The Great White Short?:
Foreign investors went on an unprecedented selling spree of Canadian bonds in June, offering further evidence of Canada’s fading international appeal.
A record $19-billion decline in foreign-held bonds, more than double the previous high set a decade ago, slashed what has become a reliable source of investment driven by Canada’s stellar reputation for financial outperformance.
…
Recent years saw a consistent net inflow of foreign funds into Canadian securities in excess of $100-billion annually. But of late, the global investing community has grown leery of Canadian real estate, slowing growth and vulnerability to softening commodity prices. Hedge funds lined up to bet against Canada – the trade dubbed the Great White Short.Over the first half of this year, net spending on Canadian bonds by non-residents amount to $16-billion, “a fraction of the net inflow chalked up during the first half of each of the prior five years,” Warren Lovely, an economist at CIBC World Markets, said in a research note.
…
The Canadian dollar would certainly feel the effect of any sustained deterioration in the demand for Canadian bonds. That relationship could also help explain some of the dramatic currency volatility seen from mid-June to early July, when the Canadian dollar dropped by four cents against its U.S. counterpart, [chief currency strategist at Bank of Nova Scotia] Ms. [Camilla] Sutton said.
Samsung Electronics Co. (005930) will introduce a wristwatch-like device named the Galaxy Gear next month that can make phone calls, surf the Web and handle e-mails, according to two people familiar with the matter.
The Galaxy Gear will be powered by Google Inc.’s Android operating system and go on sale this year to beat a potentially competing product from Apple Inc. (AAPL), the people said.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts off 3bp, FixedResets gaining 5bp and DeemedRetractibles down 22bp. The performance highlights table is as lengthy as we have come to expect recently: insurers are notable on the losers’ end, but somebody has decided they really, really like BAM! Volume was well above 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 | -0.0292 % | 2,630.5 |
| FixedFloater | 4.37 % | 3.66 % | 30,706 | 18.04 | 1 | 1.6355 % | 3,801.7 |
| Floater | 2.56 % | 2.89 % | 71,469 | 19.97 | 5 | -0.0292 % | 2,840.2 |
| OpRet | 4.68 % | 4.37 % | 73,409 | 2.82 | 3 | -0.2633 % | 2,597.0 |
| SplitShare | 4.70 % | 4.88 % | 53,787 | 4.12 | 6 | -0.2333 % | 2,947.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2633 % | 2,374.7 |
| Perpetual-Premium | 5.78 % | 5.85 % | 96,831 | 14.09 | 12 | -0.2971 % | 2,243.8 |
| Perpetual-Discount | 5.71 % | 5.79 % | 152,002 | 14.20 | 25 | -0.0325 % | 2,259.7 |
| FixedReset | 5.03 % | 3.85 % | 241,222 | 7.06 | 85 | 0.0516 % | 2,420.6 |
| Deemed-Retractible | 5.26 % | 5.28 % | 200,676 | 6.96 | 43 | -0.2231 % | 2,300.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.G | Deemed-Retractible | -2.81 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.51 Bid-YTW : 6.58 % |
| GWO.PR.H | Deemed-Retractible | -2.45 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.47 Bid-YTW : 6.76 % |
| ELF.PR.G | Perpetual-Discount | -2.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 20.79 Evaluated at bid price : 20.79 Bid-YTW : 5.79 % |
| FTS.PR.H | FixedReset | -1.73 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 20.98 Evaluated at bid price : 20.98 Bid-YTW : 3.95 % |
| FTS.PR.E | OpRet | -1.72 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2016-08-31 Maturity Price : 25.00 Evaluated at bid price : 25.16 Bid-YTW : 4.63 % |
| IGM.PR.B | Perpetual-Premium | -1.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 24.38 Evaluated at bid price : 24.84 Bid-YTW : 5.98 % |
| FTS.PR.F | Perpetual-Discount | -1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 21.64 Evaluated at bid price : 21.64 Bid-YTW : 5.68 % |
| BNA.PR.C | SplitShare | -1.27 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 24.10 Bid-YTW : 5.33 % |
| IAG.PR.A | Deemed-Retractible | -1.16 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.10 Bid-YTW : 6.13 % |
| SLF.PR.E | Deemed-Retractible | -1.10 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.77 Bid-YTW : 6.75 % |
| ENB.PR.D | FixedReset | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 22.33 Evaluated at bid price : 23.05 Bid-YTW : 4.42 % |
| MFC.PR.G | FixedReset | 1.10 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-12-19 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 4.29 % |
| BNS.PR.M | Deemed-Retractible | 1.34 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.29 Bid-YTW : 4.97 % |
| BAM.PR.X | FixedReset | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 21.54 Evaluated at bid price : 21.80 Bid-YTW : 4.38 % |
| BAM.PF.C | Perpetual-Discount | 1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 19.98 Evaluated at bid price : 19.98 Bid-YTW : 6.17 % |
| BAM.PR.G | FixedFloater | 1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 22.27 Evaluated at bid price : 21.75 Bid-YTW : 3.66 % |
| BAM.PF.D | Perpetual-Discount | 1.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 21.00 Evaluated at bid price : 21.00 Bid-YTW : 5.95 % |
| BAM.PR.N | Perpetual-Discount | 1.93 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 19.58 Evaluated at bid price : 19.58 Bid-YTW : 6.17 % |
| IFC.PR.A | FixedReset | 2.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.68 Bid-YTW : 4.02 % |
| GWO.PR.R | Deemed-Retractible | 2.04 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.55 Bid-YTW : 6.11 % |
| BAM.PR.M | Perpetual-Discount | 2.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-08-16 Maturity Price : 19.92 Evaluated at bid price : 19.92 Bid-YTW : 6.06 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.T | FixedReset | 106,136 | TD crossed blocks of 69,900 and 30,000, both at 25.88. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 25.88 Bid-YTW : 2.63 % |
| MFC.PR.C | Deemed-Retractible | 47,700 | TD bought 10,000 from National at 20.71. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.66 Bid-YTW : 6.68 % |
| TD.PR.C | FixedReset | 45,848 | TD crossed 40,000 at 25.28. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.29 Bid-YTW : 3.58 % |
| SLF.PR.F | FixedReset | 39,900 | TD crossed 25,000 at 25.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : 3.84 % |
| BNS.PR.X | FixedReset | 38,575 | TD crossed 30,000 at 25.67. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : 3.08 % |
| BNS.PR.Q | FixedReset | 32,372 | Nesbitt crossed 25,000 at 24.80. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.79 Bid-YTW : 3.66 % |
| There were 46 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| GWO.PR.N | FixedReset | Quote: 21.70 – 22.49 Spot Rate : 0.7900 Average : 0.4631 YTW SCENARIO |
| TD.PR.O | Deemed-Retractible | Quote: 24.43 – 24.98 Spot Rate : 0.5500 Average : 0.3305 YTW SCENARIO |
| FTS.PR.E | OpRet | Quote: 25.16 – 25.92 Spot Rate : 0.7600 Average : 0.5582 YTW SCENARIO |
| MFC.PR.H | FixedReset | Quote: 25.25 – 25.79 Spot Rate : 0.5400 Average : 0.3386 YTW SCENARIO |
| ELF.PR.G | Perpetual-Discount | Quote: 20.79 – 21.30 Spot Rate : 0.5100 Average : 0.3773 YTW SCENARIO |
| MFC.PR.K | FixedReset | Quote: 23.75 – 24.30 Spot Rate : 0.5500 Average : 0.4427 YTW SCENARIO |