I complained on January 19 that the political leverage given to politicians by the TARP funds would lead to calls to expand non-economic but politically attractive business methodologies. Dealbreaker passes along more commentary on this subject:
Surprise! Now anyone with public money is bathing in the gelatinous “squish” of a million squirming appetites, forced to submit to a literal morass of legislative tentacle sex with hundreds of pet projects, social theory experiments and personal causes (from the left and the right), not to mention the utter chaos and unpredictability of having every idiot in the House pop off about what new rule you should be following this week. Predicting what is or will be expected of you (or what you may or may not be paid) is a nightmarish prospect.
Dealbreaker also comments on the Caballero Insurance Plan that I have previously written about:
Typically when Congress can’t get the political backing to actually pass a bill to pay for something, they do the next best thing: get the political backing to guarantee something, or insure any losses. At the very least this reduces the cost of capital for the activity. Throw some tax benefits in and you go a long way to encouraging the behavior you are trying to stimulate. So potent can the effect be that you don’t even necessarily need a direct guarantee. (The “too big to fail” condition and the “implicit guarantee” of a Fannie Mae is a good example here).
…
The problem with this level of insurance is that while it preserves public capital (and prevents dilution) you can write a lot of insurance before anyone starts to notice that you are on the hook for, well, a lot of insurance. (See e.g., Fannie and Freddie).
An interesting day in the preferred market! Split shares got hurt, presumably due to continued equity weakness – a lot of the January 22 NAVs are coming out and don’t look very pretty. FBS.PR.B is now valued below the preferred par value, but is still rated Pfd-2(low) by DBRS, and has been under review negative for three months now.
Fixed-Resets got hurt, presumably due to continued heavy issuance: a new CIBC fixed-reset 650+447 was announced today, bringing the total number of pending issues to five. Amidst all this, PerpetualDiscounts were up on the day, albeit marginally and with a certain sloppiness.
TD went into a frenzy of activity, trading a huge number of blocks after the close – remember that after hours trading is fine, but it all has to occur at the same price as the last trade of a board lot.
| 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 | 6.93 % | 7.70 % | 40,130 | 13.38 | 2 | -0.7405 % | 848.4 |
| FixedFloater | 7.34 % | 6.91 % | 162,168 | 13.74 | 8 | 0.6072 % | 1,395.4 |
| Floater | 5.57 % | 4.75 % | 34,686 | 15.98 | 4 | -2.4838 % | 943.4 |
| OpRet | 5.31 % | 4.76 % | 154,215 | 4.04 | 15 | -0.0195 % | 2,023.4 |
| SplitShare | 6.32 % | 9.75 % | 76,264 | 4.13 | 15 | -0.6945 % | 1,760.2 |
| Interest-Bearing | 7.14 % | 8.23 % | 35,281 | 0.89 | 2 | 0.5865 % | 1,980.5 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1236 % | 1,552.4 |
| Perpetual-Discount | 6.91 % | 6.95 % | 230,184 | 12.61 | 71 | 0.1236 % | 1,429.7 |
| FixedReset | 6.06 % | 5.40 % | 788,333 | 14.34 | 22 | -0.8178 % | 1,790.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -8.07 % | A flurry of activity (insofar as 800 shares may be considered a “flurry”) took out the bid and the closing quote was 11.05-12.49 (!) 10×1, after trading 800 shares in a range of 11.02-12.01. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 11.05 Evaluated at bid price : 11.05 Bid-YTW : 4.75 % |
| FFN.PR.A | SplitShare | -4.73 % | Asset coverage of 1.1+:1 as of January 15 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2014-12-01 Maturity Price : 10.00 Evaluated at bid price : 7.25 Bid-YTW : 12.14 % |
| RY.PR.L | FixedReset | -4.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 22.56 Evaluated at bid price : 22.60 Bid-YTW : 5.45 % |
| FBS.PR.B | SplitShare | -3.99 % | Asset coverage of 1.0-:1 as of January 22, according to TD Securities. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2011-12-15 Maturity Price : 10.00 Evaluated at bid price : 7.45 Bid-YTW : 16.58 % |
| NA.PR.N | FixedReset | -3.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.35 Evaluated at bid price : 21.65 Bid-YTW : 4.89 % |
| CM.PR.K | FixedReset | -2.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.79 Evaluated at bid price : 22.25 Bid-YTW : 4.96 % |
| PWF.PR.L | Perpetual-Discount | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.04 Evaluated at bid price : 18.04 Bid-YTW : 7.12 % |
| SBN.PR.A | SplitShare | -1.67 % | Asset coverage of 1.7-:1 as of January 15 according to Mulvihill. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2014-12-01 Maturity Price : 10.00 Evaluated at bid price : 8.81 Bid-YTW : 7.90 % |
| POW.PR.C | Perpetual-Discount | -1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.19 Evaluated at bid price : 21.19 Bid-YTW : 6.92 % |
| CM.PR.H | Perpetual-Discount | -1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 7.34 % |
