When does a recession become a depression? Ask the Greeks:
Greece’s economy shrank by 6.9 per cent in the third quarter of the year, compared with the same period in 2011.
The national statistics agency says that the decrease was less than the 7.2-per-cent drop estimated in November, based on new data that wasn’t available last month.
However, the Greeks have the answer – steal from bank shareholders:
Greece’s three biggest banks said they participated in the government’s 10 billion-euro ($13 billion) buyback of sovereign debt, the second hit to their bond holdings this year as the nation rushes to cut a debt load that threatens further international aid.
National Bank of Greece SA, the largest lender, Alpha Bank SA and Eurobank Ergasias SA said in statements to the Athens bourse today that their boards agreed unanimously to join the offer, which ended at 7 p.m. Athens time. No further details were provided.
…
Stung by the biggest sovereign restructuring in history earlier this year, the Greek banks got a promise that they won’t be subject to any legal proceedings from shareholders for participating in the offer. Finance Minister Yannis Stournaras said today the banks would have legal indemnity from potential shareholder lawsuits.The buyback is aimed at the 62 billion euros of new bonds issued when Greece restructured its privately held debt in March. Greek banks held about 15 billion euros of the bonds, while the country’s pension funds had 8 billion euros, according to a Nov. 27 draft report by the troika of the European Commission, European Central Bank and IMF.
…
The prices offered for bonds maturing from 2023 to 2042 averaged 33.1 percent of face value, based on information in a statement from the Athens-based Public Debt Management Agency on Dec. 3.
There was a good, but not great, US Jobs number:
Total nonfarm payroll employment rose by 146,000 in November, and the unemployment rate edged down to 7.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in retail trade, professional and business services, and health care.
The drop in the jobless rate, from 7.9 percent in October, wasn’t great news because of why it happened: More people dropped out of the labor force so they weren’t counted among the unemployed. The labor-force participation rate remains depressed more than three years after the end of the 2007-09 recession. If it were at normal levels, the unemployment rate would be substantially higher.
IIROC has released new rules on electronic trading:
The amendments expand on existing obligations under the Universal Market Integrity Rules (UMIR) by assigning IIROC-regulated dealers clear supervisory and gatekeeper responsibilities to protect against errors related to electronic trading. The changes will ensure that market participants have appropriate automated filters, testing of algorithms, and other risk management tools in place for handling orders before those orders enter the marketplace.
For “gatekeeper”, read “policeman”. Everybody’s a policeman! Yay!
DBRS confirmed BIG.PR.B and BIG.PR.C at Pfd-2:
The Class B Preferred Shares and Class C Preferred Shares yield 7.00% and 5.75% annually, respectively, on their issue price of $12 per Preferred Share and rank pari passu with respect to return of principal and payment of dividends. Holders of the Capital Shares are expected to receive all excess dividend income after Preferred Share distributions and other Company expenses have been paid.
DBRS last confirmed the rating of the Preferred Shares at Pfd-2 on December 7, 2011. Performance has been generally stable since the last rating confirmation, with the NAV of the Company fluctuating between $28 and $32. The current dividend coverage ratio is 1.6 times and the current downside protection (as of November 30, 2012) available to holders of the preferred shares is approximately 62.4%. The confirmation of the rating of the Preferred Shares is based primarily on the level of downside protection and dividend coverage available, as well as on the high credit quality and consistency of dividend distributions of the underlying names in the Portfolio.
DBRS confirmed BSD.PR.A at Pfd-4(low):
As of September 30, 2012, the Portfolio consisted of 68% Canadian common stock, 22% REITs, 6% power generation and pipeline trusts and 3% Canadian preferred stock. Since the rating was last confirmed in December 2011, performance has been slightly negative. Downside protection available to holders of the Preferred Securities has slowly trended lower over the past year, falling from 23.9% on November 30, 2011, to 17.4% as of November 30, 2012. The yield on the Portfolio has also decreased slightly, causing the distribution coverage ratio to drop to 0.8 times (as of November 30, 2012). Despite the reduction, downside protection remains at levels sufficient for a Pfd-4 (low) rating. The rating on the Preferred Securities continues to be constrained by the large percentage of underlying securities in the Portfolio that are not rated by any rating agency and the grind on the Portfolio due to distributions exceeding income.
