Archive for July, 2007

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Falconbridge Dividends are "Eligible"

Thursday, July 12th, 2007

The Falconbridge preferreds, FAL.PR.A, FAL.PR.B & FAL.PR.H, don’t get mentioned on this blog very much – and I have even complained about them.

However, investors should know of the Xstrata 2007-06-19 Press Release which states:

On February 21, 2007, the Parliament of Canada enacted amendments to the Income Tax Act (Canada) which are intended to reduce the personal tax rate on “eligible dividends” paid after 2005. Falconbridge hereby notifies its holders of preferred shares that the full amounts of the dividends to be paid on the respective series of preferred shares set out above are designated as eligible dividends for purposes of these amendments and any applicable corresponding provincial provisions

Posted in Issue Comments | 1 Comment »

Rio Tinto Makes Friendly Bid for Alcan (AL.PR.E, AL.PR.F)

Thursday, July 12th, 2007

Alcan has announced:

they have reached an agreement for Rio Tinto to make an offer to acquire all of Alcan’s outstanding common shares for US$101 per common share in a recommended, all cash transaction.

There is no mention of the preferred shares ( AL.PR.E & AL.PR.F ) or whether Rio Tinto will take the necessary steps to ensure that the dividends thereon are considered “eligible dividends”.

The preferreds are currently on “Credit Watch – Developing” by DBRS.

Update: DBRS is maintaining the “Credit Watch – Developing”:

DBRS is maintaining the ratings of Alcan Inc. (Alcan) Under Review with Developing Implications following Rio Tinto Plc’s (Rio) announcement today to acquire Alcan in a friendly takeover for $38.1 billion.
…
In the event that this transaction is completed based on the current structure of Rio’s offer, DBRS would expect Rio’s rating to flow through to Alcan’s rating. Currently, Rio’s rating is AA (low), Under Review with Negative Implications. DBRS notes that other mining conglomerates may yet elect to make a higher bid for Alcan.

Note that Alcan’s bond rating is A(low), so unless Rio was severely downgraded, a flowthrough would improve credit quality.

Update: Alcoa’s offer has been withdrawn, amid speculation that it has become a target itself.

Posted in Issue Comments | No Comments »

July 11, 2007

Thursday, July 12th, 2007

There was the usual news today: A story about the bonds dip (I know him, he’s the guy at [Deleted on Legal Advice]), Treasuries dropped, credit spreads widened (even in America), Korea tightened, and there are fears Japan might tighten. Same old.

Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30
Index Mean Current Yield (at bid) Mean YTW Mean Average Trading Value Mean Mod Dur (YTW) Issues Day’s Perf. Index Value
Ratchet 5.32% 5.34% 27,793 14.93 2 +0.9492% 1,019.2
Fixed-Floater 5.05% 5.36% 140,345 15.00 8 -0.0912% 998.7
Floater 4.66% -0.18% 77,866 8.43 4 +0.1107% 1,048.8
Op. Retract 4.83% 4.01% 86,057 3.02 16 -0.0671% 1,021.3
Split-Share 5.05% 4.64% 122,364 3.99 17 +0.1152% 1,045.9
Interest Bearing 6.19% 6.27% 68,186 4.44 3 -0.0339% 1,039.6
Perpetual-Premium 5.54% 5.10% 120,245 5.67 26 +0.1568% 1,021.6
Perpetual-Discount 5.11% 5.14% 373,572 14.87 38 -0.1460% 965.0
Major Price Changes
Issue Index Change Notes
ELF.PR.G PerpetualDiscount -2.8033% Perhaps related to its removal from the S&P/TSX Index? None of the other removals were hit nearly as badly. Now with a pre-tax bid-YTW of 5.65% based on a bid of 21.15 and a limitMaturity.
PWF.PR.F PerpetualPremium (for now!) -1.0121% Added to the index. Now with a pre-tax bid-YTW of 5.37% based on a bid of 24.45 and a limitMaturity.
IAG.PR.A PerpetualDiscount +1.2826% Now with a pre-tax bid-YTW of 5.05% based on a bid of 22.90 and a limitMaturity.
BCE.PR.S Ratchet +1.4799%  
MIC.PR.A PerpetualPremium (Recent add) +1.1760% Now with a pre-tax bid-YTW of 5.44% based on a bid of 25.75 and a call 2012-1-30 at 25.00.
NA.PR.K PerpetualPremium +1.4479% Ex-Dividend today. Now with a pre-tax bid-YTW of 3.99% based on a bid of 26.25 and a call 2008-6-14 at 26.00.
Volume Highlights
Issue Index Volume Notes
AL.PR.F Scraps (would be Floater, but there are volume concerns) 151,725 Ex-Dividend today for $0.28125. Global crossed 75,600 at 24.97 for cash, then 75,600 at 24.68 for regular settlement.
HSB.PR.D PerpetualPremium 51,700 Scotia crossed 50,000 at 25.20. Now with a pre-tax bid-YTW of 4.98% based on a bid of 25.12 and a call 2015-1-30 at 25.00.
CIU.PR.A PerpetualDiscount 25,700 Added to the index. RBC crossed 25,000 at 23.10. Now with a pre-tax bid-YTW of 5.06% based on a bid of 23.01 and a limitMaturity.
CM.PR.J PerpetualDiscount 25,560 Now with a pre-tax bid-YTW of 5.12% based on a bid of 22.02 and a limitMaturity.
CM.PR.D PerpetualPremium 18,261 Now with a pre-tax bid-YTW of 5.01% based on a bid of 25.77 and a call 2012-5-30 at 25.00

