There were no surprises in the BOC rate decision:
The Bank of Canada today increased its target for the overnight rate to 1½%, with the Bank Rate at 1¾% and the deposit rate at 1½%. The Bank is also continuing its policy of quantitative tightening (QT).
Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April – well above the Bank’s forecast – and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.
The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.
Canadian economic activity is strong and the economy is clearly operating in excess demand. National accounts data for the first quarter of 2022 showed GDP growth of 3.1 percent, in line with the Bank’s April Monetary Policy Report (MPR) projection. Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels. With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid.
With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further. The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target.
As usual, there is no listing of who voted for and against, nor a summary of contrary arguments. The governors aren’t good enough at their jobs to risk being seen in an occasional minority.
The Globe notes:
Higher interest rates won’t do much to deal with international sources of inflation, which include persistent supply-chain bottlenecks, COVID-19 lockdowns in China, and surging commodity prices following Russia’s invasion of Ukraine.
But higher interest rates do dampen demand in the economy. That can impact domestic sources of inflation tied to the service sector, housing market and ultra-tight labour market. In practice, this happens by increasing the cost of borrowing money, which shows up in things such as interest rates on mortgages, business loans and car loans.
I think they just cribbed that from a recent comment by Assiduous Reader baffled.
Rob Carrick puts a little blame on real estate speculators:
Behaviour in the housing market is a concern to the Bank of Canada because it suggests inflation is becoming entrenched in the economy.
…
But without the influence of investors buying up homes, these rate increases might have been less of a burden.Imagine you and your young kids bought a first home five years ago, when a well-discounted five-year fixed rate mortgage could be had for 2.25 per cent. You bought the place to live in, not to flip or rent. You made improvements in your property and the community benefited from your presence.
Flash ahead to 2022 – you must now renew at mortgage rates around 4.2 per cent for the same five-year fixed rate. A substantial increase in mortgage payments is coming, brought to you in part by real estate investors and speculators.
The point of low interest rates is to get free market traders to borrow money to invest in long term assets, which includes houses. One may quibble that it would be better if this investing were performed on productive assets rather than depreciating ones – I’ve done so for years – but the fact is that people like real estate, can touch real-estate, think they understand real-estate and therefore invest in real estate. I’ve known that for years and so has the Bank of Canada.
Don’t blame speculators. I have a feeling that they lose a lot more money than they ever make in the long run and, more importantly, they did exactly what the BoC wanted them to do.
Assiduous Reader TS sends me a copy of an eMail he sent to BCE:
Dear Sir or Madame,
I believe that the dividend on BCE.PR.B and similar prime rate preferred shares for record date May 31, 2022 were calculated incorrectly.
On the website it states that the dividend is $0.06215
The prime rate for the entire month of May was 3.2% so $25 x 3.2% / 12 mths = $0.06667
You still have time to change that as payment date is Jun 13, 2022.
Please correct as soon as possible.
Thank you.
The complaints I get about dividends are usually based on a misunderstanding of the issue terms, but after reading the prospectus:
The holders of the Series AB Preferred Shares will be entitled to receive floating adjustable cumulative preferred cash dividends, as and when declared by the board of directors of BCE Inc., which will be payable on the twelfth day of each Month commencing with the Month immediately following the date of issue of the Series AB Preferred Shares.
The annual floating dividend rate for the first Month will be equal to 80% of Prime. The dividend rate will float in relation to changes in Prime and will be adjusted upwards or downwards on a monthly basis by an adjustment factor (the ‘‘Adjustment Factor’’) whenever the Calculated Trading Price of the Series AB Preferred Shares is $24.875 or less or $25.125 or more respectively. The maximum monthly adjustment for changes in the Calculated Trading Price will be +/-4.00% of Prime. The annual floating dividend rate applicable for a Month will in no event be less than 50% of Prime or be greater than Prime.
The Adjustment Factor for a Month will be based on the Calculated Trading Price of the Series AB Preferred Shares for the preceding Month determined in accordance with the following table:
If the Calculated Trading Price for the Preceding Month is The Adjustment Factor as a Percentage of Prime shall be $25.50 or more****************************************** –4.00% $25.375 and less than $25.50.****************************** –3.00% $25.25 and less than $25.375.****************************** –2.00% $25.125 and less than $25.25.****************************** –1.00% Greater than $24.875 and less than $25.125 ****************** nil Greater than $24.75 to $24.875. **************************** 1.00% Greater than $24.625 to $24.75. **************************** 2.00% Greater than $24.50 to $24.625. **************************** 3.00% $24.50 or less******************************************* 4.00% The maximum Adjustment Factor for any Month will be 4.00% of Prime.
