TXPR closed at 568.84, down 0.68% on the day. Volume today was 1.05-million, near the median of the past 21 trading days.
CPD closed at 11.29, down 0.53% on the day. Volume was 47,440, well below the median of the past 21 trading days.
ZPR closed at 9.44, down 0.74% on the day. Volume was 73,340, fourth-lowest of the past 21 trading days.
Five-year Canada yields were up 6bp to 3.52% today.
Today’s market weakness has been attributed to central banks:
Major North American indexes closed lower on Thursday as concerns mounted ahead of closely watched monthly jobs reports Friday that the Federal Reserve’s aggressive interest rate stance will lead to a recession.
…
The Bank of Canada has also been raising rates at a rapid pace. Its governor, Tiff Macklem, made clear in a speech Thursday that the central bank will not yet be pivoting away from its hawkish stance. Macklem said the currency’s recent weakness will offset some easing of inflation pressures that could come from improving global supply chains and lower commodity prices.Money markets raised bets on a 50-basis-point hike at the BoC’s next policy announcement on Oct. 26, pricing in a 70% chance of such a move versus roughly 50% before the governor’s speech.
Canadian government bond yields rose across a more deeply inverted curve, with the 2-year moving above the 4% threshold for the first time since October 2007. It was up 14.7 basis points at 4.013% by late afternoon.
…
Chicago Fed President Charles Evans was the latest to spell out the central bank’s outlook on Thursday, saying policymakers expect to deliver 125 basis points of rate hikes before year’s end as inflation readings have been disappointing.
There was other reporting on Macklem’s speech:
The labour market remains too tight, he said, putting upward pressure on wages and business costs. Likewise, inflation is increasingly being driven by domestic factors, which is showing up in service-sector prices that aren’t as responsive to higher borrowing costs.
“Domestic inflationary pressures have yet to ease. That doesn’t mean higher interest rates are not working, but it will take time,” Mr. Macklem said.
…
Mr. Macklem pointed to some promising signs for the trajectory of inflation. Oil prices have fallen in recent months as the outlook for global economic growth has darkened. Supply chain bottlenecks are improving and shipping costs have receded.
Municipal balance sheets may become less useful:
The independent body that sets accounting standards for Canada’s public sector is proposing rule changes that would allow municipalities to include the value of wetlands, grasslands and other natural assets on their balance sheets.
The Public Sector Accounting Board (PSAB) has been scrutinizing ways to recognize the value of a wide range of natural settings, from rivers and ponds to fields and marshes. The board is embarking on a complex process that would pave the way for new standards governing what is allowed to appear on financial statements.
Advocates for revamping accounting rules say that during a time of heightened concerns over climate change, it’s crucial to place financial values on natural assets and their environmental benefits. For example, adding the value of a river or marsh to its assets would enhance a city’s credit rating and potentially reduce its borrowing costs.
It’s ridiculous. Natural assets may well be valuable, but that’s not the same thing as ‘convertible into cash’. I strongly agree that municipalities should maintain wetlands, grasslands etc. due to thir valu, but this value should be accounted for separately; for instance, a credit analyst might reduce the normal probability of a very destructive flood due to these features.
On the other hand, of course, there’s the Bloomberg Effect; very few of the careful and extremely well paid financial analysts around bother reading financial statements in all their glory; they’ll go to Bloomberg and get the Recommended Ratios (required for box-ticking purposes) from a standard screen. It’s much faster, leaving more time for lunch with clients.
Canadian Utilities will aquire a portfolio of wind and solar assets and projects in Alberta and Ontario for a purchase price of $730 million:
With respect to CUL’s business risk profile, there would be no material immediate impact following the closing of the Acquisition as most CUL’s consolidated cash flows would still be from its stable, low-risk regulated utilities in Canada and Australia. DBRS Morningstar expects CUL’s regulated utility operations to continue to generate over 90% of CUL’s consolidated cash flow in the medium term post-Acquisition, as the size of the Acquisition is relatively modest compared with CUL’s total assets of approximately $21.4 billion as at June 30, 2022. However, after the Acquisition, should CUL take on an aggressive expansion in renewable generation assets to a degree that future cash flow (or EBITDA) contributed to CUL from its regulated utilities declines to significantly below 90% on a sustained basis, its rating could be affected. DBRS Morningstar is of the view that renewable generation assets, even when fully contracted, would entail higher risk than regulated utility assets.