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

Posted in Market Action | No Comments »

BSN.PR.A to be Redeemed

Wednesday, July 11th, 2007

BSN.PR.A, which I complained about last week, has announced:

The Board of Directors of BNS Split Corp. (the “Company”) has declared today dividends of $0.3162 per Preferred Share and $0.2275 per Capital Share, payable on August 2, 2007 to holders of record at the close of business on July 30, 2007.

Holders of Preferred Shares are entitled to receive quarterly fixed cumulative distributions equal to $0.3162 per Preferred Share.

…

The Capital Shares and Preferred Shares will be redeemed by the Company on August 2, 2007 (the “Redemption Date”) in accordance with the redemption provisions of the shares. Pursuant to these provisions, the Preferred Shares will be redeemed at a price per share equal to the lesser of $23.00 and the Net Asset Value per Unit. The Capital Shares will be redeemed at a price for every two shares equal to the amount by which the Net Asset Value per Unit exceeds $23.00.

HIMIPref™ data for the final dividend has been adjusted.

Update 2007-07-31: It should come as no surprise to learn that the redemption price on the prefs is $23.00.

Posted in Data Changes, Issue Comments | No Comments »

Changes to S&P/TSX Preferred Share Index

Wednesday, July 11th, 2007

Standard and Poor’s has announced:

the following index changes as a result of the semi-annual S&P/TSX Preferred Share Index Review. These changes will be effective at the open on Monday, July 23, 2007

Additions:

ADDITIONS
S&P/TSX Preferred Share Index Additions Effective 2007-7-23
Ticker HIMI Index
FBS.PR.B SplitShare
ALB.PR.A SplitShare
BNA.PR.C SplitShare
BMO.PR.J PerpetualDiscount
BMO.PR.H PerpetualPremium
BMO.PR.I OpRet
BNS.PR.L PerpetualDiscount
BCE.PR.F Not in HIMIPref™ universe
BAM.PR.K Floater
BPO.PR.F Scraps (Credit)
BPO.PR.H Scraps (Credit)
CM.PR.H PerpetualDiscount
CIU.PR.A PerpetualDiscount
DFN.PR.A SplitShare
DW.PR.A Scraps (Credit)
FIG.PR.A InterestBearing
LBS.PR.A SplitShare
NSI.PR.D Scraps (Volume)
POW.PR.B PerpetualDiscount
POW.PR.C PerpetualPremium
PWF.PR.F PerpetualPremium (for now!)
PIC.PR.A SplitShare
RPA.PR.A Not in HIMIPref™ universe
RPB.PR.A Not in HIMIPref™ universe
WFS.PR.A SplitShare
YPG.PR.A Scraps (Credit)
DELETIONS
S&P/TSX Preferred Share Index Deletions Effective 2007-7-23
Ticker HIMI Index
CL.PR.B PerpetualPremium
CM.PR.C PerpetualPremium
ELF.PR.G PerpetualDiscount
FAL.PR.A Scraps (Credit)
FTS.PR.E Scraps (Credit)
W.PR.J PerpetualPremium

It’s a good thing to see that Split Shares have been added to the index – although, sadly, it makes the index a little tougher to beat.

Total changes to the S&P Index, in terms of the HIMI Indices, are:

Changes in issues included in S&P/TSX Index, Effective 2007-07-23
Ratchet  0
FixFloat  0
Floater  +1
OpRet  +1
SplitShare  +7
InterestBearing  +1
PerpetualPremium  0
PerpetualDiscount  +4
Scraps  +3
Not in Universe  +3

Hat tip to assiduous reader MP, who asked “What’s happening with ELF.PR.G?” and thereby tipped me off to the index change. I wonder how the Claymore ETF will handle this … I’ll bet they’re annoyed!

