Back in 2005-07, Wall Street’s biggest problem was they just couldn’t write enough mortgages. Times have changed, and now their biggest problem is they can’t write enough mortgages (emphasis added):
Wall Street firms are in discussions to pool as much as $1.5 billion of property loans they’ve amassed this year after a slowdown left them unable to stockpile enough mortgages to sell as securities.
Citigroup Inc. (C), Deutsche Bank AG (DBK), Guggenheim Securities LLC, and UBS AG (UBSN) are among lenders in talks to bundle commercial mortgages to be sold as bonds during the fourth quarter, said people familiar with the talks. The firms want to clear their books before year-end and avoid risking drops in value by holding the debt, said the people, who declined to be identified because the plans are preliminary.
…
Wall Street has arranged about $25.6 billion in commercial mortgage-backed securities this year, compared with about $11.5 billion in all of 2010, according to data compiled by Bloomberg. Sales plummeted to $3.4 billion in 2009 compared with a record $234 billion in 2007, the data show.Credit Suisse, which hasn’t offered a deal since sales revived in 2009, informed about 50 employees yesterday that their jobs were likely to be eliminated, said two people with knowledge of the matter, who declined to be identified because the matter isn’t public. The bank is keeping the division that trades the debt, the people said. Jack Grone, a spokesman in New York, for Switzerland’s second-largest bank, declined to comment.
You see that emphasis???? They want to avoid possible drops in value????? And so they want to sell it to their clients????? Betting against their clients????? Isn’t that EVIL?????? How dare they even dream of buying something from one party and selling it to another?????? Occupy Wall Street!
Fitch is warning of rating carnage:
UBS AG (UBSN), Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc had long-term issuer default grades cut by Fitch Ratings, which put more than a dozen other lenders on watch negative as part of a global review.
UBS’s long-term issuer default rating and its “support rating floor” were cut to “A” from “A+” on a “view that the one-notch uplift for close affiliation with the Swiss state is no longer warranted,” the ratings firm said in a statement. Lloyds and RBS were lowered two steps to A from AA- as Fitch said the U.K. is less likely to provide future support.
Fitch also placed viability ratings, and in some cases credit grades, on negative watch for seven global banks including Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) because of new regulations and economic developments. It put European banks such as Credit Agricole SA on watch, based on sovereign debt concerns and said it would review Bank of America Corp. (BAC)’s mortgage-litigation risks.
Placement of the seven global banks — also including Deutsche Bank AG (DBK), Credit Suisse AG, BNP Paribas (BNP) SA, Societe Generale (GLE) SA and Barclays Plc (BARC) — on watch “reflects Fitch’s view that these institutions’ business models are particularly sensitive to the increased challenges the financial markets are facing,” Fitch analysts wrote in a statement. “These challenges result from both economic developments, particularly in the euro area, as well as a myriad of regulatory changes.”
More dissent in the FOMC:
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the central bank has put its credibility at risk by easing during a year in which inflation rose and unemployment fell.
“The committee’s actions at the last two meetings are inconsistent with a systematic pursuit of its communicated objectives,” Kocherlakota said today in a speech in Sidney, Montana. “It follows that these actions diminish the committee’s credibility and so reduce the effectiveness of future committee actions and communications.”
The speech marked the first time Kocherlakota has spoken about policy since opposing a Federal Open Market Committee decision to sell $400 billion of short-term Treasury securities and replace them with $400 billion of longer-term securities.
Spain had its credit rating cut one level by Standard & Poor’s as rising defaults threaten efforts to stem Europe’s sovereign-debt crisis and limit risks for the region’s banks.
The ranking slid to AA-, with a negative outlook, in the third reduction by S&P in three years. The ratings company announced the change in a statement.
“Despite signs of resilience in economic performance during 2011, we see heightened risks to Spain’s growth prospects,” S&P said in the statement. “The financial profile of the Spanish banking system will, in our opinion, weaken further, with the stock of problematic assets rising further.”
It was a good solid day for the Canadian preferred share market, with PerpetualDiscounts winning 22bp, FixedResets gaining 21bp and DeemedRetractibles up 17bp. Volatility was good, with SLF issues prominent on the plus side, contrary to recent experience. Volume was actually above average! RBC had a good day, shutting out the opposition as far as my block reporting goes.