If in any Month there is no trade of at least a board lot of the Series AB Preferred Shares on the Exchange, the
Adjustment Factor for the following Month will be nil.
The annual floating dividend rate for a Month will be calculated by BCE Inc. as promptly as practicable, and
notice thereof will be given to each stock exchange on which the Series AB Preferred Shares are listed for trading.
I can’t see anything in there to contradict him. Stay tuned!
PerpetualDiscounts now yield 5.67%, equivalent to 7.37% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.88%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed to 250bp from the 260bp reported May 25.
| 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 | 2.6322 % | 2,646.3 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 2.6322 % | 5,075.6 |
| Floater | 4.06 % | 4.11 % | 43,472 | 17.12 | 3 | 2.6322 % | 2,925.1 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0330 % | 3,516.7 |
| SplitShare | 4.84 % | 4.87 % | 38,524 | 3.23 | 8 | -0.0330 % | 4,199.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0330 % | 3,276.8 |
| Perpetual-Premium | 5.77 % | -4.48 % | 76,850 | 0.08 | 2 | 0.1978 % | 2,993.7 |
| Perpetual-Discount | 5.57 % | 5.67 % | 62,092 | 14.36 | 34 | 0.5707 % | 3,330.8 |
| FixedReset Disc | 4.44 % | 5.61 % | 119,289 | 14.38 | 57 | 0.2834 % | 2,626.0 |
| Insurance Straight | 5.50 % | 5.50 % | 94,367 | 14.70 | 19 | 0.1684 % | 3,269.0 |
| FloatingReset | 4.75 % | 4.96 % | 51,704 | 15.63 | 2 | 7.6023 % | 2,688.2 |
| FixedReset Prem | 5.03 % | 4.61 % | 113,218 | 2.03 | 9 | 0.5000 % | 2,620.5 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2834 % | 2,684.3 |
| FixedReset Ins Non | 4.31 % | 5.47 % | 72,599 | 14.78 | 15 | 2.0848 % | 2,784.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BMO.PR.W | FixedReset Disc | -9.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.05 Evaluated at bid price : 20.05 Bid-YTW : 6.00 % |
| TRP.PR.G | FixedReset Disc | -4.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 6.20 % |
| CU.PR.F | Perpetual-Discount | -3.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 5.66 % |
| BMO.PR.T | FixedReset Disc | -3.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.22 Evaluated at bid price : 21.22 Bid-YTW : 5.67 % |
| NA.PR.W | FixedReset Disc | -3.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 5.77 % |
| POW.PR.D | Perpetual-Discount | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.28 Evaluated at bid price : 22.55 Bid-YTW : 5.62 % |
| RY.PR.Z | FixedReset Disc | -1.88 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.51 Evaluated at bid price : 21.88 Bid-YTW : 5.49 % |
| BAM.PF.G | FixedReset Disc | -1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.97 Evaluated at bid price : 20.97 Bid-YTW : 6.19 % |
| BAM.PF.C | Perpetual-Discount | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.72 Evaluated at bid price : 21.97 Bid-YTW : 5.61 % |
| MFC.PR.F | FixedReset Ins Non | 1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 15.81 Evaluated at bid price : 15.81 Bid-YTW : 5.87 % |
| BIP.PR.A | FixedReset Disc | 1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.43 Evaluated at bid price : 23.00 Bid-YTW : 6.33 % |
| TD.PF.C | FixedReset Disc | 1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.63 Evaluated at bid price : 22.05 Bid-YTW : 5.45 % |
| MFC.PR.M | FixedReset Ins Non | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.51 Evaluated at bid price : 21.51 Bid-YTW : 5.69 % |
| PWF.PR.E | Perpetual-Discount | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.82 Evaluated at bid price : 24.07 Bid-YTW : 5.78 % |
| RY.PR.O | Perpetual-Discount | 1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.15 Evaluated at bid price : 24.48 Bid-YTW : 5.02 % |
| GWO.PR.I | Insurance Straight | 1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.62 Evaluated at bid price : 20.62 Bid-YTW : 5.46 % |
| BAM.PR.C | Floater | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 13.75 Evaluated at bid price : 13.75 Bid-YTW : 4.12 % |
| POW.PR.G | Perpetual-Discount | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.68 Evaluated at bid price : 25.00 Bid-YTW : 5.67 % |
| PWF.PR.H | Perpetual-Discount | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.68 Evaluated at bid price : 25.00 Bid-YTW : 5.81 % |