Posted in Indices and ETFs, Miscellaneous News | 4 Comments »

Yet More BCE Preferred Press

Wednesday, July 11th, 2007

I just noticed this National Post article from July 4:

“If any other consortium is going to do a privatization, I think a precedent has been set by Teachers and the board of BCE,” said John Nagel, an analyst at Desjardins Securities who specializes in preferred shares. “The common, preferred and minority interests will have to be looked after in any subsequent deal.”Even if Telus Corp., a rival telecommunications company, makes a subsequent bid for Bell, it will also feel pressured to redeem the preferred shares rather than leave them trading below par

John Nagel’s long term track record was not disclosed. He might be right … but I’ll stick to my guns and say these issues are far too risky to be held in a fixed income portfolio. 

Link for browsing purposes: S&P Leaves BCE on Credit Watch Negative.

Posted in Issue Comments | 1 Comment »

July 10, 2007

Tuesday, July 10th, 2007

The Bank of Canada increased the overnight rate by 0.25% to 4.5%, as universally expected. There is the usual amount of entrail-interpretation going on in the marketplace – for what it’s worth, I consider the tone of the press release to be neutral – and think that the strong CAD is doing a lot of the heavy lifting for the Bank. But there are the usual pseudo-quants from the “Look, Mom, I got a spreadsheet!” school, claiming, f’rinstance, that since increases have previously occurred in clumps, future increases will also occur in clumps. Apparently, most shops are predicting a September hike, but the track records of these firms was not disclosed. I’m not disclosing my track record of BOC watching, either, mainly because I haven’t got a clue what it is. So be warned!

Bonds had a strong day, on the back of an apparent flight to quality related to sub-prime mortgages in the US and the strength has now spread to Japan amidst muttering that maybe Japan holds too many Treasuries. What a difference a week makes, eh? It was just last Friday I was reporting on the extreme lousiness of the bond market, but Captain Quality has saved the day! I guess a lot of mortgage cheques didn’t arrive in the mail on Monday morning.

SBN.PR.A has announced a normal course issuer bid, less than six weeks after issuing additional shares and less than two months after closing the new issue. It’s not clear how seriously this press release is meant to be taken … there’s not a lot of discount in market-to-NAV for the units … which is why I’m not dignifying the release with its own post.

CXC.PR.A has announced exercise of the underwriters’ greenshoe. This issue is not tracked by HIMIPref™ and I have no plans to do so at this moment – it’s too small. Like many such issues, however, it could make a lot of sense for a small investor planning to buy 100 shares and hold until redemption, given its 5% coupon and discount price

Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30
Index Mean Current Yield (at bid) Mean YTW Mean Average Trading Value Mean Mod Dur (YTW) Issues Day’s Perf. Index Value
Ratchet 5.41% 5.41% 28,043 14.83 2 -0.3117% 1,009.6
Fixed-Floater 5.05% 5.35% 140,634 15.01 8 +0.1999% 999.6
Floater 4.67% 0.06% 79,344 4.24 4 -0.0996% 1,047.7
Op. Retract 4.83% 3.95% 86,784 2.97 16 +0.1604% 1,022.0
Split-Share 5.05% 4.65% 124,716 3.99 17 +0.4249% 1,044.7
Interest Bearing 6.19% 6.24% 68,461 4.44 3 -0.2364% 1,039.9
Perpetual-Premium 5.54% 5.17% 120,414 5.81 26 -0.0961% 1,020.0
Perpetual-Discount 5.10% 5.13% 377,903 14.88 38 -0.0181% 966.4
Major Price Changes
Issue Index Change Notes
BCE.PR.C FixFloat -1.4493%  
PWF.PR.D OpRet +1.0584% Now with a pre-tax bid-YTW of 4.49% based on a bid of 25.78 and a softMaturity 2012-10-30 at 25.00.
BCE.PR.T FixFloat +1.0616%  
PWF.PR.L PerpetualDiscount +1.0722% Now with a pre-tax bid-YTW of 5.20% based on a bid of 24.51 and a limitMaturity.
BCE.PR.R FixFloat +1.1760%  
LBS.PR.A SplitShare +1.4479% Now with a pre-tax bid-YTW of 4.34% based on a bid of 10.51 and a hardMaturity 2013-11-29 at 10.00.
BNA.PR.C SplitShare +2.1368% Now with a pre-tax bid-YTW of 4.92% based on a bid of 23.90 and a hardMaturity 2019-1-10 at 25.00.
Volume Highlights
Issue Index Volume Notes
NTL.PR.G Scraps (would be Ratchet, but there are credit concerns) 263,752  
NTL.PR.F Scraps (would be Ratchet, but there are credit concerns) 255,300 Scotia crossed 250,000 at 18.15
IGM.PR.A OpRet 55,224 Now with a pre-tax bid-YTW of 3.96% based on a bid of 26.85 and a call 2009-7-30 at 25.00.
CM.PR.J PerpetualDiscount 22,540 Now with a pre-tax bid-YTW of 5.11% based on a bid of 22.07 and a limitMaturity.
BNA.PR.C SplitShare 19,290 Now with a pre-tax bid-YTW of 4.93% based on a bid of 23.90 and a hardMaturity 2019-1-10 at 25.00.
GWO.PR.I PerpetualDiscount 18,485 Now with a pre-tax bid-YTW of 5.07% based on a bid of 22.35 and a limitMaturity. We’re still waiting for GWO to drop the other shoe.
SLF.PR.D PerpetualDiscount 17,199 Now with a pre-tax bid-YTW of 5.07% based on a bid of 22.10 and a limitMaturity.

