Italy sold some debt – possibly with some assistance:
Italy auctioned 7 billion euros ($9 billion) of debt to bring the total raised this week to almost 20 billion euros, underscoring how the European Central Bank is helping the world’s fourth-biggest borrower tap markets.
Today’s sale by the Treasury in Rome fell short of the 8.5 billion-euro target even as borrowing costs declined from last month. Italy sold 9 billion euros in bills yesterday at about half the rate of the previous sale last month in its first auction since the ECB loaned 489 billion euros to banks to ease credit amid the region’s debt crisis.
…
The euro fell to its lowest against the dollar since September 2010 and 10-year Italian notes slid after today’s sale, keeping their yield above 7 percent, the level that led Greece, Ireland and Portugal to seek bailouts. Short-term securities rose.The Frankfurt-based central bank bought Italian bonds today, according to two people with knowledge of the transactions who declined to be identified because the trades are confidential. An ECB spokesman declined to comment when contacted by phone.
Italian 10-year bonds (.IT10) stayed lower after the auction. The 10-year yield was 7.01 percent at 3:41 p.m. Rome time, pushing the difference with German bunds to 514 basis points. The five- year yield was down seven basis points at 6.16 percent, as investors pointed to the ECB as buoying the shorter-term debt.
The Treasury sold today 2.5 billion euros of securities due in 2014, less than the 3 billion euro maximum for the sale, to yield 5.62 percent. That was down from 7.89 percent at the previous sale on Nov. 29. The Treasury priced 2.5 billion euros of its 5 percent 2022 bond to yield 6.98 percent, compared with 7.56 percent on Nov. 29. Italy also sold about 2 billion euros of bonds due 2021 and a floating-rate security due 2018.
Thailand is contemplating monetizing its bank bail-out debt:
Thailand’s government will today press the central bank chief to take on $35 billion of legacy debt from bank bailouts as Prime Minister Yingluck Shinawatra looks for fiscal scope to finance flood defenses.
Bank of Thailand Governor Prasarn Trairatvorakul meets with cabinet members in Bangkok over the proposal to shift the debt to the BOT’s balance sheet. Deputy Prime Minister Kittiratt Na- Ranong said yesterday the step would save the government as much as 65 billion baht ($2 billion) in annual interest costs that could be used to fund anti-flood measures.
Japan is being more sensible:
Japan’s ruling party compromised on a plan to double the sales tax by 2015 to help reduce the world’s largest public debt, delaying implementation by six months to help lawmakers meet a campaign pledge.
The proposal by Prime Minister Yoshihiko Noda would raise the sales tax from 5 percent to 8 percent in April 2014 and to 10 percent in October 2015. The agreement, reached late yesterday, must be approved by a government panel led by Finance Minister Jun Azumi before discussion with the opposition.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts up 11bp, FixedResets winning 13bp and DeemedRetractibles down 12bp. Volatility was good. Volume continued to be lousy – not surprisingly, given the time of year.
