Spend-Every-Penny is continuing his heroic efforts to pump up a Canadian housing bubble:
Ottawa has increased by $50-billion the amount of residential mortgages that it is willing to guarantee.
But this time the Canada Mortgage and Housing Corp., the biggest provider of mortgage default insurance, is not getting any. Instead, the additional backing is going only to private-sector players such as Genworth Canada, who will see their maximum raised to $300-billion from $250-billion.
Genworth Canada disclosed the news on Thursday, which helped drive its shares up more than 3% to $22.73.
The mortgate insurance market in this country is dominated by a handful of players including the CMHC, Genworth Canada and Canada Guarantee, with CMHC accounting for the lion’s share. In the interests of fair competition, all are given access to government guarantees.
Yes, here in Canada, lenders can freely compete to see who can suck arse in Ottawa enough to get mortgage guarantees. Auctioning off the guarantees would be uncivilized; especially since there are those who have a rather peculiar take on the necessity of government guarantees:
In the financial institutions legislation we have a requirement that all mortgages over 80% have mortgage insurance, so on the one hand, we have a requirement that a mortgage lender must receive mortgage insurance from either CMHC or a private mortgage insurer in order to take on the mortgage of a Canadian who wishes to purchase a house with a down payment of less than 20%. With that mandatory requirement in legislation, the government would be under an obligation to ensure that mortgage insurance is available.
The Toronto Exchange will be close the regular session at 1pm on December 24. That will allow us members of the highest paid profession on earth to go shopping and complain about how lazy the clerks are.
CMHC has released the Canadian Registered Covered Bond Programs Guide. DBRS notes:
Upon an initial review of the Guide, DBRS expects that the current Canadian covered bond issuers will either amend their existing respective programs or create new programs to comply with the Guide. Given the substantial requirements prescribed in the Guide, DBRS does not expect any new Canadian covered bond issuances over the next few months while the issuers are implementing the changes to existing programs or establishing new programs. DBRS will not assign any final ratings to any proposed new issuances until DBRS has received confirmation that the relevant issuer, the program and series have been registered in accordance with the Guide.
On November 26 I referred to Ontario lawyers’ claims that there were too many lawyers; I was interested to see some American numbers on the topic in a rather whiny Bloomberg article:
The same housing crash that hammered young architects and loan officers also slammed lawyers. Law schools are turning out about 45,000 degree holders a year for about 25,000 full-time positions available to them, according to the National Association for Law Placement Inc. in Washington. The class of 2011 had the lowest placement with law firms, 49.5 percent, in 36 years.
Whiny? Yes, whiny:
Only one-fifth of those who graduated college since 2006 expect greater success than their parents, a Rutgers survey found earlier this year.
Uh … yeah. You’re only six years out of school, chumps, and a rather significant recession got in the way. Call me back in twenty years and then we can discuss your success relative to your parents.
The Canadian preferred share market was hot today, with PerpetualPremiums up 6bp, FixedResets winning 22bp and DeemedRetractibles gaining 18bp. Volatility was good, all positive and heavily skewed towards FixedResets. 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 | 0.2271 % | 2,485.8 |
| FixedFloater | 4.31 % | 3.66 % | 32,768 | 17.94 | 1 | -0.0906 % | 3,734.8 |
| Floater | 2.80 % | 2.98 % | 59,113 | 19.77 | 4 | 0.2271 % | 2,684.0 |
| OpRet | 4.63 % | 2.21 % | 33,145 | 0.49 | 4 | 0.0191 % | 2,594.5 |
| SplitShare | 4.64 % | 4.74 % | 57,575 | 4.39 | 2 | 0.0000 % | 2,872.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0191 % | 2,372.5 |
| Perpetual-Premium | 5.25 % | 1.62 % | 70,802 | 0.18 | 30 | 0.0575 % | 2,327.1 |
| Perpetual-Discount | 4.85 % | 4.87 % | 134,669 | 15.60 | 4 | 0.1932 % | 2,639.7 |
| FixedReset | 4.92 % | 2.96 % | 228,445 | 4.31 | 77 | 0.2214 % | 2,459.4 |
| Deemed-Retractible | 4.88 % | 0.51 % | 116,255 | 0.39 | 46 | 0.1836 % | 2,425.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TD.PR.G | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 26.79 Bid-YTW : 1.54 % |
| ENB.PR.F | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : 3.53 % |
| MFC.PR.G | FixedReset | 1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-12-19 Maturity Price : 25.00 Evaluated at bid price : 26.31 Bid-YTW : 3.02 % |
| MFC.PR.C | Deemed-Retractible | 1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.44 Bid-YTW : 4.84 % |
| BNS.PR.Z | FixedReset | 1.44 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.73 Bid-YTW : 3.27 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| HSB.PR.E | FixedReset | 82,636 | CIBC crossed 12,000 at 26.55; Desjardins crossed 50,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.53 Bid-YTW : 2.39 % |
| BMO.PR.Q | FixedReset | 55,868 | Scotia crossed 48,800 at 24.65. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.78 Bid-YTW : 3.25 % |
| BNS.PR.Q | FixedReset | 37,545 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.91 Bid-YTW : 3.38 % |
| BMO.PR.N | FixedReset | 36,564 | TD crossed 25,000 at 26.33. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-25 Maturity Price : 25.00 Evaluated at bid price : 26.32 Bid-YTW : 2.36 % |
| RY.PR.T | FixedReset | 36,065 | Scotia crossed 30,000 at 26.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.75 Bid-YTW : 2.28 % |
| BNS.PR.O | Deemed-Retractible | 33,450 | TD crossed 25,000 at 26.67. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-04-26 Maturity Price : 26.00 Evaluated at bid price : 26.64 Bid-YTW : 0.35 % |
| There were 33 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IAG.PR.E | Deemed-Retractible | Quote: 26.69 – 27.00 Spot Rate : 0.3100 Average : 0.1929 YTW SCENARIO |
| RY.PR.W | Perpetual-Premium | Quote: 25.66 – 25.94 Spot Rate : 0.2800 Average : 0.1708 YTW SCENARIO |
| TCA.PR.X | Perpetual-Premium | Quote: 52.00 – 52.42 Spot Rate : 0.4200 Average : 0.3409 YTW SCENARIO |
| BMO.PR.K | Deemed-Retractible | Quote: 26.20 – 26.39 Spot Rate : 0.1900 Average : 0.1155 YTW SCENARIO |
| RY.PR.F | Deemed-Retractible | Quote: 26.00 – 26.33 Spot Rate : 0.3300 Average : 0.2589 YTW SCENARIO |
| HSB.PR.D | Deemed-Retractible | Quote: 25.83 – 26.07 Spot Rate : 0.2400 Average : 0.1710 YTW SCENARIO |