| 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 | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5891 % | 1,965.9 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5891 % | 2,956.7 |
| Floater | 3.66 % | 3.67 % | 154,556 | 18.15 | 2 | -0.5891 % | 2,122.7 |
| OpRet | 4.86 % | 3.20 % | 64,048 | 1.56 | 8 | -0.0097 % | 2,446.2 |
| SplitShare | 5.47 % | 1.78 % | 56,740 | 0.37 | 4 | -0.1373 % | 2,449.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0097 % | 2,236.8 |
| Perpetual-Premium | 5.68 % | 3.96 % | 103,169 | 0.38 | 13 | 0.0182 % | 2,129.5 |
| Perpetual-Discount | 5.38 % | 5.43 % | 111,258 | 14.71 | 17 | 0.2176 % | 2,242.6 |
| FixedReset | 5.16 % | 3.33 % | 198,945 | 2.58 | 61 | 0.2118 % | 2,322.6 |
| Deemed-Retractible | 5.09 % | 4.60 % | 215,426 | 7.71 | 46 | 0.1709 % | 2,189.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| FTS.PR.E | OpRet | -2.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-01 Maturity Price : 25.75 Evaluated at bid price : 26.50 Bid-YTW : 3.28 % |
| BAM.PR.B | Floater | -1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-13 Maturity Price : 14.38 Evaluated at bid price : 14.38 Bid-YTW : 3.67 % |
| SLF.PR.B | Deemed-Retractible | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.75 Bid-YTW : 6.04 % |
| PWF.PR.M | FixedReset | 1.15 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.40 Bid-YTW : 3.33 % |
| BAM.PR.M | Perpetual-Discount | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-13 Maturity Price : 21.60 Evaluated at bid price : 21.90 Bid-YTW : 5.45 % |
| BAM.PR.J | OpRet | 1.17 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2018-03-30 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 4.74 % |
| ELF.PR.G | Perpetual-Discount | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-13 Maturity Price : 20.56 Evaluated at bid price : 20.56 Bid-YTW : 5.81 % |
| SLF.PR.F | FixedReset | 1.23 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.42 Bid-YTW : 3.89 % |
| ELF.PR.F | Perpetual-Discount | 1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-13 Maturity Price : 22.05 Evaluated at bid price : 22.05 Bid-YTW : 6.05 % |
| IAG.PR.C | FixedReset | 1.48 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.74 Bid-YTW : 3.06 % |
| SLF.PR.A | Deemed-Retractible | 1.48 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.56 Bid-YTW : 6.10 % |
| SLF.PR.D | Deemed-Retractible | 1.52 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.35 Bid-YTW : 6.47 % |
| SLF.PR.C | Deemed-Retractible | 1.77 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.30 Bid-YTW : 6.50 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.M | OpRet | 186,900 | Called for redemption. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-04-30 Maturity Price : 25.25 Evaluated at bid price : 25.46 Bid-YTW : 2.67 % |
| ENB.PR.B | FixedReset | 144,840 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 3.69 % |
| BMO.PR.J | Deemed-Retractible | 78,474 | RBC crossed 56,400 at 25.15. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.13 Bid-YTW : 4.53 % |
| TD.PR.N | OpRet | 75,300 | Called for redemption. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-04-30 Maturity Price : 25.25 Evaluated at bid price : 25.46 Bid-YTW : 2.58 % |
| PWF.PR.H | Perpetual-Premium | 52,475 | RBC crossed 49,300 at 25.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-10 Maturity Price : 25.00 Evaluated at bid price : 24.98 Bid-YTW : 4.51 % |
| GWO.PR.G | Deemed-Retractible | 51,570 | RBC crossed blocks of 24,400 and 22,800, both at 25.00. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 5.31 % |
| There were 35 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.G | Deemed-Retractible | Quote: 25.00 – 25.31 Spot Rate : 0.3100 Average : 0.2095 YTW SCENARIO |
| BNA.PR.C | SplitShare | Quote: 20.59 – 20.88 Spot Rate : 0.2900 Average : 0.2099 YTW SCENARIO |
| HSB.PR.D | Deemed-Retractible | Quote: 24.60 – 24.90 Spot Rate : 0.3000 Average : 0.2205 YTW SCENARIO |
| RY.PR.N | FixedReset | Quote: 26.88 – 27.18 Spot Rate : 0.3000 Average : 0.2338 YTW SCENARIO |
| TD.PR.E | FixedReset | Quote: 26.80 – 26.97 Spot Rate : 0.1700 Average : 0.1062 YTW SCENARIO |
| SLF.PR.C | Deemed-Retractible | Quote: 21.30 – 21.58 Spot Rate : 0.2800 Average : 0.2169 YTW SCENARIO |
Hello Mr Hymas,
Should I switch my BAM.PR.E to K
As always your advice is gratefully accepted.
thanks
Puggy
I have addressed this issue in the October edition of PrefLetter, which will be released prior to the opening on Monday.
Thank you for addressing this in your venerable journal Mr Hymas – it is my must read/first read each mid month Monday!
I still need someone to give me fish – I am not yet able to catch them myself in a reliable objective manner.
Puggy
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