Regulatory extortion is still being pondered:
SAC Capital Advisors LP’s record $602 million insider trading settlement with the U.S. Securities and Exchange Commission was approved by a federal judge, who conditioned his ruling on a future appeals court decision in an SEC settlement with Citigroup Inc. (C)
U.S. District Judge Victor Marrero in Manhattan approved the settlement, while saying it remains subject to a ruling by the U.S Court of Appeals in New York in the Citigroup case on whether defendants in SEC cases may be permitted to neither admit nor deny fault in such agreements. Marrero expressed concern about such a provision in the SAC settlement in a hearing on March 28. Marrero’s ruling, which was made public today, is dated yesterday.
In the Citigroup case, U.S. District Judge Jed Rakoff in Manhattan criticized the SEC’s policy of allowing defendants to resolve the agency’s allegations without admitting wrongdoing, ruling that Citigroup’s $285 million SEC settlement couldn’t go forward because the deal wasn’t in the public interest. The appeals court heard arguments in the case in February. The court hasn’t said when it will rule.
SEC Commissioner Luis A. Aguilar is one of the supporters of extra-judicial sentencing:
I must also say that I am disappointed in the Commission’s apparent lack of urgency in implementing the Dodd-Frank Act’s mandate to prevent crooks and so-called “bad actors” from utilizing Rule 506 (the “Bad Actor Rule”). It does not seem controversial for the Commission to prevent felons and other law-breakers from pitching private investment deals to investors. However, it has been almost two years since the Commission’s proposal to disqualify “bad actors” from 506 offerings, and the Commission has yet to adopt the Bad Actor Rule. I agree with U.S. House Financial Services Ranking Democrat Maxine Waters when she said:
[t]he Commission should work swiftly to impose the “bad actor” disqualification before expanding the availability of general solicitation and advertising, particularly since Congress directed the Commission to institute this disqualification provision nearly two years before the JOBS Act.
The adoption of a disqualification provision would provide much needed investor protection and would not be detrimental to legitimate issuers. The continuing delay only hurts investors.
If it is the intent of Congress to include lifetime prohibitions from certain activities as part of criminal sentencing, discretion to do so should be in the hands of the judge at trial – not of Aguilar’s beloved bureaucrats.
Talisman, proud issuer of TLM.PR.A, was confirmed at Pfd-3(high) by DBRS:
The Company’s operating cash flow for the year was affected by its exposure to weak natural gas pricing, along with a reduction in liquids production due to maintenance activities in the North Sea. This resulted in a free cash flow deficit, despite decreased capital spending (capex) of $3.7 billion in 2012 versus $4.3 billion in 2011. The Company used proceeds of asset sales (including the sale of 49% of its U.K. business to Sinopec International Petroleum Exploration and Production Co. (Sinopec); refer to Transactions on page 11) to fund the deficit, along with reducing short-term debt, which resulted in adjusted leverage lowering to 35.6% in 2012 (from 40.2% in 2011). DBRS anticipates future free-cash flow deficits to be funded with proceeds of asset sales/joint ventures.
…
Talisman has indicated that its key priorities are (1) to live within its means through reducing capex to levels within internally generated cash flow, (2) to focus capex on higher-value projects that can come onstream more quickly, (3) to focus on building and strengthening two core regions (the Americas and Southeast Asia) and (4) improving operational performance and reduce cost structure. DBRS notes that successful implementation of these priorities will support the rating of Talisman, however it remains to be seen if the Company will be able to realize the benefits of this shift in strategic focus. An inability to successfully implement its strategic plans could result in further pressure on its financial profile. DBRS would view adjusted leverage approaching 40% to be aggressive for the current rating category, which could result in negative rating action.
Emera, proud issuer of EMA.PR.A and EMA.PR.C, was confirmed by DBRS at Pfd-3(high):
The Company’s business risk profile is viewed as good, as Emera’s earnings and cash flow are largely generated by its relatively low-risk regulated subsidiaries (regulated subsidiaries accounted for over 90% of consolidated net income in 2012). Over the medium to long term, Emera’s regulated earnings and cash flow are expected to grow significantly once the Maritime Link is completed (pending approval from the Nova Scotia Utility and Review Board).
