Credit-default swaps on sovereign bonds surged on speculation Europe’s debt crisis is worsening after Hungary said it’s in a “very grave situation” because a previous government lied about the state of the economy.
The cost of insuring against losses on Hungarian sovereign debt jumped 83.5 basis points to 391.5, according to CMA DataVision prices. Swaps on France, Austria, Belgium and Germany also rose, sending the Markit iTraxx SovX Western Europe Index of contracts on 15 governments 10 basis points higher to 163, and close to the all-time high of 167 on May 6.
Hungary’s bonds fell after a spokesman for Prime Minister Viktor Orban said talk of a default is “not an exaggeration” because a previous administration “manipulated” figures. The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008.
The delays in bank reform are now being discussed publicly:
The Group of 20 nations is split on the scale and timing of increases in bank-capital requirements that have been under discussion since governments were forced to bail out lenders, an official from a G-20 government said.
Countries such as the U.S. whose economies are largely financed by markets want banks to be required to hold more assets on their balance sheets to buffer against future crises, said the official, who will attend this weekend’s talks of G-20 finance chiefs in Busan, South Korea. Policy makers in continental Europe, where banks provide more financing, are concerned that too-high reserves risk choking off growth, the official told reporters on condition he not be named.
Goldman has set up a $450-million CLO:
Goldman Sachs Group Inc. arranged a $450 million collateralized loan obligation, according to people familiar with the transaction, making it the third widely syndicated transaction of the year.
Last week’s deal marks a reversal for CLO issuance, which according to Moody’s Investors Service, fell to $26.5 billion in 2009, its lowest level in more than a decade as the credit crisis and subsequent drop in loan prices made it economically difficult to arrange new funds.
Golly, I sure hope that they pointed to investors that the fund was able to buy its holdings because other people wanted to sell them!
[US] Private payrolls rose by 41,000, Labor Department figures showed today, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7 percent from 9.9 percent.
There’s some whimpering about the Magna deal:
Magna has offered to pay Mr. Stronach $300-million (U.S.) in cash plus grant him nine million new subordinate-voting shares of the company for a total value of $863-million. The deal values each of his multiple-voting shares at $1,187, a massive premium over Magna’s share price. Magna’s widely held subordinate voting shares closed 62 cents higher at $69.86 (U.S.) Thursday.
“In our minds, it is an entirely excessive, inappropriate and egregious price that we’re being asked to pay, so that’s why we’re reacting so quickly and so strongly to what this proposal lays out,” CPPIB chief executive officer David Denison said Thursday in an interview.
Suck it up, boys! That’s what happens when you buy participating debentures rather than, you know, actual equity.
It was another day of fine performance on moderating volume in the Canadian preferred share market today, with PerpetualDiscounts gaining 31bp and FixedResets up 12bp.
The Financial Post Block Trades Report is back in operation. The link in the right-hand panel has been updated.
| 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 | 2.66 % | 2.72 % | 44,004 | 20.70 | 1 | -1.3457 % | 2,093.6 |
| FixedFloater | 5.19 % | 3.27 % | 27,945 | 19.97 | 1 | 0.0000 % | 3,084.9 |
| Floater | 2.41 % | 2.80 % | 91,173 | 20.18 | 3 | -0.0917 % | 2,239.2 |
| OpRet | 4.89 % | 3.85 % | 95,717 | 1.70 | 11 | -0.0957 % | 2,308.5 |
| SplitShare | 6.44 % | 6.17 % | 106,244 | 3.54 | 2 | 0.1112 % | 2,152.9 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0957 % | 2,110.9 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3090 % | 1,848.6 |
| Perpetual-Discount | 6.13 % | 6.19 % | 205,357 | 13.65 | 77 | 0.3090 % | 1,749.9 |
| FixedReset | 5.46 % | 4.24 % | 418,123 | 3.52 | 45 | 0.1185 % | 2,162.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.E | Ratchet | -1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 21.72 Evaluated at bid price : 21.26 Bid-YTW : 2.72 % |
| PWF.PR.J | OpRet | -1.20 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2011-05-30 Maturity Price : 25.25 Evaluated at bid price : 25.54 Bid-YTW : 3.95 % |
| POW.PR.A | Perpetual-Discount | -1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 22.31 Evaluated at bid price : 22.58 Bid-YTW : 6.30 % |
| IAG.PR.C | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.77 Bid-YTW : 4.00 % |
| CIU.PR.B | FixedReset | 1.06 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-01 Maturity Price : 25.00 Evaluated at bid price : 27.60 Bid-YTW : 4.00 % |
| PWF.PR.E | Perpetual-Discount | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 22.03 Evaluated at bid price : 22.35 Bid-YTW : 6.23 % |
| BAM.PR.R | FixedReset | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 23.26 Evaluated at bid price : 25.50 Bid-YTW : 4.96 % |
| GWO.PR.G | Perpetual-Discount | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 21.05 Evaluated at bid price : 21.05 Bid-YTW : 6.19 % |
| GWO.PR.L | Perpetual-Discount | 1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 22.50 Evaluated at bid price : 22.61 Bid-YTW : 6.26 % |
| HSB.PR.C | Perpetual-Discount | 1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 20.70 Evaluated at bid price : 20.70 Bid-YTW : 6.29 % |
| PWF.PR.H | Perpetual-Discount | 1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 22.75 Evaluated at bid price : 23.02 Bid-YTW : 6.32 % |
| ENB.PR.A | Perpetual-Discount | 1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 23.69 Evaluated at bid price : 24.00 Bid-YTW : 5.76 % |
| CM.PR.E | Perpetual-Discount | 1.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 22.89 Evaluated at bid price : 23.15 Bid-YTW : 6.12 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.X | FixedReset | 105,480 | RBC crossed 99,800 at 27.04. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 27.05 Bid-YTW : 4.27 % |
| SLF.PR.A | Perpetual-Discount | 72,744 | RBC sold 10,000 to Desjardins at 19.00, then crossed 26,000 at 19.01. Desjardins crossed 18,900 at 19.03. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 19.12 Evaluated at bid price : 19.12 Bid-YTW : 6.23 % |
| BNA.PR.C | SplitShare | 49,136 | RBC crossed 46,200 at 19.10. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 19.02 Bid-YTW : 8.34 % |
| RY.PR.G | Perpetual-Discount | 46,700 | TD crossed two blocks of 20,000 shares each at 19.20. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 19.17 Evaluated at bid price : 19.17 Bid-YTW : 5.92 % |
| CM.PR.H | Perpetual-Discount | 41,561 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 19.57 Evaluated at bid price : 19.57 Bid-YTW : 6.22 % |
| BNS.PR.K | Perpetual-Discount | 40,840 | Scotia bought 10,000 from National at 20.28. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-06-04 Maturity Price : 20.24 Evaluated at bid price : 20.24 Bid-YTW : 6.02 % |
| There were 27 other index-included issues trading in excess of 10,000 shares. | |||