This is funny. Goldman is being criticized for advising shorting municipal credit (via credit default swaps):
It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Schaer, a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd C. Blankfein.
“New Jersey needs to maximize its presence in the credit markets, not to see its presence undermined.” Schaer wrote.
…
As part of a September presentation to institutional investors on “Best Long and Short Risk Strategies,” Goldman recommended buying credit-default swaps on “a basket of liquid State General Obligation credits with current and worsening fiscal outlooks,” including California, Florida, Nevada, Ohio, Wisconsin and Michigan.The firm also recommended the derivatives on states with “significant unfunded pension” and other retiree obligations, including Illinois, Connecticut, Hawaii, New Jersey, Massachusetts and Nevada.
The practice of betting against such states is “distasteful,” said Frank Hoadley, Wisconsin’s director of capital finance in Madison.
Didn’t we do the whole “analyst independence” thing a few years ago? However, the original Newark Star-Ledger story, while attempting to sell newspapers, is better balanced than Bloomberg’s efforts.
I do apologize … but I am YET AGAIN neglecting to present the price-movement and volume-highlight tables. At some point, perhaps, I will have caught up on other committments – but not tonight.
| Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30. The Fixed-Reset index was added effective 2008-9-5 at that day’s closing value of 1,119.4 for the Fixed-Floater index. |
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| Index | Mean Current Yield (at bid) | Mean YTW | Mean Average Trading Value | Mean Mod Dur (YTW) | Issues | Day’s Perf. | Index Value |
| Ratchet | N/A | N/A | N/A | N/A | 0 | N/A | N/A |
| Fixed-Floater | 7.50% | 7.85% | 93,464 | 12.74 | 6 | -4.0589% | 705.4 |
| Floater | 9.56% | 9.85% | 72,723 | 9.52 | 2 | +3.0634% | 371.0 |
| Op. Retract | 5.46% | 6.42% | 146,946 | 3.97 | 15 | +0.7500% | 990.9 |
| Split-Share | 6.95% | 13.38% | 73,707 | 3.95 | 14 | -0.1942% | 887.0 |
| Interest Bearing | 9.69% | 20.82% | 55,306 | 2.78 | 3 | -0.2190% | 756.4 |
| Perpetual-Premium | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Perpetual-Discount | 7.79% | 7.92% | 212,362 | 11.50 | 71 | +0.0649% | 709.9 |
| Fixed-Reset | 6.02% | 5.38% | 1,081,559 | 14.48 | 16 | +0.5017% | 995.8 |
Brookfield Preferred
BAM.PR.B $6.62,
BAM.PR.C $7.00
BAM.PR.K $7.00
I am trying to understand why B is at a discount to C & K. The only locate difference I can locate is;
BAM.PR.B The formula refers to a “Prime Rate” (as defined in the share conditions).
BAM.PR.C & K The formulae refer to a “Average Prime Rate” (as defined in the share conditions).
I cannot locate any further reference to or definition of “Prime Rate” or “Average Prime Rate” and would appreciate your insight.
Or is this just another example of the preferred market inefficiencies you speak of from time to time?
One difference is the float and liquidity.
(Millions)
Volume
Liquidity has value! Therefore, if you don’t need it, it’s good to sell!
Otherwise, a large part of the reason is simple inefficiency.