November 28, 2011

Europe is considering another step towards effective nationalization of the banking system:

Banks in states roiled by Europe’s sovereign-debt crisis may be partly shielded from extra costs when they seek government guarantees, according to two people familiar with the situation.

The European Commission will publish rules on state aid for lenders that may dilute the effect of turmoil in the euro area on the fees that banks have to pay for guarantees on their loans and bonds, said the people who couldn’t be identified because the discussions aren’t public. Under the plans, the formula for setting the fees would reduce the impact of soaring debt- insurance costs for the country giving the backstops, one of the people said.

“Renewed tensions” in financial markets are forcing European Union regulators to extend into 2012 special state aid rules for banks that have allowed governments to inject billions of euros into the industry, said EU Competition Commissioner Joaquin Almunia this month. He said he was planning to “clarify and update the rules on pricing and other conditions.”

I’m not saying that’s necessarily the wrong response – I’m just saying that if it is the right response then banks are just another arm of government.

BRF.PR.A was confirmed at Pfd-3(high) by DBRS:

DBRS has today assigned an Issuer Rating of BBB (high) with a Stable trend to Brookfield Renewable Energy Partners L.P. (BREP) and a rating of BBB (high) with a Stable trend to the Senior Unsecured Debentures and Notes (the Notes) of BRP Finance ULC (BRPF). DBRS has also confirmed the Pfd-3 (high) rating with a Stable trend of Class A Preference Shares, Series 1 (the Prefs) of Brookfield Renewable Power Preferred Equity Inc. (BRPP). The ratings of the Notes of BRPF and the Prefs of BRPP are based on guarantees of the parent company, BREP, and its operating subsidiaries. In addition, the rating on the Senior Unsecured Debentures and Notes of Brookfield Renewable Power Inc. (BRPI) and the Issuer Rating and Income Fund rating of Brookfield Renewable Power Fund (the Fund) have been discontinued. These actions resolve the Under Review with Developing Implications assigned to the ratings of BRPI and the Fund on September 13, 2011.

These rating actions follow the closing of the anticipated business combination (the Transaction) today in which in BREP acquired all of the units of the Fund and the equity interests in all of BRPI’s U.S., Brazilian and Canadian power assets not already owned by the Fund. The Transaction and the expected rating outcomes were described in more detail in the DBRS press release dated September 13, 2011.

It was a mixed, uneventful day for the Canadian preferred share market, with PerpetualDiscounts losing 8bp, FixedResets down 5bp and DeemedRetractibles gaining 4bp. Volatility was negligible; volume was average.

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 0.0326 % 2,104.3
FixedFloater 4.92 % 4.66 % 28,713 17.05 1 -1.7812 % 3,130.8
Floater 3.42 % 3.44 % 151,838 18.60 2 0.0326 % 2,272.1
OpRet 4.95 % 0.72 % 49,744 1.46 7 0.1484 % 2,482.9
SplitShare 5.79 % 6.40 % 54,694 5.15 3 0.2257 % 2,535.3
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1484 % 2,270.3
Perpetual-Premium 5.59 % 3.12 % 97,593 0.41 13 0.1008 % 2,150.8
Perpetual-Discount 5.32 % 5.37 % 103,679 14.67 17 -0.0798 % 2,291.7
FixedReset 5.11 % 3.06 % 215,197 2.46 64 -0.0451 % 2,341.0
Deemed-Retractible 5.05 % 4.42 % 197,700 3.84 46 0.0384 % 2,216.6
Performance Highlights
Issue Index Change Notes
BAM.PR.X FixedReset -2.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 22.75
Evaluated at bid price : 24.01
Bid-YTW : 3.73 %
BAM.PR.G FixedFloater -1.78 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 25.00
Evaluated at bid price : 19.30
Bid-YTW : 4.66 %
Volume Highlights
Issue Index Shares
Traded
Notes
ENB.PR.D FixedReset 422,680 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 23.13
Evaluated at bid price : 25.10
Bid-YTW : 3.74 %
BAM.PR.Z FixedReset 140,977 Recent new issue.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 23.15
Evaluated at bid price : 25.15
Bid-YTW : 4.42 %
BAM.PR.H OpRet 42,231 TD crossed 40,000 at 25.35.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2011-12-28
Maturity Price : 25.00
Evaluated at bid price : 25.35
Bid-YTW : 0.01 %
CM.PR.G Perpetual-Discount 41,173 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 24.57
Evaluated at bid price : 24.90
Bid-YTW : 5.47 %
CM.PR.E Perpetual-Discount 35,260 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 24.70
Evaluated at bid price : 24.99
Bid-YTW : 5.66 %
IAG.PR.E Deemed-Retractible 31,233 TD crossed blocks of 10,000 and 15,000, both at 26.05.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.00
Bid-YTW : 5.26 %
There were 31 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
HSB.PR.C Deemed-Retractible Quote: 24.98 – 25.73
Spot Rate : 0.7500
Average : 0.4794

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.98
Bid-YTW : 5.25 %

BMO.PR.O FixedReset Quote: 27.36 – 27.68
Spot Rate : 0.3200
Average : 0.1975

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-25
Maturity Price : 25.00
Evaluated at bid price : 27.36
Bid-YTW : 2.59 %

BMO.PR.N FixedReset Quote: 27.15 – 27.44
Spot Rate : 0.2900
Average : 0.1861

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-25
Maturity Price : 25.00
Evaluated at bid price : 27.15
Bid-YTW : 2.57 %

BAM.PR.X FixedReset Quote: 24.01 – 24.60
Spot Rate : 0.5900
Average : 0.4881

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2041-11-28
Maturity Price : 22.75
Evaluated at bid price : 24.01
Bid-YTW : 3.73 %

IAG.PR.C FixedReset Quote: 26.27 – 26.70
Spot Rate : 0.4300
Average : 0.3281

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.27
Bid-YTW : 3.41 %

GWO.PR.J FixedReset Quote: 26.45 – 26.74
Spot Rate : 0.2900
Average : 0.2085

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.45
Bid-YTW : 3.60 %

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