The UK government is bringing micromanagement of the economy to new levels:
Buy-to-let landlords have been hit by the second major tax hike in less than a year, as Chancellor George Osborne took action against the “growing crisis of home ownership” in Britain.
Property investors will be hit by a 3pc rise in stamp duty from 1 April 2016, and the surcharge will also apply to people buying second homes. It means the tax bill on a buy-to-let property costing £250,000 will jump from £2,500 to £8,800.
…
Mr Osborne also announced a London Help to Buy initiative, which will allow more young people to get on the housing ladder in the capital, where the average house price for a first-time buyer is now an eye-watering £385,000. The scheme will offer buyers with a 5pc deposit a loan of up to 40pc of the value of a new build home, interest-free for five years.
It was another mixed, mostly negative day for the Canadian preferred share market, with PerpetualDiscounts off 12bp, FixedResets down 44bp and DeemedRetractibles gaining 20bp. The Performance Highlights table is mostly negative, but still showing a lot of churn. Volume was extremely high.
For as long as the FixedReset market is so violently unsettled, I’ll keep publishing updates of the more interesting and meaningful series of FixedResets’ Implied Volatilities. This doesn’t include Enbridge because although Enbridge has a large number of issues outstanding, all of which are quite liquid, the range of Issue Reset Spreads is too small for decent conclusions. The low is 212bp (ENB.PR.H; second-lowest is ENB.PR.D at 237bp) and the high is a mere 268 for ENB.PF.G.
Remember that all rich /cheap assessments are:
» based on Implied Volatility Theory only
» are relative only to other FixedResets from the same issuer
» assume constant GOC-5 yield
» assume constant Implied Volatility
» assume constant spread
Here’s TRP:
Click for Big
TRP.PR.E, which resets 2019-10-30 at +235, is bid at 19.22 to be $1.19 rich, while TRP.PR.C, resetting 2016-1-30 at +154, is $0.87 cheap at its bid price of 12.80.
Click for Big
Most expensive is MFC.PR.I, resetting at +286bp on 2017-9-19, bid at 22.67 to be 0.23 rich, while MFC.PR.K resetting at +222bp on 2018-9-19, is bid at 19.25 to be 0.42 cheap.
Click for Big
The cheapest issue relative to its peers is BAM.PR.R, resetting at +230bp on 2016-6-30, bid at 16.04 to be $1.16 cheap. BAM.PF.G, resetting at +284bp on 2020-6-30 is bid at 20.91 and appears to be $0.89 rich.
Click for Big
FTS.PR.K, with a spread of +205bp, and bid at 18.85, looks $0.65 expensive and resets 2019-3-1. FTS.PR.G, with a spread of +213bp and resetting 2018-9-1, is bid at 18.16 and is $0.65 cheap.
Click for Big
Investment-grade pairs predict an average three-month bill yield over the next five-odd years of -0.35%, with one outlier above +0.50%. There is one junk outlier below -1.50%.
Click for Big
Shall we just say that this exhibits a high level of confidence in the continued rapacity of Canadian banks?
