Dominique Beauchamp was kind enough to quote me in her article Privilégiées : comment se prémunir contre la hausse des taux (“Preferred: how to protect themselves against rising rates” – translation by Google)
[Translation by Google]
A repeat of 2008, which was flinching preferred shares is not in the cards, since we are not witnessing a credit crisis this time, but a return to normal levels, said for his part James Hymas, a leader of the Preferred Shares, president of Hymas Investment Management and author of prefblog.
…
Mr. Hymas expects a gradual increase in interest rates and an equally gradual effect that the preferred shares. When interest rates rise, fixed income securities fall for the performance of their distribution, dividend or interest increases in proportion to their course, so as to be competitive with the new rates.“Over a period of 12 months, I expect that the Preferred Shares will maintain a positive total return. In other words, the dividend income will fully offset the decline in stock prices, “said Hymas, in an interview.
Well the last few days have been anything but gradual. Some preferreds are losing
about a year’s worth of dividends a day.
A lot of catch up if they are to stay stable.
Well the last few days have been anything but gradual. Some preferreds are losing
about a year’s worth of dividends a day.
A lot of catch up if they are to stay stable.
True enough, but I don’t think we have to start annualizing the last two weeks just yet!
At this point, Straight Perpetuals of all stripes have, essentially, given up their excess gains of the last twelve months and returned only the coupon. We’ll see what the next twelve months brings.