Looks like the bankers’ club will extend its hegemony over Canadian finance:
The so-called Maple Group, consisting of four big banks and eight other financial heavyweights such as pension plans, won the final regulatory approvals necessary to close the $3.6-billion purchase of the TMX Group Inc. Securities commissions in Alberta and British Columbia signed off Wednesday, dropping the last major hurdles.
Italy’s bond rating was cut and its negative outlook reiterated by Moody’s Investors Service as the euro area’s third-biggest economy faces higher funding costs and contagion risk from Greece and Spain.
The ratings company lowered Italy’s government bond rating by two steps to Baa2 from A3, citing a greater risk of a Greek exit from the euro and the Spanish banking system experiencing greater credit losses, according to a statement released in Frankfurt today. That makes Italy’s rating the same as those of Kazakhstan, Bulgaria and Brazil, according to data compiled by Bloomberg.
“Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets,” Moody’s said. “Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.”
It was another good, if rather uneven, day for the Canadian preferred share market, with PerpetualPremiums winning 12bp, FixedResets up 9bp and DeemedRetractibles gaining 1bp. It is most interesting to note that the Median YTW on PerpetualPremiums is negative, something that has happened on only 57 days since 1993-12-31, and happened for the first time on 2011-11-3. While there have been great changes to composition of this index due to the migration of DeemedRetractibles, it is also true that eight of the thirty-four DeemedRetractibles trading at a premium also have a negative YTW; additionally, at what we now know was the peak of the pre-crisis market 2007-3-30, the 53 issues in that day’s PerpetualPremium index had a median YTW of 4.24% … aided by the huge volume of issuance in the 4.5% range that still had nine-years to go before callable at par.
It seems to me, in fact, that the market is now dominated by those who select preferred shares according to Current Yield; and it may well be that they will get bloody noses from issuer redemptions.
Volatility was low. Volume was pathetic. You hear me? PATHETIC!
| 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 | -0.1208 % | 2,291.5 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1208 % | 3,427.9 |
| Floater | 3.18 % | 3.20 % | 70,832 | 19.26 | 3 | -0.1208 % | 2,474.2 |
| OpRet | 4.79 % | 2.55 % | 44,876 | 0.94 | 5 | 0.0308 % | 2,521.3 |
| SplitShare | 5.51 % | 4.97 % | 80,187 | 4.71 | 3 | 0.1073 % | 2,748.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0308 % | 2,305.5 |
| Perpetual-Premium | 5.36 % | -0.54 % | 90,779 | 0.51 | 28 | 0.1202 % | 2,260.8 |
| Perpetual-Discount | 4.98 % | 4.91 % | 108,486 | 15.56 | 6 | 0.3575 % | 2,498.5 |
| FixedReset | 5.01 % | 2.90 % | 194,460 | 4.05 | 70 | 0.0910 % | 2,412.2 |
| Deemed-Retractible | 4.99 % | 3.68 % | 151,242 | 2.84 | 46 | 0.0103 % | 2,329.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IGM.PR.B | Perpetual-Premium | -1.46 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 4.96 % |
| POW.PR.G | Perpetual-Premium | 1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-04-15 Maturity Price : 25.00 Evaluated at bid price : 26.27 Bid-YTW : 4.90 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.A | Deemed-Retractible | 107,170 | Desjardins crossed three blocks, 30,000 at 25.60, and two of 31,000 each at 25.62. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-24 Maturity Price : 25.25 Evaluated at bid price : 25.63 Bid-YTW : 3.90 % |
| MFC.PR.I | FixedReset | 92,110 | RBC crossed two blocks of 40,000 each, both at 25.00. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.97 Bid-YTW : 4.36 % |
| GWO.PR.F | Deemed-Retractible | 60,788 | Nesbitt crossed 57,000 at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.43 Bid-YTW : -1.05 % |
| RY.PR.T | FixedReset | 57,800 | Scotia crossed 25,100 at 27.05; TD crossed 30,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 27.00 Bid-YTW : 2.77 % |
| GWO.PR.Q | Deemed-Retractible | 43,550 | Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.14 Bid-YTW : 5.12 % |
| RY.PR.E | Deemed-Retractible | 30,725 | TD crossed 30,000 at 25.70. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.70 Bid-YTW : 3.86 % |
| There were 7 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IGM.PR.B | Perpetual-Premium | Quote: 26.25 – 26.67 Spot Rate : 0.4200 Average : 0.2847 YTW SCENARIO |
| BAM.PR.R | FixedReset | Quote: 25.93 – 26.32 Spot Rate : 0.3900 Average : 0.2806 YTW SCENARIO |
| PWF.PR.E | Perpetual-Premium | Quote: 25.36 – 25.70 Spot Rate : 0.3400 Average : 0.2602 YTW SCENARIO |
| BNS.PR.X | FixedReset | Quote: 26.50 – 26.75 Spot Rate : 0.2500 Average : 0.1760 YTW SCENARIO |
| BNS.PR.L | Deemed-Retractible | Quote: 25.75 – 25.93 Spot Rate : 0.1800 Average : 0.1220 YTW SCENARIO |
| BNS.PR.O | Deemed-Retractible | Quote: 26.75 – 26.97 Spot Rate : 0.2200 Average : 0.1684 YTW SCENARIO |