Today’s cheerful credit news is about Japan:
Standard & Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.
“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he’s closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade. But the deterioration has been gradual so far, and it’s not like we’re going to move today.”
Meanwhile, in Europe:
Stocks fell, Italian bonds declined and the cost of insuring European government debt against default rose to a record after German Chancellor Angela Merkel ruled out joint euro-area borrowing.
…
The yield on Italy’s 10-year bond climbed 14 basis points to 7.11 percent, while similar-maturity French debt yields rose three basis points to 3.72 percent.Portugal’s bonds fell, with 10-year note yields climbing 90 basis points to 12.21 percent after Fitch Ratings cut the nation’s credit grade one step to BB+, the highest junk status.
Germany’s 10-year bond yield rose as much as 12 basis points to 2.26 percent before trading five basis points higher at 2.20 percent. Two-year note yields increased three basis points to 0.47 percent.
The Royal Canadian Mint’s gold receipt IPO appears to be going very well:
The Royal Canadian Mint raised C$600 million ($573 million) in an initial public offering of securities tied to its gold reserves, more than double its IPO target, according to two people familiar with the sale.
The mint initially sought to raise C$250 million from selling units in Canadian or U.S. dollars at C$20 or $19.29 each, the Ottawa-based firm said. Strong demand from institutional and individual investors drove up the size of the sale, said the people, who declined to be named because terms aren’t public.
…
Each exchange-traded receipt represents ownership in physical gold bullion held in custody of the Royal Canadian Mint. Proceeds from the sale will be used to buy gold, and the buyers of the receipts will own the metal rather than a stake in the mint, according to an Oct. 28 statement.
Huxley said “History is bunk.” Moody’s says Hungary is junk:
Hungary lost its investment-grade rating at Moody’s Investors Service after 15 years as the Cabinet seeks International Monetary Fund help to boost confidence in the European Union’s most-indebted eastern member.
The foreign- and local-currency bond ratings were cut one step to Ba1, the highest junk-level score, from Baa3, the company said today in a statement. Moody’s, which awarded Hungary its investment grade in 1996, assigned a negative outlook. The country is rated the lowest investment grade at Standard & Poor’s and Fitch Ratings.
The government has scrapped two debt sales and reduced the size of another eight auctions in the last three months as the euro region’s debt crisis deepened. Prime Minister Viktor Orban’s Cabinet on Nov. 17 asked for IMF “insurance” that doesn’t entail a loan and doesn’t impose conditions.
It was a rough day for the Canadian preferred share market, with PerpetualDiscounts losing 24bp, FixedResets down 13bp and DeemedRetractibles off 8bp. Not much volatility. Volume was very light – not unexpectedly, what with the US turkeys.
| 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 | -0.0964 % | 2,131.1 |
| FixedFloater | 4.80 % | 4.51 % | 28,451 | 17.25 | 1 | 2.3785 % | 3,211.9 |
| Floater | 3.38 % | 3.41 % | 66,017 | 18.68 | 2 | -0.0964 % | 2,301.0 |
| OpRet | 4.97 % | 1.66 % | 51,439 | 1.47 | 7 | -0.0275 % | 2,475.8 |
| SplitShare | 5.81 % | 6.58 % | 59,294 | 5.16 | 3 | -0.2115 % | 2,525.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0275 % | 2,263.9 |
| Perpetual-Premium | 5.59 % | 2.84 % | 102,058 | 0.43 | 13 | -0.1562 % | 2,149.9 |
| Perpetual-Discount | 5.32 % | 5.19 % | 101,069 | 14.68 | 17 | -0.2366 % | 2,291.7 |
| FixedReset | 5.10 % | 3.04 % | 218,480 | 2.48 | 64 | -0.1273 % | 2,343.7 |
| Deemed-Retractible | 5.05 % | 4.39 % | 202,643 | 3.86 | 46 | -0.0777 % | 2,216.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.E | Perpetual-Discount | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-24 Maturity Price : 23.85 Evaluated at bid price : 25.01 Bid-YTW : 5.50 % |
| POW.PR.B | Perpetual-Discount | -1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-24 Maturity Price : 24.53 Evaluated at bid price : 24.78 Bid-YTW : 5.46 % |
| BAM.PR.G | FixedFloater | 2.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-24 Maturity Price : 25.00 Evaluated at bid price : 19.80 Bid-YTW : 4.51 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.D | FixedReset | 91,050 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-24 Maturity Price : 23.13 Evaluated at bid price : 25.10 Bid-YTW : 3.67 % |
| SLF.PR.H | FixedReset | 66,200 | TD crossed 46,400 at 23.30. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.30 Bid-YTW : 4.54 % |
| CIU.PR.B | FixedReset | 51,600 | Nesbitt crossed 50,000 at 27.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-01 Maturity Price : 25.00 Evaluated at bid price : 27.09 Bid-YTW : 3.20 % |
| RY.PR.E | Deemed-Retractible | 46,681 | TD crossed 34,100 at 25.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.01 Bid-YTW : 4.51 % |
| CM.PR.G | Perpetual-Discount | 45,402 | Desjardins crossed 25,000 at 24.91. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-24 Maturity Price : 24.57 Evaluated at bid price : 24.90 Bid-YTW : 5.46 % |
| BNS.PR.Z | FixedReset | 36,021 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.96 Bid-YTW : 3.20 % |
| There were 16 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| HSB.PR.E | FixedReset | Quote: 27.06 – 27.50 Spot Rate : 0.4400 Average : 0.2850 YTW SCENARIO |
| PWF.PR.E | Perpetual-Discount | Quote: 25.01 – 25.50 Spot Rate : 0.4900 Average : 0.3533 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 26.10 – 26.60 Spot Rate : 0.5000 Average : 0.3992 YTW SCENARIO |
| CIU.PR.B | FixedReset | Quote: 27.09 – 27.55 Spot Rate : 0.4600 Average : 0.3620 YTW SCENARIO |
| IAG.PR.A | Deemed-Retractible | Quote: 22.65 – 23.00 Spot Rate : 0.3500 Average : 0.2610 YTW SCENARIO |
| BAM.PR.O | OpRet | Quote: 25.76 – 26.10 Spot Rate : 0.3400 Average : 0.2513 YTW SCENARIO |