With respect to CUL’s financial risk profile, DBRS Morningstar thinks the potential financing of the Acquisition would have no immediate material impact on its consolidated credit ratios. Following the closing of the Acquisition, DBRS Morningstar expects CUL to reasonably finance its future renewable generation projects in a manner so that its current credit metrics would remain relatively stable and solid within the required range to maintain its “A” rating, as indicated in DBRS Morningstar’s “Global Methodology for Rating Companies in the Regulated Electric, Natural Gas, and Water Utilities Industry” (September 2022). A material deterioration of CUL’s consolidated credit metrics, notwithstanding its business risk profile, could have a negative impact on CUL’s ratings. DBRS Morningstar believes that CUL has sufficient liquidity to finance the Acquisition.
| 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 | 0.6160 % | 2,354.5 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.6160 % | 4,516.0 |
| Floater | 7.79 % | 7.65 % | 48,357 | 11.79 | 2 | 0.6160 % | 2,602.6 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1087 % | 3,389.1 |
| SplitShare | 4.96 % | 6.33 % | 32,796 | 3.08 | 7 | -0.1087 % | 4,047.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1087 % | 3,157.9 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6993 % | 2,667.1 |
| Perpetual-Discount | 6.38 % | 6.50 % | 72,846 | 13.28 | 33 | -0.6993 % | 2,908.4 |
| FixedReset Disc | 5.24 % | 7.26 % | 91,482 | 12.44 | 63 | -0.4499 % | 2,285.2 |
| Insurance Straight | 6.31 % | 6.40 % | 75,032 | 13.35 | 19 | -0.5352 % | 2,850.9 |
| FloatingReset | 8.67 % | 9.03 % | 36,300 | 10.39 | 2 | -0.5806 % | 2,501.5 |
| FixedReset Prem | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4499 % | 2,418.5 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4499 % | 2,335.9 |
| FixedReset Ins Non | 5.47 % | 7.89 % | 45,215 | 12.09 | 14 | -0.6670 % | 2,313.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PF.E | FixedReset Disc | -7.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 15.05 Evaluated at bid price : 15.05 Bid-YTW : 9.31 % |
| CU.PR.F | Perpetual-Discount | -4.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.12 Evaluated at bid price : 17.12 Bid-YTW : 6.67 % |
| BIP.PR.F | FixedReset Disc | -4.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 7.98 % |
| SLF.PR.H | FixedReset Ins Non | -2.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 15.55 Evaluated at bid price : 15.55 Bid-YTW : 8.02 % |
| BAM.PR.R | FixedReset Disc | -2.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 14.42 Evaluated at bid price : 14.42 Bid-YTW : 8.94 % |
| BMO.PR.T | FixedReset Disc | -2.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.75 Evaluated at bid price : 18.75 Bid-YTW : 7.44 % |
| CM.PR.O | FixedReset Disc | -2.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.64 Evaluated at bid price : 18.64 Bid-YTW : 7.48 % |
| IAF.PR.I | FixedReset Ins Non | -2.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.30 Evaluated at bid price : 21.30 Bid-YTW : 7.38 % |
| FTS.PR.M | FixedReset Disc | -2.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 8.25 % |
| CM.PR.Q | FixedReset Disc | -2.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.77 Evaluated at bid price : 19.77 Bid-YTW : 7.21 % |
| NA.PR.S | FixedReset Disc | -2.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.04 Evaluated at bid price : 19.04 Bid-YTW : 7.54 % |
| GWO.PR.Y | Insurance Straight | -2.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.72 Evaluated at bid price : 17.72 Bid-YTW : 6.41 % |
| MFC.PR.N | FixedReset Ins Non | -1.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 16.72 Evaluated at bid price : 16.72 Bid-YTW : 8.25 % |
| TD.PF.C | FixedReset Disc | -1.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.74 Evaluated at bid price : 18.74 Bid-YTW : 7.35 % |
| BAM.PF.B | FixedReset Disc | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 8.58 % |
| IFC.PR.G | FixedReset Ins Non | -1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.13 Evaluated at bid price : 19.13 Bid-YTW : 7.97 % |
| GWO.PR.T | Insurance Straight | -1.53 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 6.50 % |
| IFC.PR.E | Insurance Straight | -1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.21 Evaluated at bid price : 21.21 Bid-YTW : 6.18 % |
| NA.PR.W | FixedReset Disc | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.76 Evaluated at bid price : 18.76 Bid-YTW : 7.31 % |
| MFC.PR.J | FixedReset Ins Non | -1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.99 Evaluated at bid price : 20.99 Bid-YTW : 7.37 % |
| TRP.PR.F | FloatingReset | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 15.70 Evaluated at bid price : 15.70 Bid-YTW : 9.03 % |
| FTS.PR.F | Perpetual-Discount | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.91 Evaluated at bid price : 19.91 Bid-YTW : 6.24 % |
| CCS.PR.C | Insurance Straight | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 6.08 % |
| GWO.PR.P | Insurance Straight | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 6.57 % |
| PWF.PR.R | Perpetual-Discount | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 20.95 Evaluated at bid price : 20.95 Bid-YTW : 6.58 % |
| PWF.PR.S | Perpetual-Discount | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 6.54 % |
