| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| 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 | 0.5856 % | 2,656.3 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5856 % | 5,002.3 |
| Floater | 5.44 % | 5.58 % | 37,877 | 14.52 | 3 | 0.5856 % | 2,882.8 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0789 % | 3,651.2 |
| SplitShare | 4.77 % | 4.92 % | 54,269 | 2.60 | 5 | 0.0789 % | 4,360.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0789 % | 3,402.1 |
| Perpetual-Premium | 5.61 % | 5.51 % | 51,516 | 6.65 | 12 | 0.1055 % | 3,093.0 |
| Perpetual-Discount | 5.51 % | 5.58 % | 39,105 | 14.52 | 21 | 0.1218 % | 3,426.8 |
| FixedReset Disc | 5.51 % | 5.99 % | 91,875 | 13.75 | 17 | 0.0993 % | 3,407.3 |
| Insurance Straight | 5.35 % | 5.42 % | 45,573 | 14.69 | 20 | -0.0171 % | 3,361.3 |
| FloatingReset | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0993 % | 4,160.4 |
| FixedReset Prem | 5.90 % | 4.57 % | 76,848 | 2.20 | 31 | 0.0199 % | 2,668.3 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0993 % | 3,483.0 |
| FixedReset Ins Non | 5.22 % | 5.13 % | 52,683 | 2.60 | 14 | -0.4208 % | 3,270.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| IFC.PR.A | FixedReset Ins Non | -2.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 22.40 Evaluated at bid price : 22.81 Bid-YTW : 5.56 % |
| CCS.PR.C | Insurance Straight | -2.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 22.60 Evaluated at bid price : 22.85 Bid-YTW : 5.53 % |
| ENB.PF.C | FixedReset Disc | -2.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 22.91 Evaluated at bid price : 24.01 Bid-YTW : 6.16 % |
| SLF.PR.H | FixedReset Ins Non | -1.91 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 23.50 Evaluated at bid price : 24.60 Bid-YTW : 5.56 % |
| IFC.PR.K | Insurance Straight | -1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 23.67 Evaluated at bid price : 24.15 Bid-YTW : 5.49 % |
| RY.PR.S | FixedReset Prem | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2029-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.77 Bid-YTW : 2.89 % |
| ENB.PR.Y | FixedReset Disc | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 22.72 Evaluated at bid price : 23.51 Bid-YTW : 6.06 % |
| BN.PR.B | Floater | 2.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 14.16 Evaluated at bid price : 14.16 Bid-YTW : 5.58 % |
| GWO.PR.S | Insurance Straight | 3.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 24.05 Evaluated at bid price : 24.30 Bid-YTW : 5.46 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| FTS.PR.H | FixedReset Disc | 279,529 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 20.36 Evaluated at bid price : 20.36 Bid-YTW : 5.79 % |
| BN.PF.I | FixedReset Prem | 61,200 | YTW SCENARIO Maturity Type : Call Maturity Date : 2027-03-31 Maturity Price : 25.00 Evaluated at bid price : 25.31 Bid-YTW : 4.39 % |
| ENB.PR.Y | FixedReset Disc | 51,099 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 22.72 Evaluated at bid price : 23.51 Bid-YTW : 6.06 % |
| MFC.PR.Q | FixedReset Ins Non | 37,635 | YTW SCENARIO Maturity Type : Call Maturity Date : 2028-06-19 Maturity Price : 25.00 Evaluated at bid price : 25.66 Bid-YTW : 4.95 % |
| IFC.PR.E | Insurance Straight | 31,900 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 23.91 Evaluated at bid price : 24.15 Bid-YTW : 5.45 % |
| GWO.PR.Y | Insurance Straight | 11,360 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2056-08-10 Maturity Price : 21.08 Evaluated at bid price : 21.08 Bid-YTW : 5.41 % |
| There were 0 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| See TMX DataLinx: ‘Last’ != ‘Close’ and the posts linked therein for an idea of why these quotes are so horrible. | ||
| Issue | Index | Quote Data and Yield Notes |
| BN.PR.Z | FixedReset Prem | Quote: 25.59 – 27.00 Spot Rate : 1.4100 Average : 0.7900 YTW SCENARIO |
| POW.PR.D | Perpetual-Discount | Quote: 22.89 – 24.87 Spot Rate : 1.9800 Average : 1.3799 YTW SCENARIO |
| IFC.PR.K | Insurance Straight | Quote: 24.15 – 25.10 Spot Rate : 0.9500 Average : 0.6697 YTW SCENARIO |
| POW.PR.H | Perpetual-Premium | Quote: 25.55 – 26.55 Spot Rate : 1.0000 Average : 0.7283 YTW SCENARIO |
| IFC.PR.A | FixedReset Ins Non | Quote: 22.81 – 23.51 Spot Rate : 0.7000 Average : 0.4306 YTW SCENARIO |
| SLF.PR.H | FixedReset Ins Non | Quote: 24.60 – 25.30 Spot Rate : 0.7000 Average : 0.5006 YTW SCENARIO |
Hello everyone,
There is something I really don’t understand.
