As I have often complained, there is a growing trend in securities administration la-la-land to treat creditors according to who they are rather than what they have. The receiver’s response to a Lehman creditor is another example:
Defunct brokerage Lehman Brothers Inc., which hasn’t paid institutional creditors a dime of its $25 billion hoard after four years in liquidation, is being urged to settle fights with affiliates and pay up.
…
Elliott Management Corp., a New York hedge fund, demanded in June that brokerage trustee James Giddens sell securities and pay an initial $3.2 billion soon. Giddens responded this week, saying Elliott is a “claims trader” and doesn’t share other customers’ interests. Yesterday, two creditor groups sided with Elliott, with an unofficial group in favor of giving Giddens just 60 days to resolve claims with a European affiliate. The official group didn’t set a deadline.
…
By March 30, Giddens had $25.4 billion of securities in hand, Elliott said. By selling securities, he could pay almost 26 cents on the dollar of allowed claims totaling $12.2 billion, while still reserving enough money for disputed claims, the hedge fund said.Goldman Sachs Group Inc. (GS) disagreed, saying customers should get the securities in their accounts, which may be worth more than money poured from a cash pool.
Giddens shouldn’t be treating traders differently from other customers, said Joseph Sarachek, managing director of claims trading at CRT Capital Group LLC, which buys and sells distressed debt.
“There is really no basis in law,” he said. “In the long run, this will hurt liquidity in the marketplace.”
One problem, of course, is that receiverships are a very nice meal ticket for all involved, except the creditors. The company can’t fight back!
DBRS confirmed Brookfield Renewable Energy Partners, proud guarantor of BRF.PR.A:
DBRS has today confirmed the ratings of Brookfield Renewable Energy Partners L.P. (BREP or the Company) and its related security instruments, including the Company-guaranteed Senior Unsecured Debentures and Notes at BBB (high) and Class A Preference Shares, Series 1 at Pfd-3 (high). All trends are Stable. The ratings reflect BREP’s lower-risk renewable generation mix supported by a high level of long-term contracted output, geographical diversification and operating efficiency. Constraints on the ratings include earnings and cash flow volatility resulting from fluctuation in hydrology and wind resources, high dividend payout ratios despite continued high growth-capital spending, and structural subordination to project-level debt. DBRS expects BREP to fund any material acquisition in the future and refinance maturing project debt with non-recourse project-level debt and equity to maintain a reasonable financial profile for the assigned rating category.
The credit metrics of BREP are within range for the current rating profile. Operating cash flow remains well in excess of maintenance capital expenditure requirements. However, significant growth capex and dividends have resulted in free cash flow deficits, which have been funded with a reasonable mix of debt and equity. As a result, leverage has remained relatively stable.
Additionally, DBRS confirmed IGM Financial, proud issuer of IGM.PR.B:
DBRS has today confirmed the ratings of IGM Financial Inc.’s (IGM, or the Company) Unsecured Debentures at A (high) and the First Preferred Shares at Pfd-2 (high). Trends for both are Stable.
IGM is one of the most consistently profitable financial services companies in Canada, reflecting a leading market position in the mutual funds manufacturing and distribution market through the operations of both Investors Group Inc. (IG) and Mackenzie Financial Corporation (Mackenzie). The rating is primarily based on the profitability, operating cash flow and business strengths of the Company’s IG subsidiary, while recognizing the complementary positive contribution of diverse products, brands and distribution channels offered through Mackenzie and Investment Planning Counsel Inc.
In addition to strong profitability, the Company has a conservative financial profile. Debt plus preferred shares-to-EBITDA was less than 1x in 2011, which is conservative, and the Company’s ratio of debt plus preferred shares-to-total capitalization remains appropriate for the rating, at just over 25%. While IG’s redemption rates are better than the industry average, the continuing net mutual fund redemptions at Mackenzie are not yet a major concern in determining IGM’s rating.
As a member of the Power Financial Corporation (Power) group of companies, IGM benefits from the additional financial flexibility of having a strategic shareholder and the associated strong governance and risk avoidance management model typical of Power subsidiaries.
It was a good day for the Canadian preferred share market, with PerpetualPremiums and DeemedRetractibles gaining 10bp and FixedResets winning 11bp. Volatility was average. Volume was 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 | 0.5221 % | 2,419.7 |
| FixedFloater | 4.57 % | 3.93 % | 36,416 | 17.44 | 1 | 0.0000 % | 3,485.6 |
| Floater | 3.03 % | 3.04 % | 57,013 | 19.65 | 3 | 0.5221 % | 2,612.7 |
| OpRet | 4.66 % | 3.37 % | 60,229 | 1.48 | 4 | 0.2503 % | 2,551.6 |
| SplitShare | 5.46 % | 4.86 % | 73,323 | 4.60 | 3 | 0.0399 % | 2,808.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2503 % | 2,333.2 |
| Perpetual-Premium | 5.29 % | 3.29 % | 86,967 | 1.04 | 28 | 0.0951 % | 2,280.9 |
| Perpetual-Discount | 4.94 % | 4.93 % | 96,532 | 15.65 | 3 | 0.3202 % | 2,550.1 |
| FixedReset | 4.97 % | 3.13 % | 178,966 | 4.07 | 72 | 0.1083 % | 2,425.7 |
| Deemed-Retractible | 4.95 % | 3.52 % | 121,747 | 1.25 | 46 | 0.1013 % | 2,367.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| RY.PR.W | Perpetual-Premium | -1.21 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 4.26 % |
| BAM.PR.N | Perpetual-Discount | 1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-09-14 Maturity Price : 23.73 Evaluated at bid price : 24.16 Bid-YTW : 4.90 % |
| IGM.PR.B | Perpetual-Premium | 1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-12-31 Maturity Price : 26.00 Evaluated at bid price : 26.90 Bid-YTW : 4.42 % |
| SLF.PR.E | Deemed-Retractible | 1.21 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.50 Bid-YTW : 5.32 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.P | FixedReset | 337,968 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-09-14 Maturity Price : 23.07 Evaluated at bid price : 24.92 Bid-YTW : 3.86 % |
| MFC.PR.E | FixedReset | 236,077 | RBC crossed 227,000 at 26.07. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-19 Maturity Price : 25.00 Evaluated at bid price : 25.98 Bid-YTW : 3.56 % |
| PWF.PR.P | FixedReset | 104,939 | Desjardins crossed 93,200 at 25.20. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-09-14 Maturity Price : 23.37 Evaluated at bid price : 25.15 Bid-YTW : 3.13 % |
| NA.PR.M | Deemed-Retractible | 100,800 | TD crossed 100,000 at 27.05. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-15 Maturity Price : 26.00 Evaluated at bid price : 27.00 Bid-YTW : 0.65 % |
| BAM.PF.B | FixedReset | 76,600 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-09-14 Maturity Price : 23.09 Evaluated at bid price : 25.00 Bid-YTW : 4.00 % |
| PWF.PR.F | Perpetual-Premium | 75,127 | Nesbitt crossed 75,000 at 25.35. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-14 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : -1.46 % |
| There were 31 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.W | Perpetual-Premium | Quote: 25.30 – 25.75 Spot Rate : 0.4500 Average : 0.2752 YTW SCENARIO |
| MFC.PR.C | Deemed-Retractible | Quote: 23.53 – 23.91 Spot Rate : 0.3800 Average : 0.2342 YTW SCENARIO |
| IAG.PR.E | Deemed-Retractible | Quote: 26.15 – 26.39 Spot Rate : 0.2400 Average : 0.1413 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 26.50 – 26.84 Spot Rate : 0.3400 Average : 0.2588 YTW SCENARIO |
| ENB.PR.D | FixedReset | Quote: 25.05 – 25.30 Spot Rate : 0.2500 Average : 0.1788 YTW SCENARIO |
| BAM.PR.Z | FixedReset | Quote: 25.47 – 25.69 Spot Rate : 0.2200 Average : 0.1599 YTW SCENARIO |