| 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 | 0.7143 % | 2,087.0 |
| FixedFloater | 4.87 % | 4.62 % | 40,108 | 17.04 | 1 | 1.1936 % | 3,163.2 |
| Floater | 3.19 % | 3.47 % | 71,770 | 18.57 | 3 | 0.7143 % | 2,253.4 |
| OpRet | 4.95 % | 1.68 % | 65,599 | 1.38 | 6 | 0.1684 % | 2,467.7 |
| SplitShare | 5.44 % | 2.20 % | 73,632 | 0.94 | 4 | 0.0924 % | 2,572.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1684 % | 2,256.4 |
| Perpetual-Premium | 5.49 % | -2.90 % | 86,190 | 0.09 | 18 | -0.0130 % | 2,187.6 |
| Perpetual-Discount | 5.22 % | 5.11 % | 106,403 | 15.16 | 12 | 0.1093 % | 2,333.6 |
| FixedReset | 5.08 % | 2.89 % | 214,054 | 2.43 | 64 | 0.1327 % | 2,358.6 |
| Deemed-Retractible | 5.00 % | 3.75 % | 193,832 | 2.92 | 46 | -0.1183 % | 2,248.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| W.PR.J | Perpetual-Premium | -1.84 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-01-28 Maturity Price : 25.00 Evaluated at bid price : 25.11 Bid-YTW : -2.90 % |
| GWO.PR.G | Deemed-Retractible | -1.19 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.87 Bid-YTW : 5.30 % |
| RY.PR.C | Deemed-Retractible | -1.19 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-11-24 Maturity Price : 25.00 Evaluated at bid price : 25.81 Bid-YTW : 3.84 % |
| BMO.PR.H | Deemed-Retractible | -1.10 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-02-25 Maturity Price : 25.00 Evaluated at bid price : 25.97 Bid-YTW : 2.33 % |
| PWF.PR.A | Floater | 1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-12-29 Maturity Price : 19.40 Evaluated at bid price : 19.40 Bid-YTW : 2.72 % |
| MFC.PR.D | FixedReset | 1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-19 Maturity Price : 25.00 Evaluated at bid price : 26.86 Bid-YTW : 3.54 % |
| MFC.PR.C | Deemed-Retractible | 1.14 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.34 Bid-YTW : 6.56 % |
| BAM.PR.G | FixedFloater | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-12-29 Maturity Price : 25.00 Evaluated at bid price : 19.50 Bid-YTW : 4.62 % |
| BAM.PR.B | Floater | 1.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-12-29 Maturity Price : 15.10 Evaluated at bid price : 15.10 Bid-YTW : 3.47 % |
| GWO.PR.N | FixedReset | 1.35 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.33 Bid-YTW : 3.86 % |
| IAG.PR.A | Deemed-Retractible | 1.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.81 Bid-YTW : 5.24 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.O | Deemed-Retractible | 44,622 | Desjardins crossed 10,000 at 26.41. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-01-28 Maturity Price : 25.75 Evaluated at bid price : 26.16 Bid-YTW : -5.27 % |
| PWF.PR.G | Perpetual-Premium | 34,050 | Desjardins crossed two blocks of 15,000 each, both at 25.62. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-01-28 Maturity Price : 25.00 Evaluated at bid price : 25.51 Bid-YTW : -7.08 % |
| CM.PR.I | Deemed-Retractible | 18,461 | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-01-31 Maturity Price : 26.00 Evaluated at bid price : 25.94 Bid-YTW : 2.44 % |
| CM.PR.E | Perpetual-Premium | 16,965 | Desjardins crossed 15,000 at 25.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-01-28 Maturity Price : 25.25 Evaluated at bid price : 25.36 Bid-YTW : -5.94 % |
| MFC.PR.A | OpRet | 15,980 | RBC crossed 11,300 at 25.35. YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2015-12-18 Maturity Price : 25.00 Evaluated at bid price : 25.06 Bid-YTW : 4.08 % |
| RY.PR.N | FixedReset | 13,300 | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 27.04 Bid-YTW : 2.64 % |
| There were 6 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BAM.PR.P | FixedReset | Quote: 27.23 – 27.95 Spot Rate : 0.7200 Average : 0.4428 YTW SCENARIO |
| BAM.PR.J | OpRet | Quote: 26.00 – 26.57 Spot Rate : 0.5700 Average : 0.3915 YTW SCENARIO |
| BAM.PR.T | FixedReset | Quote: 25.00 – 25.44 Spot Rate : 0.4400 Average : 0.2635 YTW SCENARIO |
| BAM.PR.K | Floater | Quote: 14.85 – 15.35 Spot Rate : 0.5000 Average : 0.3294 YTW SCENARIO |
| TCA.PR.X | Perpetual-Premium | Quote: 52.20 – 52.94 Spot Rate : 0.7400 Average : 0.5803 YTW SCENARIO |
| RY.PR.H | Deemed-Retractible | Quote: 26.70 – 27.30 Spot Rate : 0.6000 Average : 0.4533 YTW SCENARIO |