The redemption date for the Preferred Securities is March 31, 2015.
It was a mixed day for the Canadian preferred share market, with PerpetualPremiums down 10bp, FixedResets gaining 3bp and DeemedRetractibles off 1bp. Volatility was minimal. Volume was average.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| 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 | -0.0531 % | 2,477.6 |
| FixedFloater | 4.11 % | 3.46 % | 26,490 | 18.35 | 1 | -0.6452 % | 3,912.6 |
| Floater | 2.79 % | 3.01 % | 58,233 | 19.63 | 4 | -0.0531 % | 2,675.2 |
| OpRet | 4.59 % | 1.44 % | 47,967 | 0.49 | 4 | -0.1419 % | 2,600.0 |
| SplitShare | 4.66 % | 4.79 % | 65,388 | 4.42 | 2 | 0.0203 % | 2,855.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1419 % | 2,377.4 |
| Perpetual-Premium | 5.26 % | 1.66 % | 71,794 | 0.83 | 30 | -0.1014 % | 2,317.6 |
| Perpetual-Discount | 4.83 % | 4.86 % | 92,344 | 15.63 | 4 | 0.0607 % | 2,632.1 |
| FixedReset | 4.94 % | 3.09 % | 223,262 | 4.35 | 77 | 0.0257 % | 2,449.0 |
| Deemed-Retractible | 4.91 % | 3.15 % | 117,677 | 0.70 | 46 | -0.0085 % | 2,406.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IAG.PR.G | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.86 Bid-YTW : 3.43 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.S | FixedReset | 202,470 | Nesbitt crossed 150,000 at 24.85; Desjardins crossed 20,000 at 24.82. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.82 Bid-YTW : 3.18 % |
| BNS.PR.Q | FixedReset | 134,265 | Nesbitt crossed 100,000 at 24.70. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.69 Bid-YTW : 3.41 % |
| ENB.PR.T | FixedReset | 104,111 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-12-07 Maturity Price : 23.10 Evaluated at bid price : 25.01 Bid-YTW : 3.71 % |
| CM.PR.L | FixedReset | 87,686 | Nesbitt crossed 35,000 at 26.80; National crossed 49,600 at 26.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.75 Bid-YTW : 1.89 % |
| ENB.PR.P | FixedReset | 59,887 | RBC crossed 50,000 at 25.18. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-12-07 Maturity Price : 23.16 Evaluated at bid price : 25.17 Bid-YTW : 3.68 % |
| MFC.PR.J | FixedReset | 59,750 | Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.16 Bid-YTW : 3.89 % |
| There were 33 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.O | Perpetual-Premium | Quote: 26.63 – 27.00 Spot Rate : 0.3700 Average : 0.2294 YTW SCENARIO |
| BAM.PR.G | FixedFloater | Quote: 23.10 – 23.80 Spot Rate : 0.7000 Average : 0.6336 YTW SCENARIO |
| HSE.PR.A | FixedReset | Quote: 25.55 – 25.76 Spot Rate : 0.2100 Average : 0.1483 YTW SCENARIO |
| PWF.PR.R | Perpetual-Premium | Quote: 26.60 – 26.80 Spot Rate : 0.2000 Average : 0.1432 YTW SCENARIO |
| ENB.PR.N | FixedReset | Quote: 25.22 – 25.38 Spot Rate : 0.1600 Average : 0.1085 YTW SCENARIO |
| RY.PR.I | FixedReset | Quote: 25.29 – 25.62 Spot Rate : 0.3300 Average : 0.2791 YTW SCENARIO |