Never mind Greece and Spain, here’s some commentary about an old friend:
Ireland may be forced into a second bailout by mounting loan losses in its banking system, according to Deutsche Bank AG.
Ireland’s bailed-out banks may need capital to cover as much as 4 billion euros ($5.1 billion) more bad-loan provisions than assumed in stress tests last year, Deutsche Bank analysts David Lock and Jason Napier said in a report published today.
…
“Although resilient during 2009 and 2010, mortgage arrears have risen sharply over the past year, house prices are continuing to fall, market liquidity is limited, and over half of customers are now in negative equity,” the analysts said. “We fear the size of negative equity balances for some mortgage holders may greatly reduce their incentive to cooperate, pushing them towards default.”
Meanwhile, on the other side of the world:
Australia and New Zealand Banking Group said volatile conditions in global markets have caused the wholesale funding market for Australian banks to freeze again, a worrying echo of the global financial crisis.
…
“Right now, markets are closed again, and this is what happens in this sort of situation,” ANZ Chief Executive Mike Smith said after a speech to a business group.
…
Australian banks raise about $100 billion annually from wholesale funding markets to bridge a gap between total loans and deposits.
Here’s a story you don’t see too often:
Investors Group Inc., which sells mutual funds through its own financial adviser network, plans to chop fees on many of its offerings in a bid to woo fee-conscious clients.
The move comes after the company saw net fund sales plunge to $175-million in the first quarter during the key registered retirement savings plan (RRSP) from $504-million a year earlier.
Reductions in management fees will range from .05-to 0.40-per-cent annually on the asset value of select funds, the Winnipeg-based firm said in a statement on Friday.
There’s some alarmist talk from S&P:
In a report last week, Standard & Poor’s said the world faces a mountain of roughly $46-trillion (U.S.) in corporate debt needs between now and the end of 2016. In addition to a $30-trillion “wall” of corporate debt that will come due and require refinancing, S&P estimated that corporations worldwide will need between $13-trillion and $16-trillion of new debt to meet their capital spending and working-capital needs – essentially, to finance growth.
…
“This demand for funds will potentially compound the credit rationing that may occur as banks seek to restructure their balance sheets, and bond and equity investors reassess their risk-return thresholds. These factors, amid the current euro zone crisis, a soft U.S. economic recovery following the Great Recession, and the prospect of slowing Chinese growth, raise the downside risk of a perfect storm for credit markets, in our view,” S&P wrote.
The Canadian preferred share market got thumped today, with PerpetualPremiums off 10bp, FixedResets losing 45bp and DeemedRetractibles down 37bp. There is quite a lengthy list of Performance Highlights, all of them losers – the only pattern I see at first glance is that banks are relatively unscathed. 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 | -3.2471 % | 2,417.6 |
| FixedFloater | 4.44 % | 3.80 % | 29,122 | 17.72 | 1 | -1.1537 % | 3,554.6 |
| Floater | 2.99 % | 3.02 % | 59,452 | 19.63 | 3 | -3.2471 % | 2,610.4 |
| OpRet | 4.79 % | 2.32 % | 50,980 | 1.08 | 5 | -0.2308 % | 2,507.0 |
| SplitShare | 5.26 % | -4.17 % | 53,930 | 0.58 | 4 | -0.0595 % | 2,716.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2308 % | 2,292.4 |
| Perpetual-Premium | 5.45 % | 2.82 % | 75,243 | 0.65 | 25 | -0.0962 % | 2,227.6 |
| Perpetual-Discount | 5.13 % | 5.24 % | 88,318 | 15.03 | 8 | -0.8924 % | 2,416.5 |
| FixedReset | 5.07 % | 3.16 % | 175,865 | 2.34 | 68 | -0.4533 % | 2,389.8 |
