December 20, 2016

There’s a lot of Canadian bond issuance south of the border:

Canadian companies have issued about $69 billion of debt in U.S. markets this year, up 12 percent from a year ago. That compares with about C$93 billion in the domestic market, a similar amount — $70 billion — when adjusted for currency, and a 3 percent decline from 2015. The move south is being driven by the lure of lower borrowing costs in America‚Äôs far larger market, where the high-quality debt of Canadian companies is being lapped up.

The downside for Canadian investors is that deals done south of the border are frequently sold to U.S. investors first. Canadians must wait until those U.S. bond buyers start to sell their notes in the secondary market, which can mean losing out when prices of newly issued bonds rise. Companies meanwhile are chasing the best terms, regardless of geography.

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It would be most interesting to learn just how much of this effect was due to the crowding out of Canadian investment capital by our bloated banking sector.

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 -0.0222 % 1,802.9
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.0222 % 3,293.5
Floater 4.20 % 4.25 % 55,800 16.92 4 -0.0222 % 1,898.1
OpRet 0.00 % 0.00 % 0 0.00 0 -0.0330 % 2,929.8
SplitShare 4.82 % 4.68 % 62,895 4.28 6 -0.0330 % 3,498.8
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0330 % 2,729.9
Perpetual-Premium 5.48 % 5.55 % 88,075 14.40 23 -0.3622 % 2,641.0
Perpetual-Discount 5.53 % 5.53 % 103,495 14.54 15 -0.2282 % 2,720.1
FixedReset 4.78 % 4.67 % 241,261 6.75 96 -0.1512 % 2,139.1
Deemed-Retractible 5.19 % 4.74 % 142,914 4.54 32 -0.2415 % 2,742.1
FloatingReset 2.84 % 3.97 % 45,699 4.79 12 -0.3220 % 2,309.1
Performance Highlights
Issue Index Change Notes
CU.PR.C FixedReset -2.18 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 19.74
Evaluated at bid price : 19.74
Bid-YTW : 4.57 %
TRP.PR.F FloatingReset -2.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 15.05
Evaluated at bid price : 15.05
Bid-YTW : 3.98 %
BMO.PR.S FixedReset -1.81 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 19.57
Evaluated at bid price : 19.57
Bid-YTW : 4.60 %
CCS.PR.C Deemed-Retractible -1.75 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.50
Bid-YTW : 6.63 %
BMO.PR.Y FixedReset -1.71 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 21.30
Evaluated at bid price : 21.30
Bid-YTW : 4.58 %
SLF.PR.H FixedReset -1.66 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 17.16
Bid-YTW : 8.45 %
BAM.PR.X FixedReset -1.65 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 14.90
Evaluated at bid price : 14.90
Bid-YTW : 5.06 %
SLF.PR.J FloatingReset -1.41 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 14.00
Bid-YTW : 9.91 %
MFC.PR.F FixedReset -1.41 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 14.03
Bid-YTW : 10.53 %
RY.PR.O Perpetual-Premium -1.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 23.66
Evaluated at bid price : 24.02
Bid-YTW : 5.13 %
BMO.PR.T FixedReset -1.29 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 19.12
Evaluated at bid price : 19.12
Bid-YTW : 4.60 %
BMO.PR.Z Perpetual-Premium -1.21 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 24.15
Evaluated at bid price : 24.55
Bid-YTW : 5.12 %
BAM.PR.N Perpetual-Discount -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 20.67
Evaluated at bid price : 20.67
Bid-YTW : 5.78 %
MFC.PR.O FixedReset -1.05 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-06-19
Maturity Price : 25.00
Evaluated at bid price : 26.31
Bid-YTW : 4.34 %
MFC.PR.C Deemed-Retractible -1.03 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.23
Bid-YTW : 7.01 %
TRP.PR.H FloatingReset -1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 11.65
Evaluated at bid price : 11.65
Bid-YTW : 3.77 %
BAM.PR.R FixedReset -1.00 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 16.79
Evaluated at bid price : 16.79
Bid-YTW : 5.02 %
BNS.PR.Z FixedReset 1.31 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.88
Bid-YTW : 6.02 %
BMO.PR.Q FixedReset 1.43 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 20.57
Bid-YTW : 5.96 %
PWF.PR.T FixedReset 2.85 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 20.57
Evaluated at bid price : 20.57
Bid-YTW : 4.46 %
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.K FixedReset 127,256 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-05-31
Maturity Price : 25.00
Evaluated at bid price : 25.17
Bid-YTW : 4.87 %
TD.PF.H FixedReset 89,843 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-10-31
Maturity Price : 25.00
Evaluated at bid price : 25.54
Bid-YTW : 4.56 %
BAM.PF.I FixedReset 87,694 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-31
Maturity Price : 25.00
Evaluated at bid price : 25.25
Bid-YTW : 4.70 %
TD.PF.B FixedReset 82,319 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 19.12
Evaluated at bid price : 19.12
Bid-YTW : 4.63 %
RY.PR.H FixedReset 79,167 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 19.16
Evaluated at bid price : 19.16
Bid-YTW : 4.61 %
MFC.PR.R FixedReset 76,860 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2022-03-19
Maturity Price : 25.00
Evaluated at bid price : 24.98
Bid-YTW : 4.98 %
There were 83 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
TRP.PR.F FloatingReset Quote: 15.05 – 15.38
Spot Rate : 0.3300
Average : 0.2168