| BMO.PR.F | FixedReset Prem | 1.26 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2024-05-25 Maturity Price : 25.00 Evaluated at bid price : 25.72 Bid-YTW : 3.64 % |
| RS.PR.A | SplitShare | 1.29 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-12-31 Maturity Price : 10.00 Evaluated at bid price : 10.20 Bid-YTW : 4.87 % |
| BAM.PR.Z | FixedReset Disc | 1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.95 Evaluated at bid price : 24.57 Bid-YTW : 5.81 % |
| BAM.PF.H | FixedReset Prem | 1.33 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2025-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.90 Bid-YTW : 4.18 % |
| TRP.PR.D | FixedReset Disc | 1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.12 Evaluated at bid price : 20.12 Bid-YTW : 6.23 % |
| GWO.PR.Q | Insurance Straight | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.71 Evaluated at bid price : 22.95 Bid-YTW : 5.60 % |
| BAM.PR.M | Perpetual-Discount | 1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.57 Evaluated at bid price : 21.83 Bid-YTW : 5.52 % |
| GWO.PR.R | Insurance Straight | 1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.51 Evaluated at bid price : 21.51 Bid-YTW : 5.59 % |
| GWO.PR.G | Insurance Straight | 1.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.92 Evaluated at bid price : 23.19 Bid-YTW : 5.60 % |
| SLF.PR.J | FloatingReset | 1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 16.00 Evaluated at bid price : 16.00 Bid-YTW : 4.51 % |
| PWF.PR.O | Perpetual-Discount | 1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.83 Evaluated at bid price : 25.05 Bid-YTW : 5.86 % |
| MFC.PR.N | FixedReset Ins Non | 1.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.20 Evaluated at bid price : 21.20 Bid-YTW : 5.67 % |
| SLF.PR.G | FixedReset Ins Non | 1.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 15.55 Evaluated at bid price : 15.55 Bid-YTW : 5.96 % |
| BAM.PF.J | FixedReset Disc | 1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.31 Evaluated at bid price : 24.84 Bid-YTW : 5.89 % |
| BAM.PR.T | FixedReset Disc | 1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 19.05 Evaluated at bid price : 19.05 Bid-YTW : 6.23 % |
| GWO.PR.Y | Insurance Straight | 1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 5.50 % |
| PWF.PR.R | Perpetual-Discount | 1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.95 Evaluated at bid price : 24.20 Bid-YTW : 5.74 % |
| BAM.PR.B | Floater | 1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 13.80 Evaluated at bid price : 13.80 Bid-YTW : 4.11 % |
| GWO.PR.H | Insurance Straight | 1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.65 Evaluated at bid price : 21.90 Bid-YTW : 5.53 % |
| PWF.PR.K | Perpetual-Discount | 1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.75 Evaluated at bid price : 22.00 Bid-YTW : 5.68 % |
| MFC.PR.B | Insurance Straight | 1.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.59 Evaluated at bid price : 21.85 Bid-YTW : 5.32 % |
| TRP.PR.B | FixedReset Disc | 2.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 13.75 Evaluated at bid price : 13.75 Bid-YTW : 6.47 % |
| FTS.PR.K | FixedReset Disc | 2.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 19.90 Evaluated at bid price : 19.90 Bid-YTW : 5.91 % |
| GWO.PR.M | Insurance Straight | 2.21 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-07-01 Maturity Price : 25.00 Evaluated at bid price : 25.20 Bid-YTW : -9.29 % |
| RY.PR.S | FixedReset Disc | 2.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.48 Evaluated at bid price : 24.55 Bid-YTW : 5.13 % |
| RY.PR.N | Perpetual-Discount | 2.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 24.25 Evaluated at bid price : 24.58 Bid-YTW : 5.00 % |
| PWF.PR.T | FixedReset Disc | 2.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.51 Evaluated at bid price : 21.88 Bid-YTW : 5.74 % |
| MFC.PR.Q | FixedReset Ins Non | 2.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.75 Evaluated at bid price : 24.25 Bid-YTW : 5.38 % |
| MFC.PR.K | FixedReset Ins Non | 2.72 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.03 Evaluated at bid price : 22.65 Bid-YTW : 5.38 % |
| GWO.PR.S | Insurance Straight | 2.76 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 23.53 Evaluated at bid price : 23.78 Bid-YTW : 5.51 % |
| GWO.PR.T | Insurance Straight | 2.87 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.95 Evaluated at bid price : 23.39 Bid-YTW : 5.49 % |