| SLF.PR.E | Perpetual-Discount | -1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.50 Evaluated at bid price : 15.50 Bid-YTW : 7.37 % |
| PWF.PR.K | Perpetual-Discount | -1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.53 Evaluated at bid price : 17.53 Bid-YTW : 7.12 % |
| BMO.PR.K | Perpetual-Discount | -1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 19.31 Evaluated at bid price : 19.31 Bid-YTW : 6.95 % |
| BCE.PR.Y | Ratchet | -1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 14.15 Bid-YTW : 7.70 % |
| BCE.PR.Z | FixedFloater | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 15.01 Bid-YTW : 7.49 % |
| BNS.PR.P | FixedReset | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 22.57 Evaluated at bid price : 22.65 Bid-YTW : 4.57 % |
| SLF.PR.C | Perpetual-Discount | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.41 Evaluated at bid price : 15.41 Bid-YTW : 7.33 % |
| RY.PR.F | Perpetual-Discount | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.06 Evaluated at bid price : 17.06 Bid-YTW : 6.54 % |
| RY.PR.I | FixedReset | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 22.47 Evaluated at bid price : 22.51 Bid-YTW : 4.69 % |
| BNS.PR.K | Perpetual-Discount | -1.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.86 Evaluated at bid price : 18.86 Bid-YTW : 6.41 % |
| GWO.PR.J | FixedReset | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 24.46 Evaluated at bid price : 24.51 Bid-YTW : 5.40 % |
| BCE.PR.C | FixedFloater | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 16.06 Bid-YTW : 7.09 % |
| SLF.PR.D | Perpetual-Discount | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.37 Evaluated at bid price : 15.37 Bid-YTW : 7.35 % |
| MFC.PR.A | OpRet | -1.10 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2015-12-18 Maturity Price : 25.00 Evaluated at bid price : 24.34 Bid-YTW : 4.65 % |
| BNS.PR.J | Perpetual-Discount | -1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 19.81 Evaluated at bid price : 19.81 Bid-YTW : 6.68 % |
| RY.PR.B | Perpetual-Discount | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.01 Evaluated at bid price : 18.01 Bid-YTW : 6.54 % |
| BNS.PR.N | Perpetual-Discount | 1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 20.11 Evaluated at bid price : 20.11 Bid-YTW : 6.58 % |
| TD.PR.Q | Perpetual-Discount | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.25 Evaluated at bid price : 21.25 Bid-YTW : 6.64 % |
| CM.PR.E | Perpetual-Discount | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 19.52 Evaluated at bid price : 19.52 Bid-YTW : 7.24 % |
| RY.PR.W | Perpetual-Discount | 1.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.91 Evaluated at bid price : 18.91 Bid-YTW : 6.50 % |
| GWO.PR.I | Perpetual-Discount | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.72 Evaluated at bid price : 15.72 Bid-YTW : 7.26 % |
| BAM.PR.N | Perpetual-Discount | 1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 12.01 Evaluated at bid price : 12.01 Bid-YTW : 10.09 % |
| TCA.PR.Y | Perpetual-Discount | 1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 43.61 Evaluated at bid price : 44.50 Bid-YTW : 6.31 % |
| BMO.PR.H | Perpetual-Discount | 1.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 20.47 Evaluated at bid price : 20.47 Bid-YTW : 6.61 % |
| BCE.PR.F | FixedFloater | 1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 15.75 Bid-YTW : 6.31 % |
| CU.PR.A | Perpetual-Discount | 1.76 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.91 Evaluated at bid price : 21.91 Bid-YTW : 6.75 % |
| BAM.PR.K | Floater | 1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 7.49 Evaluated at bid price : 7.49 Bid-YTW : 7.11 % |
| BCE.PR.I | FixedFloater | 1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 16.07 Bid-YTW : 6.91 % |
| PWF.PR.H | Perpetual-Discount | 2.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 20.73 Evaluated at bid price : 20.73 Bid-YTW : 6.99 % |
| BNA.PR.C | SplitShare | 2.09 % | Asset coverage of 1.8+:1 as of December 31 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 11.24 Bid-YTW : 15.64 % |
| NA.PR.M | Perpetual-Discount | 2.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 7.01 % |
| RY.PR.C | Perpetual-Discount | 2.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.85 Evaluated at bid price : 17.85 Bid-YTW : 6.46 % |
| PWF.PR.E | Perpetual-Discount | 2.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 20.25 Evaluated at bid price : 20.25 Bid-YTW : 6.84 % |
| GWO.PR.G | Perpetual-Discount | 2.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.75 Evaluated at bid price : 18.75 Bid-YTW : 7.03 % |
| BAM.PR.M | Perpetual-Discount | 3.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 12.37 Evaluated at bid price : 12.37 Bid-YTW : 9.79 % |
| BAM.PR.G | FixedFloater | 4.66 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 11.00 Bid-YTW : 9.99 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.K | Perpetual-Discount | 283,255 | TD crossed 277,000 after hours at 17.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.53 Evaluated at bid price : 17.53 Bid-YTW : 7.12 % |