Rates are rising, perpetuals are not impacted at all (near their 52 week-high) and today, assuming taxes do not play a part (in a tax-sheltered account), I can buy a provincial bond yielding 5% with a set maturity date of 20 years and only get 5.5% for a perpetual preferred shares???
The spread seems to be very tight.
Despite the debt burden of most countries, maybe I’m wrong but I’d much rather own a strip bond from the province of Quebec with a YTM of 5% with my capital returned in 20 years than any perpetual pref yielding 5.5%.
The 1.3 multiplier raises the yield to about 6.5% to 7% interest rate equivalent. Then there’s the liquidity as compared to trading bonds for little guys. Moving bonds would typically be hard.
Having said that, three years ago, you could not give any of the preferreds away. We saw a few people who entirely gave up on preferred shares.
Markets remain well behaved, whatever that means( Perhaps things going as per our desire ) mostly, but often go from thin spreads to wide spreads.
I think the closest time analogue to current period ( higher rates and tight spreads) is from 2006 to 2007. This is based on the issue date of some of the extant perpetuals for lifecos from that time(SLF.PR.C/D/E and MFC.PR.C/B). James would have much better details of these. If we go back to that era, these 4.5% perpetuals were issued and bought at a time when yields were approximately where we are now. Perhaps a bit higher.
Then there’s the whole issue of the issuer preference. IFC.PR.C would have reset at somewhere around 6% and IFC doesn’t want to pay 6%. We can’t fight that. Because they have a cheaper funding source.
The supply of almost all preferreds has been dwindling since 2020 and we are going to possibly lose so many more in the coming years if the trajectory remains.
Good thing is that we are not in 2020/21 when there are no alternatives. Provincial bonds and corporate bonds from Canadian telecoms and others are now touching 5% to 5.7%.
If you are a fixed income investor with money to deploy, these are happy times.
Thank you!
You’re right, it is much more convenient to trade preferred shares than bonds but if you invest for the long-term and don’t chase quick profits in this part of your portfolio, it is somewhat less of an issue.
Big banks usually have a deep inventory so it is quite easy to buy them.
Maybe it is a mistake but I have gradually sold all my perpetuals and no longer own any as of last week.
I have mostly used the proceeds to buy…
=> individual provincial strip bonds (lower yields but not by a lot and spread tighter than in the past),
Note: My goal is to keep them to maturity.
and to a lower extent:
=> US corporate bond ETFs (same yield actually than perpetuals, lower duration but foreign currency exposure),
=> Long-term US treasuries.
I don’t want to bother anybody with my thought process but if we go through any kind of crises in the future (pretty much a given if my time horizon is 20 years), these 3 assets are very likely to withstand the shock much better than perpetuals and can actually fly if rates collapse.
Sure, I only state the obvious :O … sorry for that.
The spread seems to be very tight.
I make a practice of tracking the “Seniority Spread” – the yield difference between long term corporate bonds and the interest-equivalent rate for PerpetualDiscounts.
This gets reported on PrefBlog on the Wednesday posts (updated with the information Thursday) and in the MAPF performance reports – such as MAPF Performance: July, 2026 which includes a historical chart of this measure. PrefLetter also has this and much other information.
The Seniority Spread was 205bp on July 29, the tightest it’s been in about fifteen years. Mind you, it bounced around 100bp in the early part of this century. So make your own mind up about where it’s going!
As for the overall market … Intact just refinanced IFC.PR.C with LRCNs … so, according to ONE data point from ONE issue from ONE issuer, the preferred share market is still expensive for issuers, which means cheap for investors. Make of that what you will.
you are assuming in a crisis, rates will fall and not rise….
Thank you again for your insight!
Yes, before writing my comment I took a look at the post you write monthly because I know you always mention the seniority spread.
However, it is between long corporate and perpetuals so I am wondering where things stand vs. canadian provincial bonds (although I admit bonds are not the topic of this website…)
With the AI tools at our disposal nowadays, maybe I can find the historical spread between those 2 assets classes out of curiosity.
I wish I could edit my previous post instead of creating a new one!
Bingo!
“Over the last 20 years in Canada, the yield spread between investment-grade corporate bonds and provincial bonds has generally fluctuated between 100 and 220 basis points.
2008–2009 => Spreads widened dramatically spiking past 300–400 basis points,
2015–2016 => Spreads widened moderately (pushing past 180–200 bps),
2020 => A sharp, temporary spike occurred in early 2020,
2022–2026 => Spreads compressed to historically tight percentiles hovering close to 100–130 basis points.”
ZLC has a YTM of 5.25% and based on what I can see with my bank, provincial strips with a maturity in 20 years have on average a YTM of c.4.9%.
For being tight, it is tight.
However, it is between long corporate and perpetuals so I am wondering where things stand vs. canadian provincial bonds (although I admit bonds are not the topic of this website…)
FYI, I also do a decomposition of the PerpetualDiscount yield every month in PrefLetter using the 5-Year Canadas as a base: