Assiduous Readers will remember that Manulife was bailed out by the regulators again after a hedge fund claimed the terms of its contract with the firm allowed it to deposit unlimited funds with the firm at a guaranteed rate of up to 5%.
It turns out the bail-out was unnecessary! Manulife won the court case:
Manulife Financial Corp. says a Saskatchewan court has ruled in its favour in its legal fight with hedge fund Mosten Investment LP over insurance contracts.
Mosten had argued that under the terms of the universal life insurance policy, it could deposit an unlimited amount of money and receive an annualized guaranteed return of at least four per cent with one-month liquidity.
However, Manulife says the ruling by the Saskatchewan Court of Queen’s Bench found the policy in question “does not provide for unlimited stand-alone investment opportunities within the carrier fund.”
Still, it has been a useful episode: we now have increased assurance that regulators will not allow Manulife to go bankrupt. Moral hazard, anyone?
Ian Bandeen makes a good point about how the banks’ hegemony over the Canadian financial system hurts us all:
Likely unwittingly, the securities regulators have worked in almost perfect alignment with the dominant bank oligopoly to effectively shut down the efficient provision of early-stage, high-risk, capital to our innovators and fledgling companies. Industry leaders have been trying to warn us of this phenomenon for some time.
…
The problems really started in the 1980s when we permitted the banks to buy out the then-independent investment dealers. The significant culture clashes were systematically paved over as the banks increasingly asserted their comparatively risk-adverse approach to the investment business, one division at a time. Typically, it was the equity capital markets trading operations and the corporate finance M&A businesses that were the last to be subsumed.Initially resistant to the anti-risk culture of their parent commercial banks, the investment subsidiaries began to realize that their new owners were well practised at the art of being heavily regulated and had whole departments dedicated to servicing and dealing with regulators. Instead of pushing back against excessive regulation, they came to see the competitive advantage of having regulatory-centric resources relative to their non-bank-owned competitors.
…
None of this bodes well for our junior markets. Without rising new stars, the traditional “blue-chip” companies will start to hollow out. Witness the recent de-Canadianization of some of our former, world-leading gold companies. Where will their replacements come from? Without funding and capital markets support, the innovation continuum will be broken and Canada will lose so much of its potential.
…
Perhaps the time has come for a serious rethink of what the fundamental goals of securities regulation should be, coupled with a holistic review of whether our current facilities and regimes are actually helping or hindering our attainment of same. It may be time to start thinking outside the box in which we have unwittingly cornered ourselves. Doing nothing is no longer an option and our early-stage entrepreneurs need political assistance before they get lost in the paper shuffle orchestrated by the dominant banks and their regulators.
The obvious answer is: break up the banks. This bloated oligarchy is detrimental to our prosperity … and one day, some day, will break down completely. And, with respect to the point of securities regulation … I hope that at least one or two Assiduous Readers will remember my exhortations to remember that the point of public securities markets is not to ‘provide good, safe returns to Canadians’ or to ‘assist retirement planning’ or any such other incidental trivia. The point of securities markets is to move money from individual savers to corporate capital investment and all regulation should be examined through that lens.
| 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 | -0.6867 % | 2,122.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6867 % | 3,894.9 |
| Floater | 5.52 % | 5.65 % | 45,598 | 14.45 | 3 | -0.6867 % | 2,244.6 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1242 % | 3,279.2 |
| SplitShare | 4.87 % | 4.63 % | 71,868 | 3.90 | 8 | 0.1242 % | 3,916.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1242 % | 3,055.5 |
| Perpetual-Premium | 5.64 % | -0.23 % | 60,118 | 0.08 | 9 | 0.0263 % | 2,920.5 |
| Perpetual-Discount | 5.45 % | 5.61 % | 72,870 | 14.40 | 26 | 0.0599 % | 3,053.7 |
| FixedReset Disc | 5.18 % | 5.32 % | 201,155 | 14.92 | 64 | 0.2256 % | 2,202.4 |
| Deemed-Retractible | 5.30 % | 6.06 % | 101,005 | 8.18 | 27 | 0.1219 % | 3,025.7 |
| FloatingReset | 4.20 % | 4.22 % | 44,355 | 2.74 | 5 | -0.1725 % | 2,404.0 |
| FixedReset Prem | 5.08 % | 3.91 % | 325,612 | 2.24 | 19 | 0.0838 % | 2,565.8 |
| FixedReset Bank Non | 1.98 % | 3.99 % | 156,960 | 2.76 | 3 | 0.1811 % | 2,634.1 |
| FixedReset Ins Non | 4.99 % | 6.54 % | 117,624 | 8.36 | 22 | 0.3958 % | 2,257.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.C | Deemed-Retractible | -2.21 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.40 Bid-YTW : 6.98 % |
| EMA.PR.F | FixedReset Disc | -2.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 18.74 Evaluated at bid price : 18.74 Bid-YTW : 5.73 % |
