PrefBlog

The Bank of Canada held the overnight rate steady at 3.00%:

Global inflationary pressures remain elevated, with potential implications for import prices and the dynamics of inflation in Canada. While total CPI inflation has moved above 3 per cent, core inflation has stayed at 1.5 per cent as expected. The temporary factors affecting both of these measures should dissipate over the coming quarters, and the Bank continues to expect that total and core inflation will converge on 2 per cent in the second half of 2009. However, the recent decline in both spot and futures prices for energy means that the spike in total CPI inflation expected between now and the first quarter of 2009 will be lower than projected in July.

Although an argument can be made for a rate cut, it is not clear and compelling. Most of the world’s central banks are tightening or are thinking about it – just today, there are updates on the Fed, the BoE and Indonesia); I don’t think the BoC will swim against the tide without a clear and compelling reason.

The collapse of Ospraie’s flagship hedge fund was mentioned yesterday; there are some rumours that natural gas brought it down while others finger copper.

The Clear Channel LBO debt might be clearing:

Banks led by Deutsche Bank AG are seeking to sell $980 million of Clear Channel Communications Inc. bonds in the biggest sale of leveraged buyout debt since March.

The 10.75 percent, eight-year notes are scheduled to price early next week, said a person familiar with the transaction, who declined to be identified because terms aren’t set. The debt helped to finance the radio-station operator’s buyout by Bain Capital Partners LLC and Thomas H. Lee Partners LP.

… and, perhaps not entirely coincidentally, Blackrock is setting up another vulture fund:

BlackRock Inc., the biggest publicly traded U.S. asset manager, is seeking as much as $3 billion for a fund to buy loans that banks are selling for losses, said two investors with knowledge of the matter.

BlackRock Credit Investors II will invest in leveraged- buyout loans that banks are trying to unload after the collapse of the subprime-mortgage market drove investors away from all but the safest securities, the investors said. Last year, New York- based BlackRock raised $3 billion for its first such fund.

As all Assiduous Readers know, one of my macro-economic fears is that regulators will make all but the most plain-vanilla securities too risky to sell to the usual recipients of their back-dated largesse. This may be happening with municipalities and interest rate swaps:

JPMorgan Chase & Co., under investigation in a federal antitrust probe of derivative sales in the $2.6 trillion municipal bond market, will stop marketing products such as interest-rate swaps to municipalities, a spokeswoman said.

The bank will still arrange derivatives for non-profit organizations and sell commodity derivatives to municipalities, said JPMorgan spokeswoman Kristin Lemkau. Derivatives are contracts whose value is derived from tradeable securities, or linked to future changes in lending costs.

Geez, when the rules change on a backdated basis, people don’t want to play anymore, eh?

Another solid up-day for the PerpetualDiscounts.

There were twenty other index-included $25-pv-equivalent issues trading over 10,000 shares today.

The most interesting news items of the day got their own posts (TD Capital to Issue Asset-Backed Tier 1 Paper, Swiss Bank Regulator to Impose Assets-to-Capital Multiple Cap, New Issue: TD Fixed-Reset 5.00%+196bp) so there ain’t much left to report!

Ambac got permission to set up a new bond insurer. After all, you can’t just let Buffet get his own way all the time!

PrefBlog’s “Whoopsee!” Department reminds me to link to a Bloomberg story about a hedge fund:

Ospraie Management LLC, the investment firm run by Dwight Anderson, will close its biggest hedge fund after it fell 38.6 percent this year because of losing wagers on commodity stocks, according to a letter to investors.

The Ospraie Fund lost 26.7 percent in August, after a “substantial sell-off in a number of our energy, mining and resource equity holdings,” Anderson, 41, wrote in the letter today.

I don’t know, particularly, why so many of these things are called “Hedge” funds … most of the ones I’ve seen are really “highly leveraged macro-bet” funds. But perhaps I’m just bitter, what with not being able to find funding for my own idea … a hedge fund, really hedge, trading preferred shares could, I am quite confident, make good money for non-taxable investors.

PerpetualDiscounts performed well on a slow day.

There were ten other index-included $25-pv-equivalent issues trading over 10,000 shares today.