The US jobs number was disappointing:
Employers in the U.S. added fewer jobs than forecast in March, underscoring Federal Reserve Chairman Ben S. Bernanke’s concern that recent gains may not be sustained without a pickup in growth.
The 120,000 increase in payrolls, the fewest in five months, followed a revised 240,000 gain in February that was bigger than first estimated, Labor Department figures showed today in Washington. The March increase was less than the most pessimistic forecast in a Bloomberg News survey in which the median estimate called for a 205,000 rise. Unemployment fell to 8.2 percent, the lowest since January 2009, from 8.3 percent.
Stock lending can be profitable!
The other day on Bloomberg (the paid version), I came across several ETFs with incredibly rich dividends. One of them — Guggenheim’s Solar ETF (TAN/NYSE) — far outshined the others. TAN holds about 30 solar energy companies. Its dividend yield is 9.2%, reports Bloomberg and others. Indeed, its dividend of US$2.11, adjusted for a 1:10 reverse split, divided by its price of US$23.02 works out to 9.2%. But is that possible in what should be a high-growth sector?
Digging deeper, only seven of the companies in the ETF, representing about 28% of the total allocation, have ever paid a dividend. Two have postponed dividends for 2012 and another has cut its dividend by more than half. The weighted average yield on the seven companies is under 1%.
Since holdings can change every quarter, I also checked the holdings as of February 2011. The picture was the same: seven dividend payers with an average yield of below 1%.
Where then did most of TAN’s dividend come from? The answer, as revealed by the fund’s prospectus, is securities lending. Nearly 90% of TAN’s investment income for the 12 months ending last August came from lending about half its shares to short sellers.
Who needs retirement in Florida, when you can retire to sunny Spain?
Banks trying to offload billions of euros of property left on their hands by bankrupt developers are selling new apartments at rock-bottom prices with bargain-basement mortgage deals.
Santander, the eurozone’s largest bank, was responsible for the frenzy in Sesena. It offered two-bedroom apartments around a communal swimming pool for 65,000 euros (US$86,100), with 100% mortgages over 40 years, costing as little as 242 euros a month to service, about a sixth of the average Spaniard’s monthly income.
At the peak of the decade-long property boom that preceded the crash, similar apartments would have sold for at least twice that, and for properties it isn’t selling, a Santander mortgage would cover 80% of the property price over 25 years.
Those with an interest in YLO will be happy to learn there is a market for the assets:
AT&T Inc. (T) agreed to sell a majority stake in its Yellow Pages directory division to Cerberus Capital Management LP for about $950 million as part of an effort to dispose of units that are holding back revenue growth.
AT&T will receive $750 million in cash and a $200 million note, according to a statement from the Dallas-based phone carrier today. AT&T will keep a 47 percent stake in the business, which had about $3.3 billion in revenue in 2011.
…
Sales at the Yellow Pages business declined 16 percent last year, compared with revenue growth of about 2 percent for AT&T as a whole.
So $950-million for 53% of a print company with $3.3-billion revenue …. YLO had revenue of $1.3-billion in 2011, but a buyer will have to assume the debt …
Boyd Erman opines in the Globe:
But giving Cerberus the benefit of the assumption that its people have some idea of what they’re doing, the purchase has set a bar for what Yellow Media bondholders, who are now mobilizing, will expect to receive in a restructuring. While the valuation is not enough to create any real recoveries for stockholders, or even preferred shareholders, it is enough to suggest there are gains in store for bondholders gutsy enough to buy Yellow Media paper at distressed levels.
Broadly speaking, Yellow Media has about $1.5-billion of debt that has been trading at about 50 cents on the dollar. If there’s $1-billion of value, that suggests the bonds should be closer to 67 cents on the dollar.
Some bondholders argue there’s more. Applying market multiples to the free cash flow generated from Yellow Media’s old-line and online operations, some bondholders argue you can get to a range of $1.4-billion to $2.2-billion.
It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 5bp, FixedResets down 1bp and DeemedRetractibles losing 15bp. Volatility was negligible. Volume was ridiculously low.
| 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 | -0.4740 % | 2,406.2 |
| FixedFloater | 4.47 % | 3.88 % | 36,935 | 17.48 | 1 | 1.1899 % | 3,489.6 |
| Floater | 3.00 % | 3.01 % | 47,568 | 19.72 | 3 | -0.4740 % | 2,598.0 |
| OpRet | 4.76 % | 2.90 % | 47,539 | 1.16 | 5 | 0.2304 % | 2,505.4 |
| SplitShare | 5.25 % | -5.45 % | 82,164 | 0.69 | 4 | -0.0594 % | 2,691.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2304 % | 2,290.9 |
| Perpetual-Premium | 5.48 % | -0.39 % | 89,170 | 0.15 | 23 | 0.0477 % | 2,218.5 |
| Perpetual-Discount | 5.19 % | 5.13 % | 133,545 | 15.18 | 10 | 0.1578 % | 2,405.4 |
| FixedReset | 5.02 % | 3.06 % | 187,413 | 2.20 | 67 | -0.0132 % | 2,391.6 |
| Deemed-Retractible | 4.97 % | 3.90 % | 199,280 | 3.06 | 46 | -0.1540 % | 2,301.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.B | Floater | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-09 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 3.01 % |
| BAM.PR.G | FixedFloater | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-09 Maturity Price : 22.17 Evaluated at bid price : 21.26 Bid-YTW : 3.88 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.H | FixedReset | 124,740 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-09 Maturity Price : 23.16 Evaluated at bid price : 25.21 Bid-YTW : 3.64 % |
| TRP.PR.B | FixedReset | 94,930 | Desjardins crossed 90,400 at 25.35. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-09 Maturity Price : 23.45 Evaluated at bid price : 25.30 Bid-YTW : 2.85 % |
| BAM.PF.A | FixedReset | 63,380 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-04-09 Maturity Price : 23.14 Evaluated at bid price : 25.13 Bid-YTW : 4.38 % |
| ENB.PR.B | FixedReset | 45,865 | Scotia Capital crossed 40,000 at 25.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.53 Bid-YTW : 3.65 % |
| MFC.PR.H | FixedReset | 31,638 | RBC bought 15,000 from Scotia at 25.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.62 Bid-YTW : 4.20 % |
| TD.PR.E | FixedReset | 27,366 | TD crossed 25,000 at 26.80. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.82 Bid-YTW : 2.43 % |
| There were 7 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IAG.PR.F | Deemed-Retractible | Quote: 25.88 – 26.45 Spot Rate : 0.5700 Average : 0.3564 YTW SCENARIO |
| IGM.PR.B | Perpetual-Premium | Quote: 26.40 – 26.90 Spot Rate : 0.5000 Average : 0.4069 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 25.95 – 26.29 Spot Rate : 0.3400 Average : 0.2697 YTW SCENARIO |
| BNS.PR.J | Deemed-Retractible | Quote: 25.80 – 26.00 Spot Rate : 0.2000 Average : 0.1332 YTW SCENARIO |
| TCA.PR.Y | Perpetual-Premium | Quote: 52.04 – 52.49 Spot Rate : 0.4500 Average : 0.3839 YTW SCENARIO |
| BNS.PR.N | Deemed-Retractible | Quote: 26.25 – 26.49 Spot Rate : 0.2400 Average : 0.1765 YTW SCENARIO |