| 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 | 4.29 % | 5.16 % | 32,687 | 17.62 | 1 | -0.6250 % | 1,807.8 |
| FixedFloater | 6.29 % | 5.53 % | 27,994 | 16.86 | 1 | -2.2654 % | 3,101.9 |
| Floater | 4.32 % | 4.34 % | 84,528 | 16.67 | 3 | -1.7386 % | 1,826.1 |
| OpRet | 4.86 % | 3.63 % | 31,441 | 0.75 | 1 | 0.2783 % | 2,740.8 |
| SplitShare | 4.76 % | 5.43 % | 132,884 | 4.34 | 5 | 0.1479 % | 3,219.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1479 % | 2,512.0 |
| Perpetual-Premium | 5.79 % | 0.57 % | 85,153 | 0.08 | 6 | 0.0198 % | 2,510.0 |
| Perpetual-Discount | 5.58 % | 5.63 % | 89,426 | 14.44 | 33 | -0.1223 % | 2,568.0 |
| FixedReset | 4.99 % | 4.66 % | 222,822 | 15.12 | 76 | -0.4367 % | 2,054.7 |
| Deemed-Retractible | 5.16 % | 5.06 % | 119,774 | 5.38 | 33 | 0.2018 % | 2,585.3 |
| FloatingReset | 2.60 % | 3.75 % | 60,630 | 5.74 | 10 | -0.0358 % | 2,184.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.C | FixedReset | -3.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 12.80 Evaluated at bid price : 12.80 Bid-YTW : 4.88 % |
| CM.PR.P | FixedReset | -2.99 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.19 Evaluated at bid price : 18.19 Bid-YTW : 4.59 % |
| BAM.PR.K | Floater | -2.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 10.72 Evaluated at bid price : 10.72 Bid-YTW : 4.46 % |
| CM.PR.O | FixedReset | -2.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.81 Evaluated at bid price : 18.81 Bid-YTW : 4.55 % |
| BAM.PR.R | FixedReset | -2.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 16.04 Evaluated at bid price : 16.04 Bid-YTW : 5.24 % |
| BAM.PR.G | FixedFloater | -2.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 25.00 Evaluated at bid price : 15.10 Bid-YTW : 5.53 % |
| BMO.PR.T | FixedReset | -2.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.58 Evaluated at bid price : 18.58 Bid-YTW : 4.49 % |
| TRP.PR.G | FixedReset | -1.97 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.41 Evaluated at bid price : 20.41 Bid-YTW : 4.76 % |
| BAM.PR.N | Perpetual-Discount | -1.94 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.17 Evaluated at bid price : 20.17 Bid-YTW : 6.00 % |
| BAM.PF.B | FixedReset | -1.92 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.88 Evaluated at bid price : 18.88 Bid-YTW : 4.97 % |
| BAM.PF.C | Perpetual-Discount | -1.88 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.36 Evaluated at bid price : 20.36 Bid-YTW : 6.07 % |
| BAM.PR.B | Floater | -1.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 11.03 Evaluated at bid price : 11.03 Bid-YTW : 4.34 % |
| HSE.PR.G | FixedReset | -1.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 21.37 Evaluated at bid price : 21.37 Bid-YTW : 5.25 % |
| BAM.PR.T | FixedReset | -1.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 16.60 Evaluated at bid price : 16.60 Bid-YTW : 5.14 % |
| TD.PF.B | FixedReset | -1.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.75 Evaluated at bid price : 18.75 Bid-YTW : 4.47 % |
| BAM.PR.X | FixedReset | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 15.10 Evaluated at bid price : 15.10 Bid-YTW : 4.89 % |
| TD.PF.C | FixedReset | -1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.50 Evaluated at bid price : 18.50 Bid-YTW : 4.51 % |
| BAM.PF.A | FixedReset | -1.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 19.98 Evaluated at bid price : 19.98 Bid-YTW : 5.01 % |
| BAM.PR.M | Perpetual-Discount | -1.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.20 Evaluated at bid price : 20.20 Bid-YTW : 5.99 % |
| SLF.PR.J | FloatingReset | -1.47 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.40 Bid-YTW : 9.49 % |
| FTS.PR.M | FixedReset | -1.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.96 Evaluated at bid price : 20.96 Bid-YTW : 4.26 % |
| TRP.PR.D | FixedReset | -1.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 4.72 % |
| BAM.PF.D | Perpetual-Discount | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.74 Evaluated at bid price : 20.74 Bid-YTW : 6.02 % |
| CU.PR.F | Perpetual-Discount | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 20.11 Evaluated at bid price : 20.11 Bid-YTW : 5.63 % |