| CU.PR.D | Perpetual-Discount | 3.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.84 Evaluated at bid price : 22.08 Bid-YTW : 5.57 % |
| MIC.PR.A | Perpetual-Discount | 3.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.36 Evaluated at bid price : 22.70 Bid-YTW : 6.05 % |
| CM.PR.Q | FixedReset Disc | 3.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.10 Evaluated at bid price : 22.51 Bid-YTW : 5.62 % |
| PWF.PR.P | FixedReset Disc | 4.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 15.25 Evaluated at bid price : 15.25 Bid-YTW : 6.22 % |
| RY.PR.M | FixedReset Disc | 4.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.68 Evaluated at bid price : 21.95 Bid-YTW : 5.56 % |
| CM.PR.P | FixedReset Disc | 4.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.57 Evaluated at bid price : 21.97 Bid-YTW : 5.47 % |
| PWF.PF.A | Perpetual-Discount | 4.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.33 Evaluated at bid price : 21.63 Bid-YTW : 5.25 % |
| BAM.PR.K | Floater | 4.95 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 13.78 Evaluated at bid price : 13.78 Bid-YTW : 4.11 % |
| IFC.PR.A | FixedReset Ins Non | 5.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 20.46 Evaluated at bid price : 20.46 Bid-YTW : 5.47 % |
| BAM.PR.R | FixedReset Disc | 6.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 18.29 Evaluated at bid price : 18.29 Bid-YTW : 6.34 % |
| GWO.PR.N | FixedReset Ins Non | 7.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 15.05 Evaluated at bid price : 15.05 Bid-YTW : 5.83 % |
| SLF.PR.H | FixedReset Ins Non | 9.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 19.85 Evaluated at bid price : 19.85 Bid-YTW : 5.56 % |
| TRP.PR.F | FloatingReset | 14.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 17.12 Evaluated at bid price : 17.12 Bid-YTW : 4.96 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| FTS.PR.F | Perpetual-Discount | 162,658 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.87 Evaluated at bid price : 22.11 Bid-YTW : 5.56 % |
| MIC.PR.A | Perpetual-Discount | 103,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.36 Evaluated at bid price : 22.70 Bid-YTW : 6.05 % |
| IFC.PR.K | Perpetual-Discount | 87,059 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 22.87 Evaluated at bid price : 23.26 Bid-YTW : 5.75 % |
| CM.PR.R | FixedReset Disc | 75,600 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.11 Bid-YTW : 4.25 % |
| CM.PR.P | FixedReset Disc | 70,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.57 Evaluated at bid price : 21.97 Bid-YTW : 5.47 % |
| FTS.PR.J | Perpetual-Discount | 56,902 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-06-01 Maturity Price : 21.48 Evaluated at bid price : 21.48 Bid-YTW : 5.57 % |
| There were 12 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BMO.PR.W | FixedReset Disc | Quote: 20.05 – 24.20 Spot Rate : 4.1500 Average : 2.6049 YTW SCENARIO |
| SLF.PR.H | FixedReset Ins Non | Quote: 19.85 – 23.50 Spot Rate : 3.6500 Average : 2.6064 YTW SCENARIO |
| CU.PR.G | Perpetual-Discount | Quote: 20.75 – 24.84 Spot Rate : 4.0900 Average : 3.3050 YTW SCENARIO |
| TD.PF.E | FixedReset Disc | Quote: 22.75 – 23.95 Spot Rate : 1.2000 Average : 0.7574 YTW SCENARIO |
| BAM.PR.T | FixedReset Disc | Quote: 19.05 – 20.49 Spot Rate : 1.4400 Average : 1.0539 YTW SCENARIO |
| BMO.PR.T | FixedReset Disc | Quote: 21.22 – 22.16 Spot Rate : 0.9400 Average : 0.6250 YTW SCENARIO |
Credit markets continue to function very smoothly, despite the rate hikes.
FortisAlberta raised $125 million in ‘medium term’ notes at a whopping yield of 4.618%. The medium term notes mature in 2052. These are rated A-/A.
For comparison, Fortis Perpetuals, rated P2(L), yield about 5.5%.
Search for May 26, 2022 FortisAlberta on Sedar, under Marketing Material.
[…] noted in the June 1 Market Action Report, the Bank of Canada has announced it […]
[…] mentioned in the June 1 Market Action Report, I recently was forwarded a copy about a complaint regarding the dividend amount for […]
[…] PerpetualDiscounts now yield 5.70%, equivalent to 7.41% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.94%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed slightly (and perhaps spuriously) to 245bp from the 250bp reported June 1. […]