| Deemed-Retractible | 4.97 % | 3.65 % | 176,465 | 1.54 | 45 | -0.3713 % | 2,321.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.K | Floater | -6.05 % | Not a real loss … the Last Quote was 17.23-18.60, but the issue traded 21,495 shares in a range of 18.00-20. Virtually all the volume was at 18.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 17.23 Evaluated at bid price : 17.23 Bid-YTW : 3.07 % |
| BAM.PR.N | Perpetual-Discount | -4.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 22.16 Evaluated at bid price : 22.50 Bid-YTW : 5.34 % |
| BAM.PR.M | Perpetual-Discount | -2.76 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 22.27 Evaluated at bid price : 22.59 Bid-YTW : 5.32 % |
| BAM.PR.C | Floater | -2.72 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 3.02 % |
| MFC.PR.D | FixedReset | -2.65 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-19 Maturity Price : 25.00 Evaluated at bid price : 26.05 Bid-YTW : 4.23 % |
| MFC.PR.B | Deemed-Retractible | -2.19 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.26 Bid-YTW : 5.57 % |
| TCA.PR.X | Perpetual-Premium | -1.59 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-15 Maturity Price : 50.00 Evaluated at bid price : 52.06 Bid-YTW : 2.83 % |
| SLF.PR.B | Deemed-Retractible | -1.47 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.11 Bid-YTW : 5.39 % |
| TRP.PR.C | FixedReset | -1.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 23.54 Evaluated at bid price : 25.85 Bid-YTW : 2.99 % |
| SLF.PR.A | Deemed-Retractible | -1.36 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.00 Bid-YTW : 5.40 % |
| BAM.PF.A | FixedReset | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 23.11 Evaluated at bid price : 25.03 Bid-YTW : 4.37 % |
| BMO.PR.Q | FixedReset | -1.21 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.25 Bid-YTW : 3.12 % |
| MFC.PR.F | FixedReset | -1.18 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.30 Bid-YTW : 3.81 % |
| BAM.PR.G | FixedFloater | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 22.25 Evaluated at bid price : 21.42 Bid-YTW : 3.80 % |
| TD.PR.P | Deemed-Retractible | -1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-11-01 Maturity Price : 26.00 Evaluated at bid price : 26.21 Bid-YTW : 3.81 % |
| BNS.PR.L | Deemed-Retractible | -1.11 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-04-28 Maturity Price : 25.25 Evaluated at bid price : 25.91 Bid-YTW : 3.62 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.L | FixedReset | 79,450 | National crossed 75,000 at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.08 Bid-YTW : 3.03 % |
| CU.PR.A | Perpetual-Premium | 52,550 | TD crossed 47,400 at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-06-17 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : -11.11 % |
| MFC.PR.H | FixedReset | 48,780 | Scotia sold 23,100 to anonymous at 25.25, and another 13,500 to RBC at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.20 Bid-YTW : 4.68 % |
| TRP.PR.C | FixedReset | 46,192 | Nesbitt crossed 40,000 at 26.05. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-05-18 Maturity Price : 23.54 Evaluated at bid price : 25.85 Bid-YTW : 2.99 % |
| TD.PR.O | Deemed-Retractible | 41,459 | Nesbitt crossed 30,000 at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-06-17 Maturity Price : 25.75 Evaluated at bid price : 25.87 Bid-YTW : 1.86 % |
| SLF.PR.A | Deemed-Retractible | 36,400 | Nesbitt crossed 29,400 at 24.25. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.00 Bid-YTW : 5.40 % |
| There were 26 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BAM.PR.K | Floater | Quote: 17.23 – 18.60 Spot Rate : 1.3700 Average : 0.9391 YTW SCENARIO |
| MFC.PR.D | FixedReset | Quote: 26.05 – 26.74 Spot Rate : 0.6900 Average : 0.4086 YTW SCENARIO |
| BAM.PR.C | Floater | Quote: 17.51 – 18.35 Spot Rate : 0.8400 Average : 0.5723 YTW SCENARIO |
| NA.PR.O | FixedReset | Quote: 26.68 – 27.25 Spot Rate : 0.5700 Average : 0.3605 YTW SCENARIO |
| TCA.PR.X | Perpetual-Premium | Quote: 52.06 – 52.50 Spot Rate : 0.4400 Average : 0.2617 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 23.26 – 23.69 Spot Rate : 0.4300 Average : 0.2522 YTW SCENARIO |