Who will be the next domino? Willem Buiter thinks Spain:
Spain has never been so close to default and Greece, Ireland and Portugal may need further bailouts, Citigroup Inc. chief economist Willem Buiter said.
“Spain is the key country about which I’m most worried,” Buiter, a former Bank of England policy maker, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “It’s really moved to the wrong side of the spectrum and is now at greater risk of sovereign restructuring than ever before.”
…
Spanish bonds fell, pushing 10-year yields to the highest level in more than a month at 5.388 percent at 5 p.m. Madrid time, widening the spread over similar German maturities to 3.4 percentage points, 20 basis points more than yesterday.
Bottom-fishers are in the US housing market:
Waypoint, a private-equity real-estate fund with $150 million in assets, is pioneering a new approach to making money from the housing crash. Since 2007, investors have been trolling the cratered suburbs stretching from California to Florida (SPCSMIA) for cheap houses to flip. And firms such as PennyMac Mortgage Investment Trust have sought value in subprime-mortgage-backed securities.
Waypoint, which owns 1,100 houses and is buying five more a day, is betting that converting foreclosures into rentals is a better way to make a profit. Other firms, such as Landsmith LP in San Francisco, are now cropping up and pursuing the same strategy in Arizona, California and Nevada.
With many suburban homes selling for half their peak values and demand for rentals from prospective tenants climbing, Waypoint was earning an 8 to 9 percent return on its capital as of Dec. 31, according to a quarterly report it sends to clients. That beats the 6.3 percent gain in the BI NA Multifamily REIT (BRFREITC) Index, which tracks the performance of 27 apartment building operators.
The cost of renting in the U.S. reached an all-time high compared with that of buying a home at the end of last year, indicating it’s a good time for investors to purchase, Deutsche Bank AG (DBK) analysts said in a note today.
There’s a grim outlook for airlines:
Emirates, the biggest airline by international traffic, said more carriers will go bust this year as fuel costs and sluggish economies undermine profitability.
…
Airline profits will plunge 62 percent in 2012 to $3 billion, equal to a 0.5 percent margin on sales, as oil prices rise, the International Air Transport Association said this week. Emirates’s fuel bill accounts for 45 percent of costs and may jump by an “incredibly challenging” $1.7 billion in the year ending March 31, according to Clark, who says he’s sticking with a no-hedging strategy rather than risking a losing bet.
…
AMR Corp. (AMR1)’s American Airlines is restructuring after filing for Chapter 11 bankruptcy and India’s Kingfisher Airlines Ltd. (KAIR) may lose its license as it struggles with cash shortages and losses. That’s after Barcelona-based Spanair SA collapsed Jan. 27, followed that week by Hungarian national carrier Malev Zrt. (MALEV)
Air Canada will do all right, since competing with them is illegal, as is negotiating labour contracts.
Toronto Shitty Council debated Sheppard Avenue transit today. My favourite question was:
Cllr Minnan-Wong asks Andy Byford why TTC did not have ready figures on operating costs of LRTs v subways. He says wk now done. #TOcouncil
Glad the work’s been done now! Now I want to know: is there anybody, anybody at all in TTC management who deserves to keep their job?
The Canadian preferred share market got smacked again today, with PerpetualPremiums down 20bp, FixedResets off 11bp and DeemedRetractibles losing 27bp. The Performance Highlights table is suitably long. Volume was average.
PerpetualDiscounts (all seven of them!) now yield 5.19%, equivalent to 6.75% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.7%, so the pre-tax interest-equivalent spread (in this context, “the Seniority Spread”) is now about 205bp, unchanged from that reported on March 14.