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

Posted in Market Action | No Comments »

July 9, 2007

Monday, July 9th, 2007

Quiet day today. Volatility continues to be high, as it has for the past two months, but nothing unusual when considered in the context of this short period.

The Bank of Canada will announce the Overnight Rate on July 10. Universally expected to be up 25bp to 4.50%; the suspense lies in what sort of language they use to prepare us for the next meeting.

Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30
Index Mean Current Yield (at bid) Mean YTW Mean Average Trading Value Mean Mod Dur (YTW) Issues Day’s Perf. Index Value
Ratchet 5.39% 5.41% 29,205 14.83 2 -0.5626% 1,012.8
Fixed-Floater 5.06% 5.36% 139,980 15.01 8 -0.0152% 997.6
Floater 4.66% -1.58% 77,898 4.66 4 +0.0712% 1,048.7
Op. Retract 4.83% 4.09% 86,094 3.17 16 +0.1215% 1,020.4
Split-Share 5.07% 4.79% 125,028 4.08 17 -0.2458% 1,040.3
Interest Bearing 6.18% 6.21% 68,783 4.45 3 +0.3063% 1,042.4
Perpetual-Premium 5.54% 5.13% 120,487 5.34 26 -0.0272% 1,021.0
Perpetual-Discount 5.10% 5.13% 383,837 14.89 38 -0.1514% 966.6
Major Price Changes
Issue Index Change Notes
PWF.PR.D OpRet -1.9223% Now with a pre-tax bid-YTW of 4.72% based on a bid of 25.51 and a softMaturity 2012-10-30 at 25.00.
LBS.PR.A SplitShare -1.3333% Now with a pre-tax bid-YTW of 4.60% based on a bid of 10.36 and a hardMaturity 2013-11-29 at 10.00.
NA.PR.L PerpetualDiscount -1.1741% Now with a pre-tax bid-YTW of 5.03% based on a bid of 24.41 and a limitMaturity.
BCE.PR.T FixFloat -1.0504% Exchange/Reset date is 2011-11-1 (exchanges with BCE.PR.S); until then pays 4.502% of par. Teachers is bidding 25.77 for the ‘T’; 25.50 for the ‘S’. The ‘T’ closed at 23.55-99, 5×10; the ‘S’ closed at 23.85-35, 6×5.
CFS.PR.A SplitShare -1.0091% Now with a pre-tax bid-YTW of 4.72% based on a bid of 9.81 and a hardMaturity 2012-1-31 AT 10.00.
BCE.PR.C FixFloat +1.4706% Exchange/Reset date is 2008-3-1 (exchanges with series ‘AD’, not issued); until then, pays 5.54% of par.
BCE.PR.H Ratchet +1.2685% Exchange/Reset date is 2011-5-1 (exchanges with BCE.PR.G, which pays 4.35% of par). The ‘H’ closed at 23.85-20, 13×6; the ‘G’ closed at 24.00-10, 13×10. Teachers is bidding 25.50 for the ‘G’; 25.56 for the ‘H’. Given the huge discount to the Teachers price (which implies a large presumed probability of the deal not being consumated) I would have expected a larger price differential between the H & G, given that the H will probably yield 100% of prime for the forseeable future. There are a lot of moving parts in the calculation; it is possible to construct a self-consistent event probability matrix; but it still seems very strange to me.
MFC.PR.C PerpetualDiscount +1.3187% Now with a pre-tax bid-YTW of 4.91% based on a bid of 23.05 and a limitMaturity.
Volume Highlights
Issue Index Volume Notes
RY.PR.F PerpetualDiscount 32,790 Now with a pre-tax bid-YTW of 5.11% based on a bid of 22.35 and a limitMaturity.
SLF.PR.D PerpetualDiscount 31,170 Now with a pre-tax bid-YTW of 5.05% based on a bid of 22.16 and a limitMaturity.
BAM.PR.K Floater 27,000  
SLF.PR.A PerpetualDiscount 14,320 Now with a pre-tax bid-YTW of 4.93% based on a bid of 24.20 and a limitMaturity.
BMO.PR.J PerpetualDiscount 12,920 Now with a pre-tax bid-YTW of 5.06% based on a bid of 22.50 and a limitMaturity.

