May 15, 2012

There will be new elections in Greece:

Greece will hold new elections after President Karolos Papoulias failed to broker a governing coalition following an inconclusive May 6 vote, raising concern it may exit the euro. The currency and euro-area stocks fell.

“The country is once again headed to elections in a few days under adverse conditions,” Evangelos Venizelos, the leader of the socialist Pasok party said. “The Greek people told us they didn’t want elections but a coalition government, that they want Greece in the euro.”

Greece’s political impasse means the new vote will have to be held as early as next month, with polls showing that could boost the anti-bailout Syriza party to the top spot. The country may run out of money by early July.

If the Greeks are playing good cop bad cop, it’s working:

German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters there committed to the austerity demanded to stay in the euro.

Requests for measures to bolster growth will be “considered” and the European Union may also “approach Greece with proposals,” Merkel said late yesterday at a joint press conference with Hollande during his first official visit to Berlin. “Greece can stay in the euro area,” and “Greek citizens will be voting on exactly that.”

Smoke and mirrors? I wouldn’t be surprised.

All the fuss about Greece has me thinking … much the same sort of thing applies to Canadian provinces. They, too, can borrow cheaply with a generally narrow spread off Canadas; they, too, do not have the ability to devalue their currency. What would happen if Quebec – just to pick a provincial name at random – were to start to drown under its own debt? What then?

It was a negative day for the Canadian preferred share market, with PerpetualPremiums down 5bp and both FixedResets and DeemedRetractibles losing 9bp. Volatility was muted. It was Enbridge Day as far as blocks were concerned, but otherwise volume was below 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 0.5173 % 2,494.2
FixedFloater 4.42 % 3.79 % 29,542 17.76 1 0.7026 % 3,567.8
Floater 2.89 % 2.91 % 53,372 19.91 3 0.5173 % 2,693.1
OpRet 4.78 % 2.71 % 55,865 1.09 5 0.0283 % 2,509.9
SplitShare 5.20 % -2.84 % 60,268 0.59 4 0.8309 % 2,718.3
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0283 % 2,295.0
Perpetual-Premium 5.45 % 2.54 % 71,934 0.13 25 -0.0522 % 2,229.1
Perpetual-Discount 5.07 % 5.05 % 86,083 15.31 8 -0.2665 % 2,447.2
FixedReset 5.05 % 3.01 % 175,619 2.13 68 -0.0889 % 2,401.2
Deemed-Retractible 4.95 % 3.56 % 177,064 2.75 45 -0.0912 % 2,330.1
Performance Highlights
Issue Index Change Notes
BAM.PR.N Perpetual-Discount -1.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 23.23
Evaluated at bid price : 23.70
Bid-YTW : 5.05 %
IAG.PR.C FixedReset 1.10 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 26.55
Bid-YTW : 2.77 %
BAM.PR.K Floater 1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 18.26
Evaluated at bid price : 18.26
Bid-YTW : 2.90 %
FBS.PR.C SplitShare 2.06 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-12-15
Maturity Price : 10.00
Evaluated at bid price : 10.91
Bid-YTW : -8.83 %
Volume Highlights
Issue Index Shares
Traded
Notes
ENB.PR.H FixedReset 89,430 RBC crossed 41,000 at 25.40.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 23.20
Evaluated at bid price : 25.33
Bid-YTW : 3.57 %
ENB.PR.F FixedReset 62,106 RBC crossed 24,100 at 25.40.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.35
Bid-YTW : 3.72 %
ENB.PR.B FixedReset 50,550 TD crossed two blocks of 10,000 each, both at 25.40.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-01
Maturity Price : 25.00
Evaluated at bid price : 25.35
Bid-YTW : 3.67 %
ENB.PR.D FixedReset 37,647 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 23.23
Evaluated at bid price : 25.35
Bid-YTW : 3.71 %
BNS.PR.Z FixedReset 36,083 Desjardins crossed 10,000 at 25.00.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 25.05
Bid-YTW : 3.21 %
PWF.PR.P FixedReset 35,700 RBC crossed 34,200 at 25.65.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 23.44
Evaluated at bid price : 25.50
Bid-YTW : 3.13 %
There were 26 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
FTS.PR.C OpRet Quote: 25.40 – 25.80
Spot Rate : 0.4000
Average : 0.2484

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-07-01
Maturity Price : 25.25
Evaluated at bid price : 25.40
Bid-YTW : -1.16 %

IGM.PR.B Perpetual-Premium Quote: 25.56 – 26.00
Spot Rate : 0.4400
Average : 0.3323

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.56
Bid-YTW : 5.57 %

MFC.PR.C Deemed-Retractible Quote: 23.52 – 23.75
Spot Rate : 0.2300
Average : 0.1403

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.52
Bid-YTW : 5.26 %

POW.PR.C Perpetual-Premium Quote: 25.46 – 25.72
Spot Rate : 0.2600
Average : 0.1832

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2012-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.46
Bid-YTW : -10.37 %

BNS.PR.T FixedReset Quote: 26.70 – 26.96
Spot Rate : 0.2600
Average : 0.1888

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-25
Maturity Price : 25.00
Evaluated at bid price : 26.70
Bid-YTW : 2.80 %

PWF.PR.P FixedReset Quote: 25.50 – 25.75
Spot Rate : 0.2500
Average : 0.1888

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2042-05-15
Maturity Price : 23.44
Evaluated at bid price : 25.50
Bid-YTW : 3.13 %

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