…
Emera is currently on track to deleverage its non-consolidated balance sheet as reflected by (1) a $250 million preferred shares offering in June 2012 and (2) an equity offering of approximately $200 million in December 2012. The Company’s non-consolidated debt-to-capital ratio was 34.2% as of December 31, 2012, versus its peak of 41.5% in Q2 2012. Going forward, DBRS expects Emera to fund significant unforeseen costs or cash shortfalls (including potential cost overruns associated with the Maritime Link) with equity (including preferred shares and dividend re-investment proceeds) and to continue to deleverage its non-consolidated balance sheet to a level that is commensurate with the current BBB (high) rating.
It was a fine day for the Canadian preferred share market, with PerpetualPremiums winning 13bp, FixedResets up 9bp and DeemedRetractibles gaining 8bp. There was no volatility. None. Volume was quite low.
| 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 | -0.0254 % | 2,606.0 |
| FixedFloater | 4.05 % | 3.36 % | 32,866 | 18.67 | 1 | 0.0000 % | 4,055.6 |
| Floater | 2.67 % | 2.88 % | 88,494 | 20.04 | 4 | -0.0254 % | 2,813.8 |
| OpRet | 4.79 % | -0.04 % | 53,262 | 0.18 | 5 | 0.1158 % | 2,614.3 |
| SplitShare | 4.81 % | 4.02 % | 132,211 | 4.13 | 5 | -0.0241 % | 2,957.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1158 % | 2,390.5 |
| Perpetual-Premium | 5.18 % | 2.96 % | 82,988 | 0.53 | 32 | 0.1307 % | 2,383.4 |
| Perpetual-Discount | 4.83 % | 4.83 % | 178,165 | 15.74 | 4 | 0.1622 % | 2,693.0 |
| FixedReset | 4.92 % | 2.78 % | 244,933 | 3.43 | 80 | 0.0851 % | 2,508.1 |
| Deemed-Retractible | 4.86 % | 3.45 % | 125,779 | 0.69 | 44 | 0.0845 % | 2,458.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| No individual gains or losses exceeding 1%! | |||
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| IFC.PR.C | FixedReset | 122,880 | Scotia crossed 50,000 at 26.00; National crossed 67,300 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.99 Bid-YTW : 3.06 % |
| ENB.PR.B | FixedReset | 105,479 | Nesbitt crossed 90,100 at 25.89. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.86 Bid-YTW : 3.25 % |
| ENB.PR.P | FixedReset | 105,435 | Desjardins crossed 100,000 at 25.86. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-03-01 Maturity Price : 25.00 Evaluated at bid price : 25.83 Bid-YTW : 3.48 % |
| PWF.PR.S | Perpetual-Premium | 84,566 | Scotia crossed 75,000 at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2022-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.36 Bid-YTW : 4.60 % |
| SLF.PR.H | FixedReset | 52,112 | Scotia bought blocks of 15,000 and 19,500 from Nesbitt at 25.70, then another 10,000 from TD at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.67 Bid-YTW : 3.14 % |
| BNS.PR.Q | FixedReset | 32,460 | National crossed 20,000 at 24.85. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.80 Bid-YTW : 3.02 % |
| There were 20 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TRI.PR.B | Floater | Quote: 24.14 – 24.55 Spot Rate : 0.4100 Average : 0.2954 YTW SCENARIO |
| ELF.PR.H | Perpetual-Premium | Quote: 26.38 – 26.65 Spot Rate : 0.2700 Average : 0.1574 YTW SCENARIO |
| FTS.PR.H | FixedReset | Quote: 25.36 – 25.70 Spot Rate : 0.3400 Average : 0.2365 YTW SCENARIO |
| ABK.PR.C | SplitShare | Quote: 32.11 – 32.42 Spot Rate : 0.3100 Average : 0.2502 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 24.94 – 25.15 Spot Rate : 0.2100 Average : 0.1521 YTW SCENARIO |
| IAG.PR.E | Deemed-Retractible | Quote: 26.91 – 27.10 Spot Rate : 0.1900 Average : 0.1395 YTW SCENARIO |