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

Posted in Market Action | No Comments »

July 6, 2007

Saturday, July 7th, 2007

Bondholders will be glad this horrible week is over, as bonds slipped again after the US Employment Numbers (and wage numbers!) came out.

The Teachers/BCE agreement has been released on SEDAR. I didn’t find much of interest, but there was one tidbit: a “Superior Bid” only has to target 50.1% of the common shareholders, but has to be deemed (by BCE’s board) to be financially superior for the Affected Shareholders – and the latter group includes preferreds! Now there’s something that could possibly cause some ill-feeling in the future!

Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30
Index Mean Current Yield (at bid) Mean YTW Mean Average Trading Value Mean Mod Dur (YTW) Issues Day’s Perf. Index Value
Ratchet 5.37% 5.38% 28,542 14.87 2 +0.6542% 1,018.5
Fixed-Floater 5.06% 5.35% 139,658 15.02 8 -0.4563% 997.8
Floater 4.67% 0.11% 76,973 4.25 4 -0.2370% 1,048.0
Op. Retract 4.84% 4.11% 87,589 3.29 16 -0.1310% 1,019.1
Split-Share 5.06% 4.69% 125,697 4.09 17 -0.0755% 1,042.9
Interest Bearing 6.20% 6.30% 69,095 4.46 3 +0.2047% 1,039.2
Perpetual-Premium 5.54% 4.79% 121,526 5.81 26 -0.1722% 1,021.3
Perpetual-Discount 5.09% 5.12% 390,600 14.91 38 -0.0978% 968.0
Major Price Changes
Issue Index Change Notes
BCE.PR.C FixFloat -2.8571%  
ELF.PR.F PerpetualDiscount -2.0656% Now with a pre-tax bid-YTW of 5.49% based on a bid of 24.18 and a limitMaturity.
MIC.PR.A PerpetualPremium -1.1324% Now with a pre-tax bid-YTW of 5.85% based on a bid of 25.32 and a call 2012-1-30 at 25.00.
TOC.PR.B Floater -1.1072% Still on Credit Watch Negative.
BNA.PR.C SplitShare -1.0504% Now with a pre-tax bid-YTW of 5.09% based on a bid of 23.55 and a hardMaturity 2019-1-10 at 25.00.
BCE.PR.Z FixFloat -1.0417%  
BCE.PR.H Ratchet +1.2685%  
MFC.PR.C PerpetualDiscount +1.3187% Now with a pre-tax bid-YTW of 4.91% based on a bid of 23.05 and a limitMaturity.
Volume Highlights
Issue Index Volume Notes
BNS.PR.K PerpetualDiscount 43,560 Now with a pre-tax bid-YTW of 4.97% based on a bid of 24.13 and a limitMaturity.
BNS.PR.M PerpetualDiscount 26,070 Now with a pre-tax bid-YTW of 5.02% based on a bid of 22.42 and a limitMaturity.
BAM.PR.K Floater 25,353  
TD.PR.O PerpetualDiscount 24,500 Now with a pre-tax bid-YTW of 4.99% based on a bid of 24.30 and a limitMaturity.
NA.PR.L PerpetualDiscount 21,900 Now with a pre-tax bid-YTW of 4.97% based on a bid of 24.70 and a limitMaturity.

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

Posted in Market Action | 2 Comments »

BSN.PR.A Dividend Dates Estimated

Saturday, July 7th, 2007

Thanks a lot, guys! The last record date for this issue was April 16, but this quarter’s dividend hasn’t even been declared yet, according to TSX data.

July record dates for this company have been: 2003-7-31, 2004-7-29, 2005-7-15, 2006-7-28. I guess someone at Scotia is in the habit of a regular summer vacation!

Dates for the coming dividend have been estimated as 7/27, 7/31, 8/2

Posted in Better Communication, Please! | 1 Comment »

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