| VNR.PR.A | FixedReset | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 19.50 Evaluated at bid price : 19.50 Bid-YTW : 4.94 % |
| TD.PF.A | FixedReset | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.75 Evaluated at bid price : 18.75 Bid-YTW : 4.47 % |
| FTS.PR.K | FixedReset | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.85 Evaluated at bid price : 18.85 Bid-YTW : 4.20 % |
| RY.PR.Z | FixedReset | -1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.68 Evaluated at bid price : 18.68 Bid-YTW : 4.44 % |
| TRP.PR.B | FixedReset | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 12.01 Evaluated at bid price : 12.01 Bid-YTW : 4.64 % |
| TRP.PR.F | FloatingReset | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 14.14 Evaluated at bid price : 14.14 Bid-YTW : 4.18 % |
| BMO.PR.Y | FixedReset | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 21.26 Evaluated at bid price : 21.26 Bid-YTW : 4.35 % |
| GWO.PR.Q | Deemed-Retractible | -1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.21 Bid-YTW : 6.34 % |
| NA.PR.Q | FixedReset | 1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 3.54 % |
| MFC.PR.L | FixedReset | 1.29 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.56 Bid-YTW : 6.64 % |
| GWO.PR.N | FixedReset | 1.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.69 Bid-YTW : 9.95 % |
| FTS.PR.H | FixedReset | 1.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 14.19 Evaluated at bid price : 14.19 Bid-YTW : 4.26 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.L | FixedReset | 113,750 | Nesbitt crossed two blocks of 50,000 each, both at 25.10. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.16 Bid-YTW : 3.86 % |
| RY.PR.Z | FixedReset | 54,447 | Nesbitt crossed 13,800 at 18.73. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.68 Evaluated at bid price : 18.68 Bid-YTW : 4.44 % |
| TRP.PR.D | FixedReset | 45,287 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 4.72 % |
| RY.PR.H | FixedReset | 43,956 | Nesbitt crossed 13,00 at 18.81. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.74 Evaluated at bid price : 18.74 Bid-YTW : 4.47 % |
| BAM.PR.X | FixedReset | 42,814 | Scotia crossed 20,000 at 15.10. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 15.10 Evaluated at bid price : 15.10 Bid-YTW : 4.89 % |
| FTS.PR.K | FixedReset | 40,570 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-11-25 Maturity Price : 18.85 Evaluated at bid price : 18.85 Bid-YTW : 4.20 % |
| There were 61 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| TRP.PR.E | FixedReset | Quote: 19.22 – 19.70 Spot Rate : 0.4800 Average : 0.2951 YTW SCENARIO |
| MFC.PR.K | FixedReset | Quote: 19.25 – 19.81 Spot Rate : 0.5600 Average : 0.4089 YTW SCENARIO |
| TRP.PR.G | FixedReset | Quote: 20.41 – 20.84 Spot Rate : 0.4300 Average : 0.3062 YTW SCENARIO |
| BAM.PR.E | Ratchet | Quote: 15.90 – 16.63 Spot Rate : 0.7300 Average : 0.6087 YTW SCENARIO |
| BMO.PR.R | FloatingReset | Quote: 22.64 – 23.00 Spot Rate : 0.3600 Average : 0.2615 YTW SCENARIO |
| CU.PR.D | Perpetual-Discount | Quote: 21.95 – 22.29 Spot Rate : 0.3400 Average : 0.2444 YTW SCENARIO |
re The Stamp Tax. Reflection –
Toronto
Municipal Land Transfer Tax (MLTT)
Up to and including $55,000.00 X 0.5% of total property value
From $55,000.01 to $400,000.00 X 1% of total property value
Over $400,000.00 X 2% of total property value
Ontario
Provincial Land Transfer Tax (PLTT)
Up to $55,000 X 0.5% of total property value
From $55,000 to $250,000 X 1% of total property value
From $250,000 to $400,000 X 1.5% of total property value
From $400,000 up X 2% of total property value
The City of Toronto levies an additional LTT on Toronto real estate in addition to the provincial rate.
Then again first time buyers are given a break so all is good.
🙂
Happy Thanksgiving
My objection to the UK’s increase in stamp tax isn’t with respect to the level, but to the idea that it’s selectively applied to investors and buyers of second homes.
I also object to the Ontario exemption for first-time buyers.