Interesting article about the R&D Tax Credits:
Open Text Corp. chairman Tom Jenkins, who spent the past year investigating Canada’s R&D spending, said he was stunned at how little effort is spent figuring out what works, and what doesn’t.
That’s true of all government programmes – particularly securities regulation, I might say. If it sounds good, do it! is the slogan, and if you go back to something after five years and find out it’s done nothing – or made matters worse – in order to change the programme … well, that would look like you made a mistake, so don’t check.
Europe is having some success in gaining the ability to manipulate sovereign debt markets:
The European Union reached a deal as part of a short-selling law that will pave the way for an optional ban on naked credit-default swaps on sovereign debt.
Poland, which holds the rotating presidency of the EU, and lawmakers from the European Parliament, reached the accord at a meeting in Brussels, EU spokeswoman Chantal Hughes said.
Under today’s deal, traders may be prevented from buying CDS on government bonds unless they either own the sovereign debt or other assets whose price moves in tandem with it. Nations will have the right to opt out of the measure if they detect signs that it may affect their borrowing costs.
…
German Finance Minister Wolfgang Schaeuble and lawmakers in the European Parliament have called for a ban on naked CDS trades on government debt over concerns the practice fueled the euro zone’s debt crisis. Germany already has restrictions on using swaps to bet on sovereign defaults.Some European governments have also criticized the use of short selling to bet against bank stocks, arguing that the practice has roiled markets. Volatility that sent European bank stocks to two-year lows led France, Spain, Belgium and Italy in August to impose temporary bans on short selling that remain in force.
I’m not sure that this will have any effect – buying protection naked is simply a convenient way to short bonds. Sovereigns are, as a rule, fairly easy to borrow and therefore also fairly easy to short. Forward and Futures contracts are also generally available.
Moody’s cut Spain two notches:
Spain’s credit rating was cut for the third time since June 2010 by Moody’s Investors Service as Europe’s sovereign-debt crisis threatens to engulf the nation.
Moody’s reduced its ranking to its fifth-highest investment grade, cutting it by two levels to A1 from Aa2, with the outlook remaining negative, the rating company said in a statement today. Standard & Poor’s downgraded Spain on Oct. 14 to its fourth-highest investment grade after Fitch Ratings cut it to the same level on Oct. 7, the day it also downgraded Italy.
Spain continues to be vulnerable to market stress and event risk while already moderate growth prospects for the nation have been scaled back further, Moody’s said in the statement.
Tomorrow’s report will be greatly delayed because I’m going to go see Chess again. Yes, I know that when I reviewed it on October 7 I said I didn’t like the production … but six months ago when I heard it was coming to town, I decided that if I was going to wait twenty-five years to see a show, I was damn well going to see it twice.
It was a negative day for the Canadian preferred share market, with PerpetualDiscounts losing 18bp, FixedResets down 11bp and DeemedRetractibles off 6bp. Volatility was mild. Volume was heavy.
| 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 | 0.5534 % | 1,992.0 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5534 % | 2,995.9 |
| Floater | 3.61 % | 3.62 % | 154,567 | 18.26 | 2 | 0.5534 % | 2,150.8 |
| OpRet | 4.85 % | 2.95 % | 62,777 | 1.55 | 8 | -0.0292 % | 2,448.3 |
| SplitShare | 5.45 % | 1.85 % | 53,350 | 0.36 | 4 | -0.0526 % | 2,460.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0292 % | 2,238.8 |
| Perpetual-Premium | 5.69 % | 3.94 % | 107,648 | 0.36 | 13 | -0.1060 % | 2,127.2 |
| Perpetual-Discount | 5.36 % | 5.41 % | 112,222 | 14.77 | 17 | -0.1790 % | 2,252.2 |
| FixedReset | 5.15 % | 3.25 % | 201,139 | 2.47 | 61 | -0.1098 % | 2,326.5 |
| Deemed-Retractible | 5.08 % | 4.58 % | 214,281 | 7.64 | 46 | -0.0624 % | 2,190.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.H | Deemed-Retractible | -1.27 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.36 Bid-YTW : 5.77 % |
| SLF.PR.F | FixedReset | -1.22 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.93 Bid-YTW : 4.68 % |
| SLF.PR.C | Deemed-Retractible | -1.17 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.11 Bid-YTW : 6.63 % |
| POW.PR.B | Perpetual-Discount | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-18 Maturity Price : 24.31 Evaluated at bid price : 24.62 Bid-YTW : 5.45 % |
| SLF.PR.E | Deemed-Retractible | -1.07 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.31 Bid-YTW : 6.56 % |
| GWO.PR.I | Deemed-Retractible | 1.46 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.20 Bid-YTW : 6.04 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.Z | FixedReset | 143,040 | Secondary offering. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.65 Bid-YTW : 3.45 % |
| RY.PR.F | Deemed-Retractible | 113,155 | RBC crossed blocks of 48,000 and 37,400, both at 24.90. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 4.58 % |
| ENB.PR.B | FixedReset | 64,720 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 3.66 % |
| CU.PR.C | FixedReset | 62,799 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.33 Bid-YTW : 3.82 % |
| CM.PR.I | Deemed-Retractible | 46,487 | TD crossed 35,000 at 25.16. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.11 Bid-YTW : 4.57 % |
| TRP.PR.C | FixedReset | 45,307 | Scotia crossed 25,000 at 25.45. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-18 Maturity Price : 23.34 Evaluated at bid price : 25.36 Bid-YTW : 3.19 % |
| There were 45 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| NA.PR.N | FixedReset | Quote: 25.95 – 26.45 Spot Rate : 0.5000 Average : 0.3502 YTW SCENARIO |
| SLF.PR.F | FixedReset | Quote: 25.93 – 26.45 Spot Rate : 0.5200 Average : 0.3718 YTW SCENARIO |
| BNA.PR.E | SplitShare | Quote: 22.12 – 22.55 Spot Rate : 0.4300 Average : 0.3040 YTW SCENARIO |
| TD.PR.C | FixedReset | Quote: 26.26 – 26.51 Spot Rate : 0.2500 Average : 0.1594 YTW SCENARIO |
| ENB.PR.B | FixedReset | Quote: 25.50 – 25.75 Spot Rate : 0.2500 Average : 0.1629 YTW SCENARIO |
| TRP.PR.C | FixedReset | Quote: 25.36 – 25.59 Spot Rate : 0.2300 Average : 0.1447 YTW SCENARIO |