.60
Bid-YTW : 3.03 %