| NA.PR.E | FixedReset Disc | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.47 Evaluated at bid price : 21.47 Bid-YTW : 7.08 % |
| RY.PR.J | FixedReset Disc | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.96 Evaluated at bid price : 19.96 Bid-YTW : 7.27 % |
| SLF.PR.D | Insurance Straight | -1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.72 Evaluated at bid price : 17.72 Bid-YTW : 6.34 % |
| POW.PR.D | Perpetual-Discount | 1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.50 Evaluated at bid price : 19.50 Bid-YTW : 6.45 % |
| CM.PR.S | FixedReset Disc | 1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 22.14 Evaluated at bid price : 22.79 Bid-YTW : 6.52 % |
| PWF.PR.P | FixedReset Disc | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 12.70 Evaluated at bid price : 12.70 Bid-YTW : 8.63 % |
| BAM.PR.X | FixedReset Disc | 1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 16.00 Evaluated at bid price : 16.00 Bid-YTW : 8.05 % |
| BAM.PR.T | FixedReset Disc | 1.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 15.15 Evaluated at bid price : 15.15 Bid-YTW : 8.61 % |
| CU.PR.J | Perpetual-Discount | 1.34 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.90 Evaluated at bid price : 18.90 Bid-YTW : 6.38 % |
| MFC.PR.B | Insurance Straight | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.81 Evaluated at bid price : 18.81 Bid-YTW : 6.25 % |
| TD.PF.L | FixedReset Disc | 1.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 23.50 Evaluated at bid price : 23.90 Bid-YTW : 6.96 % |
| PWF.PR.T | FixedReset Disc | 1.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 7.85 % |
| NA.PR.G | FixedReset Disc | 1.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.61 Evaluated at bid price : 22.00 Bid-YTW : 7.05 % |
| IFC.PR.K | Perpetual-Discount | 2.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 6.16 % |
| TD.PF.K | FixedReset Disc | 2.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.57 Evaluated at bid price : 21.95 Bid-YTW : 6.88 % |
| PWF.PF.A | Perpetual-Discount | 2.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.90 Evaluated at bid price : 17.90 Bid-YTW : 6.30 % |
| BAM.PF.G | FixedReset Disc | 2.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 16.70 Evaluated at bid price : 16.70 Bid-YTW : 8.67 % |
| TD.PF.J | FixedReset Disc | 2.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 21.79 Evaluated at bid price : 22.25 Bid-YTW : 6.96 % |
| IFC.PR.C | FixedReset Disc | 3.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 8.06 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.P | FixedReset Disc | 49,200 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 12.70 Evaluated at bid price : 12.70 Bid-YTW : 8.63 % |
| TD.PF.I | FixedReset Disc | 47,650 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 22.82 Evaluated at bid price : 24.12 Bid-YTW : 6.74 % |
| GWO.PR.I | Insurance Straight | 30,814 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 18.00 Evaluated at bid price : 18.00 Bid-YTW : 6.31 % |
| SLF.PR.D | Insurance Straight | 29,620 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 17.72 Evaluated at bid price : 17.72 Bid-YTW : 6.34 % |
| BMO.PR.S | FixedReset Disc | 14,812 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 19.73 Evaluated at bid price : 19.73 Bid-YTW : 7.26 % |
| CM.PR.S | FixedReset Disc | 12,200 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2052-10-06 Maturity Price : 22.14 Evaluated at bid price : 22.79 Bid-YTW : 6.52 % |
| There were 6 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.N | FixedReset Ins Non | Quote: 16.72 – 18.85 Spot Rate : 2.1300 Average : 1.4612 YTW SCENARIO |
| CCS.PR.C | Insurance Straight | Quote: 20.75 – 23.50 Spot Rate : 2.7500 Average : 2.1615 YTW SCENARIO |
| BAM.PF.E | FixedReset Disc | Quote: 15.05 – 16.66 Spot Rate : 1.6100 Average : 1.0386 YTW SCENARIO |
| CU.PR.F | Perpetual-Discount | Quote: 17.12 – 18.44 Spot Rate : 1.3200 Average : 0.8331 YTW SCENARIO |
| GWO.PR.Y | Insurance Straight | Quote: 17.72 – 18.75 Spot Rate : 1.0300 Average : 0.6715 YTW SCENARIO |
| MFC.PR.K | FixedReset Ins Non | Quote: 18.30 – 19.50 Spot Rate : 1.2000 Average : 0.9051 YTW SCENARIO |
“It’s ridiculous. Natural assets may well be valuable, but that’s not the same thing as ‘convertible into cash’.”
Mark Carney deals with this topic in his book “Values”. Spoiler: he is generally in favour of the idea.
FWIW: lots of line items on balance sheets are not convertible in cash (in the short run anyway). Examples include: NPV of proven resources for mining firms, goodwill, etc.
This way the Feds and the Provinces can download more costs on to munis as they will now have the extra capacity to carry the accompanying debt!
“This way the Feds and the Provinces can download more costs on to munis as they will now have the extra capacity to carry the accompanying debt!”
Jurisdiction is an interesting component of this. Most natural assets are Provincial jurisdiction, some Federal (think rivers, lakes and oceans), at least so far as their environmental services are concerned. There is a lot to sort out!
Interesting!
Another bank reset NA.PR.C will NOT be redeemed (on 15 Nov.).
https://money.tmx.com/en/quote/NA/news/6280048049725960/National_Bank_of_Canada_Announces_Conversion_Rights_for_NonCumulative_5Year_Rate_Reset_First_Preferred_Shares_Series_38_NonViability_Contingent_Capital_NVCC_the_Series_38_Shares
[…] Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention! […]