The New York Times points out – albeit disapprovingly – one of the good elements of the Obama regulation plan: it leaves Credit Rating Agencies alone:
The proposals call for the agencies to improve disclosure and release more detailed information, as well as establish policies for “managing and disclosing conflicts of interest.”
But the plan does not alter the issuer-pay model, whereby the companies selling securities pay to have them rated. Nor does it encourage competitors to enter the industry, which many regard as an oligopoly.
The proposal does call for regulators to reduce their reliance on agency ratings when deciding whether structured investments are safe enough for banks, insurance companies, pension funds and money market mutual fund investors. Regulators should encourage more independent analysis, a Treasury official said, but the administration did not propose an alternative standard.
Bank of Canada Governor Mark Carney gave a speech today:
The performance of core funding markets during the crisis intensified the financial panic and helped trigger the recession. This is totally unacceptable. As a consequence, one of the Bank of Canada’s top priorities is to promote institutional changes to create more robust core funding markets. Promising avenues to break such (il)liquidity spirals include introducing clearing houses, standardizing products, implementing through-the-cycle margining, and ensuring more effective netting.
Does anybody else think this is non-sequiter? When I think of “core funding”, I think of deposits, deposit notes and GICs. One might well make the argument that the “promising avenues” might contain a mathod whereby the market for these instruments remains stable … but Mr. Carney doesn’t.
There is a possibility that the panel surveyed to calculate US LIBOR will increase:
The dollar rose versus the euro yesterday for the first time in three days after British Bankers’ Association said it may allow more institutions to take part in the daily survey that sets Libor, the benchmark for more than $360 trillion of financial products around the world.
…
“It would be a wider group of banks, so some ‘weaker’ ones who would submit higher rates, thus Libor would aggregate higher,” said Scott Ainsbury, a portfolio manager at New York- based FX Concepts Inc., the world’s largest currency hedge fund with about $12 billion in assets.
Not much price action today in Canadian Preferreds, but volume continued high.
| 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 | -5.2289 % | 1,221.5 |
| FixedFloater | 7.02 % | 5.48 % | 35,706 | 16.32 | 1 | 0.0000 % | 2,150.2 |
| Floater | 3.12 % | 3.36 % | 81,292 | 18.86 | 3 | -5.2289 % | 1,526.1 |
| OpRet | 4.96 % | 3.78 % | 135,875 | 0.92 | 14 | 0.0931 % | 2,196.4 |
| SplitShare | 5.82 % | 6.24 % | 59,589 | 4.23 | 3 | -0.3499 % | 1,873.7 |
| Interest-Bearing | 5.99 % | 7.69 % | 23,215 | 0.52 | 1 | -0.1992 % | 1,991.2 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1097 % | 1,737.7 |
| Perpetual-Discount | 6.32 % | 6.30 % | 167,613 | 13.38 | 71 | 0.1097 % | 1,600.4 |
| FixedReset | 5.68 % | 4.83 % | 536,966 | 4.35 | 39 | -0.0800 % | 2,011.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRI.PR.B | Floater | -12.06 % | Traded 8,100 shares in a range of 14.80-16.15 before closing at 14.51-15.89 (!). Somebody took out the bid with a sale of 2500 shares at $14.80 at 3:59, with the last ten trades of the day totalling 6200 shares in the last eight minutes of trading … whatever the merits of floaters may be, liquidity is not one of them! YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 14.51 Evaluated at bid price : 14.51 Bid-YTW : 2.71 % |
| BNS.PR.R | FixedReset | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 24.61 Evaluated at bid price : 24.66 Bid-YTW : 4.83 % |
| GWO.PR.H | Perpetual-Discount | -1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 18.10 Evaluated at bid price : 18.10 Bid-YTW : 6.74 % |
| CU.PR.B | Perpetual-Discount | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 24.32 Evaluated at bid price : 24.62 Bid-YTW : 6.14 % |
| BAM.PR.O | OpRet | 1.10 % | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 23.81 Bid-YTW : 6.35 % |
| CIU.PR.A | Perpetual-Discount | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 18.60 Evaluated at bid price : 18.60 Bid-YTW : 6.25 % |
| CIU.PR.B | FixedReset | 1.17 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-01 Maturity Price : 25.00 Evaluated at bid price : 27.60 Bid-YTW : 4.51 % |
| PWF.PR.M | FixedReset | 1.96 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 4.78 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| GWO.PR.X | OpRet | 129,915 | RBC crossed 120,000 at 25.85. YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-09-29 Maturity Price : 25.00 Evaluated at bid price : 25.75 Bid-YTW : 4.01 % |
| BAM.PR.P | FixedReset | 74,039 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-30 Maturity Price : 25.00 Evaluated at bid price : 25.37 Bid-YTW : 6.79 % |
| RY.PR.I | FixedReset | 72,325 | National crossed 50,000 at 25.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 24.66 Evaluated at bid price : 24.71 Bid-YTW : 4.84 % |
| RY.PR.N | FixedReset | 66,625 | TD bought 12,900 from National at 26.65. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 26.71 Bid-YTW : 4.77 % |
| PWF.PR.I | Perpetual-Discount | 66,000 | Nesbitt bought two blocks from RBC, 14,500 at 22.78 and 15,000 at 22.80, then crossed 32,000 at 22.88. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 22.55 Evaluated at bid price : 22.76 Bid-YTW : 6.70 % |
| RY.PR.D | Perpetual-Discount | 63,145 | RBC crossed blocks of 23,900 and 25,000 shares, both at 18.49. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-06-18 Maturity Price : 18.39 Evaluated at bid price : 18.39 Bid-YTW : 6.20 % |
| There were 46 other index-included issues trading in excess of 10,000 shares. | |||