| HSB.PR.C | Perpetual-Discount | 269,940 | TD crossed 257,400 after hours at 17.23. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.23 Evaluated at bid price : 17.23 Bid-YTW : 7.51 % |
| SLF.PR.A | Perpetual-Discount | 224,950 | TD crossed 215,800 after hours at 16.95. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.77 Evaluated at bid price : 16.77 Bid-YTW : 7.19 % |
| SLF.PR.E | Perpetual-Discount | 208,615 | TD crossed 198,700 after hours at 15.50. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.50 Evaluated at bid price : 15.50 Bid-YTW : 7.37 % |
| TD.PR.E | FixedReset | 201,785 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 24.95 Evaluated at bid price : 25.00 Bid-YTW : 6.27 % |
| BNS.PR.K | Perpetual-Discount | 190,250 | TD crossed 189,800 after hours at 19.05. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.86 Evaluated at bid price : 18.86 Bid-YTW : 6.41 % |
| TD.PR.R | Perpetual-Discount | 190,003 | TD crossed 184,500 at 21.20. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 20.92 Evaluated at bid price : 20.92 Bid-YTW : 6.74 % |
| BMO.PR.K | Perpetual-Discount | 184,160 | TD crossed 180,000 after hours at 19.62. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 19.31 Evaluated at bid price : 19.31 Bid-YTW : 6.95 % |
| IAG.PR.A | Perpetual-Discount | 181,830 | TD crossed 180,600 after hours at 16.62. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.61 Evaluated at bid price : 16.61 Bid-YTW : 7.02 % |
| TD.PR.O | Perpetual-Discount | 173,480 | TD crossed 164,800 after hours at 18.88. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 18.81 Evaluated at bid price : 18.81 Bid-YTW : 6.49 % |
| RY.PR.P | FixedReset | 167,217 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 24.95 Evaluated at bid price : 25.00 Bid-YTW : 6.14 % |
| GWO.PR.H | Perpetual-Discount | 164,810 | TD crossed 162,100 at 16.71. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.71 Evaluated at bid price : 16.71 Bid-YTW : 7.37 % |
| RY.PR.C | Perpetual-Discount | 145,660 | TD crossed 142,800 after hours at 17.91. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.85 Evaluated at bid price : 17.85 Bid-YTW : 6.46 % |
| BNS.PR.T | FixedReset | 132,590 | National crossed 40,000 at 25.03. TD crossed 30,100 after hours at 25.05. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 24.98 Evaluated at bid price : 25.03 Bid-YTW : 6.09 % |
| BCE.PR.A | FixedFloater | 131,405 | TD crossed 126,100 after hours at 17.01. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 25.00 Evaluated at bid price : 16.93 Bid-YTW : 6.73 % |
| MFC.PR.C | Perpetual-Discount | 123,880 | TD crossed 118,100 after hours at 16.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.85 Evaluated at bid price : 16.85 Bid-YTW : 6.79 % |
| CL.PR.B | Perpetual-Discount | 121,975 | Nesbitt crossed 18,800 at 21.81. TD crossed 94,100 after hours at 22.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.90 Evaluated at bid price : 21.90 Bid-YTW : 7.24 % |
| CM.PR.H | Perpetual-Discount | 115,284 | TD crossed 95,000 after hours at 16.55. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 7.34 % |
| WFS.PR.A | SplitShare | 115,100 | Desjardins crossed 100,000 at 8.62. Asset coverage of 1.2-:1 as of January 15 according to Mulvihill. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2011-06-30 Maturity Price : 10.00 Evaluated at bid price : 8.52 Bid-YTW : 12.82 % |
| SLF.PR.B | Perpetual-Discount | 111,859 | TD crossed 105,300 after hours at 16.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 16.62 Evaluated at bid price : 16.62 Bid-YTW : 7.33 % |
| RY.PR.H | Perpetual-Discount | 110,530 | TD crossed 103,700 after hours at 21.42. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.42 Evaluated at bid price : 21.42 Bid-YTW : 6.61 % |
| PWF.PR.G | Perpetual-Discount | 110,246 | TD crossed 109,500 after hours at 21.67. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.30 Evaluated at bid price : 21.30 Bid-YTW : 6.98 % |
| BNS.PR.O | Perpetual-Discount | 109,740 | TD crossed 108,500 after hours at 21.04. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 21.01 Evaluated at bid price : 21.01 Bid-YTW : 6.72 % |
| BNS.PR.P | FixedReset | 109,700 | Nesbitt crossed 50,000 at 23.00, then another 57,600 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 22.57 Evaluated at bid price : 22.65 Bid-YTW : 4.57 % |
| SLF.PR.C | Perpetual-Discount | 104,709 | RBC bought 22,000 from National at 15.60; TD crossed 66,800 after hours at 15.47. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 15.41 Evaluated at bid price : 15.41 Bid-YTW : 7.33 % |
| MFC.PR.B | Perpetual-Discount | 103,083 | Nesbitt crossed 40,000 at 17.85; TD crossed 51,900 after hours at 16.21. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-01-26 Maturity Price : 17.55 Evaluated at bid price : 17.55 Bid-YTW : 6.73 % |
| There were 65 other index-included issues trading in excess of 10,000 shares. | |||