PrefBlog

I could not agree more with Stephen Gordon’s Ode to a High Exchange Rate:

Exports are costs. The goal of international trade is to import goods and services; exports are the price we pay in return. If a higher exchange rate allows Ontario to import more and export less, Ontarians are better off.

I’m perpetually astonished by political attitudes towards exchange rates and dumping. If some foreigner wants to sell me something cheap, I tell ’em “Fine! Back up the truck!”

There’s some interesting colour regarding pain in pension land:

General Electric Co. (GE), Boeing Co. (BA) and 3M Co. (MMM) will join big U.S. employers in making a record $100 billion in 2012 pension contributions, 67 percent more than two years ago, as low interest rates boost companies’ liabilities.

Payments may total $400 billion from 2011 through 2015 to ease underfunding at the 100 largest defined-benefit programs, according to consultant Milliman Inc., which estimated that assets in January were enough to cover less than three-fourths of projected payouts.

There was an excellent result in the latest Vikings vs. Pirates match:

The navy said its ship, the Absalon, had been tracking the pirate vessel for several days near the Somali coast. As the pirate ship tried to leave the coast, the warship called on it to stop, firing warning shots. When the pirate ship didn’t respond, the Danish warship opened fire, according to the statement. The vessel had been used as a base by the pirates for attacks in the region, the navy said.

The only thing I don’t understand is: why did they bother tracking it for several days? I hope this was for intelligence-gathering purposes, because ideally it would have been blown out of the water on sight.

It was another good day for the Canadian preferred share market, with PerpetualPremiums winning 17bp, FixedResets flat and DeemedRetractibles gaining 15bp. The good sized Performance Highlights table is highly skewed to the upside. Volume was below average.

There is a report that RBC may buy out the rest of RBC-Dexia:

Dexia SA chief executive Pierre Mariani said he hopes to conclude discussions with Royal Bank of Canada “shortly” regarding the sale of Dexia’s stake in joint venture company RBC Dexia Investor Services.
…
On Thursday Dexia reported a loss of 11.6-billion euros, warning that unless a group of European countries come through with bailout funds that were promised when Dexia became the first victim of the EU debt crisis last year, it could go out of business.
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Ranked among the world’s top 10 global custody banks, RBC Dexia has about $2.74-trillion in client assets under administration. The company was formed in 2006, with both parents taking equal stakes.

Meanwhile, the Maple/TMX deal has been extended again:

A group of Canadian banks and pension funds extended their $3.73-billion offer for TMX Group Inc. until March 30, the fifth delay as it pursues regulatory approval for its agreement to purchase the nation’s main equities and derivatives markets.
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The Competition Bureau said Nov. 29 that it had “serious concerns” about the plan in connection with equities trading and clearing settlement, and yesterday said in a statement that it has “no new developments to report” on its review.

It looks like the Competition Bureau guys won’t be getting any plum job offers from the banks any time soon! But OMERS has a good idea:

OMERS CEO Michael Nobrega says he hopes the London Stock Exchange would make another play for the TMX Group if the Maple consortium’s bid doesn’t succeed.

OMERS did not join the Maple group, while a number of other major pension plans did.

“We supported the LSE,” Mr. Nobrega said. He didn’t join Maple because he felt it was a highly leveraged bid and was worried about its chances of success.

Everybody is dancing with everybody else!

National Bank of Canada (NA-T76.590.250.33%)is in talks to sell its Natcan asset management arm to Fiera Sceptre Inc. (FSZ-T7.200.304.35%)in return for a stake of approximately 30 per cent in the merged firm, sources said Friday. The deal could be announced as early as Monday.

Fiera Sceptre, a mainly institutional money manager, was formed in 2010 from the merger of Fiera Capital Inc., founded by Jean-Guy Desjardins, and Sceptre Investment Counsel Ltd.

This deal has been confirmed:

Fiera Sceptre Inc. (FSZ-T8.501.3018.06%) has struck a $310-million deal to buy National Bank of Canada’s asset management arm, a move that sets the stage for an ambitious expansion into the United States.

Fiera Capital, the new name for the merged entity, will have $54-billion in assets and overtake AGF Management Ltd. to become the third-largest Canadian publicly traded asset manager after IGM Financial Inc. and CI Financial Corp.

Under the stock-and-cash deal announced on Monday, the bank will get a 35-per-cent stake in Fiera Capital in exchange for giving up Natcan Investment Management.

And meanwhile, in Greek news:

Greece had its long-term sovereign credit ratings cut to selective default from CC by Standard & Poor’s Ratings Services, which cited an action by Greece’s government regarding its sovereign debt that began a “distressed debt restructuring.”

The downgrade was triggered after Greece retroactively inserted collective action clauses in the documentation of certain sovereign debt series last week, according to S&P.

ABK.PR.B was confirmed at Pfd-2(low) by DBRS:

Since the rating was last confirmed by DBRS in March 2011, the net asset value of the Company has remained fairly stable, fluctuating between $57 and $64. The current downside protection (as of February 16, 2012) is approximately 56.6%.

The confirmation of the Pfd-2 (low) rating of the Class B Preferred Shares is based primarily on the downside protection and dividend coverage available, as well as on the strong credit quality and consistency of dividend distributions of the Portfolio holdings.

ALB.PR.B was confirmed at Pfd-2(low) by DBRS:

The current yield on the Portfolio shares fully covers the Class B Preferred Share dividends, providing dividend coverage of approximately 1.76 times. The Class A Capital Shares receive all excess dividend income after the Class B Preferred Share distributions and other expenses of the Company have been paid. Current downside protection available to holders of the Preferred Shares is 52.0% as of February 16, 2012.

The Pfd-2 (low) rating of the Class B Preferred Shares is based primarily on the downside protection and dividend coverage available, as well as on the strong credit quality and consistency of dividend distributions of the Portfolio holdings.

It was a slightly positive day for the Canadian preferred share market, with PerpetualPremiums up 3bp, FixedResets gaining 2bp and DeemedRetractibles winning 4bp. Volatility was quite good, while volume was extremely low.

It was another positive day for the Canadian preferred share market, with PerpetualPremiums up 9bp, FixedResets gaining 9bp and DeemedRetractibles winning 33bp. PerpetualDiscounts – all four of them! – shot up 69bp to decrease the Bozo Spread (Current Yield PerpetualDiscounts less Current Yield FixedResets) to zero again. Not much volatility. Volume was average.

Sorry this is late, folks!