| MFC.PR.L | FixedReset Ins Non | -2.10 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.71 Bid-YTW : 7.84 % |
| CCS.PR.C | Deemed-Retractible | -1.83 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.58 Bid-YTW : 6.25 % |
| BAM.PF.C | Perpetual-Discount | -1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.98 Evaluated at bid price : 20.98 Bid-YTW : 5.81 % |
| PWF.PR.A | Floater | -1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 13.25 Evaluated at bid price : 13.25 Bid-YTW : 5.28 % |
| RY.PR.J | FixedReset Disc | -1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.60 Evaluated at bid price : 20.60 Bid-YTW : 5.28 % |
| RY.PR.M | FixedReset Disc | -1.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.53 Evaluated at bid price : 20.53 Bid-YTW : 5.13 % |
| CU.PR.H | Perpetual-Discount | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 24.25 Evaluated at bid price : 24.75 Bid-YTW : 5.33 % |
| BAM.PR.M | Perpetual-Discount | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.61 Evaluated at bid price : 20.61 Bid-YTW : 5.79 % |
| SLF.PR.J | FloatingReset | -1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.60 Bid-YTW : 9.21 % |
| GWO.PR.T | Deemed-Retractible | -1.07 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.15 Bid-YTW : 6.10 % |
| NA.PR.E | FixedReset Disc | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.40 Evaluated at bid price : 20.40 Bid-YTW : 5.32 % |
| GWO.PR.N | FixedReset Ins Non | -1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.70 Bid-YTW : 8.71 % |
| TD.PF.C | FixedReset Disc | 1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 19.21 Evaluated at bid price : 19.21 Bid-YTW : 5.09 % |
| BAM.PF.G | FixedReset Disc | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 19.86 Evaluated at bid price : 19.86 Bid-YTW : 5.63 % |
| SLF.PR.I | FixedReset Ins Non | 1.08 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.50 Bid-YTW : 6.53 % |
| TRP.PR.D | FixedReset Disc | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 17.95 Evaluated at bid price : 17.95 Bid-YTW : 5.65 % |
| RY.PR.S | FixedReset Disc | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 21.85 Evaluated at bid price : 22.30 Bid-YTW : 4.73 % |
| HSE.PR.C | FixedReset Disc | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 19.18 Evaluated at bid price : 19.18 Bid-YTW : 6.20 % |
| HSE.PR.A | FixedReset Disc | 1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 13.02 Evaluated at bid price : 13.02 Bid-YTW : 6.22 % |
| IAF.PR.B | Deemed-Retractible | 1.20 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.17 Bid-YTW : 6.61 % |
| BMO.PR.D | FixedReset Disc | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 22.51 Evaluated at bid price : 23.20 Bid-YTW : 5.08 % |
| SLF.PR.D | Deemed-Retractible | 1.38 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.64 Bid-YTW : 6.75 % |
| BAM.PR.N | Perpetual-Discount | 1.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.65 Evaluated at bid price : 20.65 Bid-YTW : 5.78 % |
| RY.PR.H | FixedReset Disc | 1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 19.65 Evaluated at bid price : 19.65 Bid-YTW : 4.98 % |
| BNS.PR.I | FixedReset Disc | 1.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 22.40 Evaluated at bid price : 23.21 Bid-YTW : 4.60 % |
| NA.PR.G | FixedReset Disc | 1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 21.69 Evaluated at bid price : 22.05 Bid-YTW : 5.18 % |
| GWO.PR.P | Deemed-Retractible | 1.90 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.61 Bid-YTW : 5.60 % |
| GWO.PR.I | Deemed-Retractible | 2.14 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.50 Bid-YTW : 6.89 % |
| MFC.PR.K | FixedReset Ins Non | 2.21 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.43 Bid-YTW : 7.13 % |
| IAF.PR.I | FixedReset Ins Non | 2.88 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.40 Bid-YTW : 6.42 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.K | FixedReset Disc | 161,335 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 25.05 Bid-YTW : 4.95 % |
| MFC.PR.K | FixedReset Ins Non | 55,208 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.43 Bid-YTW : 7.13 % |
| IFC.PR.F | Deemed-Retractible | 53,007 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.52 Bid-YTW : 6.06 % |
| BAM.PF.F | FixedReset Disc | 51,813 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 20.45 Evaluated at bid price : 20.45 Bid-YTW : 5.49 % |
| BAM.PF.G | FixedReset Disc | 50,416 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 19.86 Evaluated at bid price : 19.86 Bid-YTW : 5.63 % |
| NA.PR.G | FixedReset Disc | 36,167 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-03-18 Maturity Price : 21.69 Evaluated at bid price : 22.05 Bid-YTW : 5.18 % |
| There were 32 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.K | FixedReset Ins Non | Quote: 19.43 – 23.99 Spot Rate : 4.5600 Average : 2.5756 YTW SCENARIO |
| MFC.PR.G | FixedReset Ins Non | Quote: 21.10 – 25.00 Spot Rate : 3.9000 Average : 2.1261 YTW SCENARIO |
| MFC.PR.N | FixedReset Ins Non | Quote: 18.54 – 22.15 Spot Rate : 3.6100 Average : 2.0494 YTW SCENARIO |
| VNR.PR.A | FixedReset Disc | Quote: 21.25 – 22.69 Spot Rate : 1.4400 Average : 0.8536 YTW SCENARIO |
| W.PR.H | Perpetual-Premium | Quote: 25.21 – 26.21 Spot Rate : 1.0000 Average : 0.5564 YTW SCENARIO |
| TD.PF.D | FixedReset Disc | Quote: 21.60 – 22.60 Spot Rate : 1.0000 Average : 0.5985 YTW SCENARIO |