| 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 | -0.3617 % | 2,399.3 |
| FixedFloater | 4.54 % | 3.93 % | 38,317 | 17.38 | 1 | 0.4323 % | 3,432.2 |
| Floater | 3.01 % | 2.98 % | 47,007 | 19.77 | 3 | -0.3617 % | 2,590.6 |
| OpRet | 4.93 % | 3.20 % | 49,825 | 1.24 | 6 | 0.3041 % | 2,496.9 |
| SplitShare | 5.29 % | -2.79 % | 83,767 | 0.73 | 4 | -0.0698 % | 2,673.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3041 % | 2,283.2 |
| Perpetual-Premium | 5.43 % | 3.46 % | 99,567 | 0.83 | 25 | -0.2001 % | 2,207.8 |
| Perpetual-Discount | 5.17 % | 5.19 % | 189,370 | 15.16 | 7 | -0.7860 % | 2,394.7 |
| FixedReset | 5.07 % | 3.26 % | 191,734 | 2.25 | 67 | -0.1067 % | 2,375.1 |
| Deemed-Retractible | 4.98 % | 4.06 % | 211,460 | 3.08 | 46 | -0.2729 % | 2,291.1 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.N | Perpetual-Discount | -2.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-03-21 Maturity Price : 22.54 Evaluated at bid price : 22.90 Bid-YTW : 5.19 % |
| BAM.PR.M | Perpetual-Discount | -2.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-03-21 Maturity Price : 22.38 Evaluated at bid price : 22.77 Bid-YTW : 5.21 % |
| CIU.PR.A | Perpetual-Premium | -2.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-03-21 Maturity Price : 24.36 Evaluated at bid price : 24.65 Bid-YTW : 4.69 % |
| BAM.PR.K | Floater | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-03-21 Maturity Price : 17.24 Evaluated at bid price : 17.24 Bid-YTW : 3.04 % |
| RY.PR.Y | FixedReset | -1.52 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-11-24 Maturity Price : 25.00 Evaluated at bid price : 26.61 Bid-YTW : 3.76 % |
| IAG.PR.F | Deemed-Retractible | -1.46 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2019-03-31 Maturity Price : 25.00 Evaluated at bid price : 25.67 Bid-YTW : 5.44 % |
| GWO.PR.H | Deemed-Retractible | -1.22 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.26 Bid-YTW : 5.25 % |
| MFC.PR.B | Deemed-Retractible | -1.06 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.36 Bid-YTW : 5.56 % |
| IAG.PR.A | Deemed-Retractible | -1.00 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.75 Bid-YTW : 5.27 % |
| SLF.PR.H | FixedReset | 1.04 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.25 Bid-YTW : 4.24 % |
| HSB.PR.D | Deemed-Retractible | 1.11 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.25 Evaluated at bid price : 25.51 Bid-YTW : 4.28 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.B | Deemed-Retractible | 118,444 | RBC crossed 109,500 at 25.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.25 Evaluated at bid price : 25.54 Bid-YTW : 4.33 % |
| BAM.PF.A | FixedReset | 79,550 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-03-21 Maturity Price : 23.08 Evaluated at bid price : 24.97 Bid-YTW : 4.45 % |
| ENB.PR.F | FixedReset | 70,349 | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.31 Bid-YTW : 3.92 % |
| TD.PR.R | Deemed-Retractible | 54,401 | Scotia crossed 30,000 at 26.85; TD crossed 20,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-04-30 Maturity Price : 26.00 Evaluated at bid price : 26.93 Bid-YTW : 2.76 % |
| CM.PR.J | Deemed-Retractible | 35,981 | Called for redemption. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-04-30 Maturity Price : 26.00 Evaluated at bid price : 26.23 Bid-YTW : 1.76 % |
| POW.PR.G | Perpetual-Premium | 34,352 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-15 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 5.43 % |
| There were 30 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TCA.PR.X | Perpetual-Premium | Quote: 52.01 – 52.55 Spot Rate : 0.5400 Average : 0.3815 YTW SCENARIO |
| RY.PR.Y | FixedReset | Quote: 26.61 – 27.01 Spot Rate : 0.4000 Average : 0.2464 YTW SCENARIO |
| RY.PR.H | Deemed-Retractible | Quote: 26.85 – 27.23 Spot Rate : 0.3800 Average : 0.2357 YTW SCENARIO |
| BAM.PR.K | Floater | Quote: 17.24 – 17.64 Spot Rate : 0.4000 Average : 0.2660 YTW SCENARIO |
| TD.PR.P | Deemed-Retractible | Quote: 26.32 – 26.66 Spot Rate : 0.3400 Average : 0.2196 YTW SCENARIO |
| PWF.PR.I | Perpetual-Premium | Quote: 25.61 – 25.89 Spot Rate : 0.2800 Average : 0.1677 YTW SCENARIO |
[…] PerpetualDiscounts (all seven of them!) now yield 5.33%, equivalent to 6.93% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.55%, so the pre-tax interest-equivalent spread (in this context, the Seniority Spread) is now about 240bp, a sharp widening from the 205bp reported March 21. […]