After skirmishing over the Greek bail-out, France has surrendered to Germany:
Germany and France have agreed to back International Monetary Fund aid for Greece, a German Finance Ministry official said, signaling a joint position after weeks of dispute over how to resolve the Greek crisis.
Germany and France, the euro region’s two biggest economies, are now pulling together before a two-day EU summit in Brussels beginning March 25, the official said on condition of anonymity. Greece has pressed the EU to make specific commitments on aid to help lower its borrowing costs.
Apparently, the IMF money will be spent on armanents:
In a bizarre twist to the Greek debt crisis, France and Germany are pressing Greece to buy their gunboats and warplanes, even as they urge it to cut public spending and curb its deficit.
Indeed, some Greek officials privately say Paris and Berlin are using the crisis as leverage to advance arms contracts or settle payment disputes, just when the Greeks are trying to reduce defense spending.
“No one is saying ‘Buy our warships or we won’t bail you out’, but the clear implication is that they will be more supportive if we do what they want on the armaments front,” said an adviser to Prime Minister George Papandreou, speaking on condition of anonymity because of the diplomatic sensitivity.
Ten-Year swap spreads are negative:
The 10-year U.S. swap spread turned negative for the first time on record amid rising demand for higher-yielding assets such as corporate and emerging market securities.
The gap between the rate to exchange floating- for fixed- interest payments and comparable maturity Treasury yields for 10 years, known as the swap spread, narrowed to as low as negative 2.5 basis points, the lowest since at least 1988, when Bloomberg began collecting the data. The spread narrowed 5.38 basis points to negative 2.38 basis point at 3:12 p.m. in New York.
A negative swap spread means the Treasury yield is higher than the swap rate, which typically is greater given the floating payments are based on interest rates that contain credit risk, such as the London interbank offered rate, or Libor. The 30-year swap spread turned negative for the first time in August 2008, after the collapse of Lehman Brothers Holdings Inc. triggered a surge of hedging in swaps. The difference narrowed to negative 20.5 basis points today.
“It’s hedge-related activity related to new corporate issuance,” said Christian Cooper, an interest-rate strategist at Royal Bank of Canada in New York, one of 18 primary dealers that trade with the Federal Reserve. “As more and more institutions receive, then swap rates will go lower.”
PerpetualDiscounts slid again on a day of elevated volume, losing 10bp, while FixedResets roared ahead, gaining 12bp and taking weighted median average yield down to 3.40%.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 2.66 % | 2.73 % | 61,237 | 20.67 | 1 | 0.9048 % | 2,073.3 |
| FixedFloater | 5.09 % | 3.21 % | 48,919 | 19.92 | 1 | -0.0468 % | 3,105.4 |
| Floater | 1.93 % | 1.72 % | 47,698 | 23.24 | 4 | 0.6180 % | 2,384.6 |
| OpRet | 4.89 % | 2.89 % | 100,637 | 0.18 | 13 | 0.1582 % | 2,312.8 |
| SplitShare | 6.37 % | 6.26 % | 135,559 | 3.67 | 2 | 0.5077 % | 2,142.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1582 % | 2,114.8 |
| Perpetual-Premium | 5.93 % | 6.03 % | 120,056 | 13.79 | 7 | 0.0000 % | 1,875.9 |
| Perpetual-Discount | 5.97 % | 6.00 % | 180,024 | 13.83 | 71 | -0.1000 % | 1,771.0 |
| FixedReset | 5.34 % | 3.40 % | 343,611 | 3.68 | 43 | 0.1221 % | 2,209.1 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.C | Perpetual-Discount | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 18.70 Evaluated at bid price : 18.70 Bid-YTW : 6.07 % |
| BNS.PR.J | Perpetual-Discount | -1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 22.17 Evaluated at bid price : 22.67 Bid-YTW : 5.87 % |
| IAG.PR.F | Perpetual-Discount | -1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 24.40 Evaluated at bid price : 24.60 Bid-YTW : 6.06 % |
| BAM.PR.P | FixedReset | 1.25 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-30 Maturity Price : 25.00 Evaluated at bid price : 27.61 Bid-YTW : 4.47 % |
| TRI.PR.B | Floater | 2.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 23.48 Evaluated at bid price : 23.75 Bid-YTW : 1.62 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.R | OpRet | 376,300 | TD crossed 65,900 at 25.95. Scotia bought 75,000 from National at 26.00. Anonymous bought 12,000 from TD at 25.99 and 34,900 from National at the same price. National crossed 12,000 at 25.95, then sold 24,000 to Scotia at 26.00. National crossed 140,000 at 25.96. YTW SCENARIO Maturity Type : Call Maturity Date : 2010-04-22 Maturity Price : 25.60 Evaluated at bid price : 25.95 Bid-YTW : -3.36 % |
| MFC.PR.D | FixedReset | 166,970 | RBC crossed 150,000 at 28.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-19 Maturity Price : 25.00 Evaluated at bid price : 28.07 Bid-YTW : 3.58 % |
| PWF.PR.O | Perpetual-Discount | 87,575 | Nesbitt crossed 80,000 at 24.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 23.72 Evaluated at bid price : 23.90 Bid-YTW : 6.17 % |
| BNS.PR.X | FixedReset | 78,344 | CIBC bought 14,800 from Desjardins at 28.24 and 10,000 from National at the same price. CIBC then bought two blocks, of 13,000 and 20,000 shares, from National at 28.22. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 28.24 Bid-YTW : 3.22 % |
| TRP.PR.B | FixedReset | 77,460 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-03-23 Maturity Price : 24.88 Evaluated at bid price : 24.93 Bid-YTW : 3.95 % |
| TD.PR.K | FixedReset | 65,500 | CIBC bought 25,000 from Desjardins at 28.40. National crossed 25,000 at 28.37. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 28.40 Bid-YTW : 3.21 % |
| There were 64 other index-included issues trading in excess of 10,000 shares. | |||