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 15.05
Evaluated at bid price : 15.05
Bid-YTW : 3.98 %

BAM.PR.R FixedReset Quote: 16.79 – 17.22
Spot Rate : 0.4300
Average : 0.3198

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 16.79
Evaluated at bid price : 16.79
Bid-YTW : 5.02 %

SLF.PR.B Deemed-Retractible Quote: 22.38 – 22.62
Spot Rate : 0.2400
Average : 0.1552

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.38
Bid-YTW : 6.50 %

POW.PR.G Perpetual-Premium Quote: 25.00 – 25.30
Spot Rate : 0.3000
Average : 0.2178

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 24.71
Evaluated at bid price : 25.00
Bid-YTW : 5.69 %

BNS.PR.D FloatingReset Quote: 19.80 – 20.09
Spot Rate : 0.2900
Average : 0.2198

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 19.80
Bid-YTW : 6.30 %

BMO.PR.Y FixedReset Quote: 21.30 – 21.54
Spot Rate : 0.2400
Average : 0.1748

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-12-20
Maturity Price : 21.30
Evaluated at bid price : 21.30
Bid-YTW : 4.58 %

6 Responses to “December 20, 2016”

  1. fed says:

    “Canadians must wait until those U.S. bond buyers start to sell their notes in the secondary market”

    But as retail investors, we can’t access bonds in Canada either, other than in the secondary market. PLEASE correct me if I am wrong about this. I have been searching for a way to access new issue bonds for the past few years, but I gave been unsuccessful.

  2. jiHymas says:

    I have been searching for a way to access new issue bonds for the past few years, but I gave been unsuccessful.

    Most discount brokers offer a small selection of new issues to their clients; full-service brokers offer more.

    However, this isn’t a business the brokers really like doing, because the commissions aren’t very high.

  3. fed says:

    I have beenwith a full service broker for 2 years. He has never told me about a new issue bond that I couldn’t get from my discount broker. And all the ‘new’ issues I have seen in the past year (4) have been provincial reissues. Are there no alternatives?

  4. jiHymas says:

    Which brokerage house? How much are you willing to invest in a single new issue? What has your guy told you when you’ve complained?

  5. fed says:

    TD
    We never spoke about minimum purchase amount
    He said “sorry, but that’s all we have.”

  6. jiHymas says:

    The best full-service broker for new issues is RBC-Dominion.

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