PrefBlog

Spend-Every-Penny has declared:

As the United States and other countries debate giving more authority to central banks and other regulatory agencies, [Spend-Every-Penny] Sunday said he is sticking with his current approach to systemic oversight, which brings together the heads of the Bank of Canada, the federal banking regulator and other key authorities on a regular basis to compare notes. The decision means a previously obscure grouping of senior officials – the Financial Institutions Supervisory Committee – will be thrust into the spotlight as Canada’s answer to the pledge the federal government and its allies in the Group of 20 made to correct regulatory failings that contributed to the financial crisis.

[Spend-Every-Penny] made clear that even though unelected public servants will play crucial roles, responsibility for ensuring that Canada stays out of financial trouble rests with him.

There’s a very good chance that there won’t be another major banking crisis before he retires, so it’s a pretty safe way to appear tough and authoritative. In most countries, however, the idea that the politicians are ultimately responsible for the performance of their appointees is generally understood. I can’t find a public copy of the speech anywhere, by the way. I hope Spend-Every-Penny won’t be so shy when something bad happens … but I won’t bet on it.

I see that Toronto, well known for its inability to license a souvlaki cart in less than three years is attempting to create a bigger sink-hole than the one on Finch Avenue by bidding to host the Pan-Am games. Send in the clowns!

I noted on March 23 that Liddy, the last CEO of AIG, demonstrated his lack of qualification for the office by throwing his people to the wolves during the bonus controversy. The new guy, Benmosche, is much better:

Benmosche criticized Cuomo and lawmakers during a town-hall style meeting this month for life insurance workers in Houston. Cuomo subpoenaed AIG in March during a national furor about $165 million in retention bonuses sent after the firm’s bailout and said those who returned the cash wouldn’t have their names published. That month, some employees received death threats and protesters visited the Connecticut homes of two AIG executives.

“What he did is so unbelievably wrong,” Benmosche said during the Aug. 11 remarks, according to a record obtained by Bloomberg. “He doesn’t deserve to be in government, and he surely shouldn’t be the attorney general of the state of New York. What he did is criminal. You don’t create lynch mobs to go out to people’s homes and do the things he did.”

Speaking of bonuses…:

U.S. Securities and Exchange Commission Chairman Mary Schapiro, in a letter to brokerage chiefs, warned that burgeoning recruitment bonuses may push employees to engage in improper sales and trades.

Large, up-front bonuses and enhanced commissions may lead brokers “to believe they must sell securities at a sufficiently high level to justify special arrangements,” she wrote today. “Those pressures may in turn create incentives to engage in conduct that may violate obligations to investors.”

Brokers may be motivated to make excessive trades to generate fees, a process known as churning, Schapiro said. They might recommend products that don’t suit their clients’ objectives or generate fees with transactions that aren’t in their customers’ interest, Schapiro said.

Warning! Increased political scrutiny may lead regulators to believe they must make gratuitously precious statements about activities that are already illegal.

Volume ticked upward today, but the market ended a very good month on a sour note, with PerpetualDiscounts losing 13bp and FixedResets down 14bp. The latter may be related to the BPO new issue.

PerpetualDiscounts closed with a pre-tax bid-YTW of 5.66%, equivalent to 7.92% interest at the standard equivalency factor of 1.4x. Long Corporates closed the month with a yield of about 5.95% (after generating +2.83% total return in August), implying that the pre-tax interest-equivalent spread remains at about 200bp.

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	-0.3957 %	1,457.2
FixedFloater	5.72 %	4.00 %	60,880	18.60	1	0.4757 %	2,684.5
Floater	3.13 %	3.16 %	174,664	19.27	2	-0.3957 %	1,820.5
OpRet	4.86 %	-10.56 %	132,541	0.09	15	0.1285 %	2,280.1
SplitShare	5.67 %	3.97 %	98,723	0.08	3	-0.3891 %	2,056.3
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.1285 %	2,085.0
Perpetual-Premium	5.69 %	5.10 %	69,784	2.60	4	0.5453 %	1,888.0
Perpetual-Discount	5.68 %	5.66 %	188,811	14.31	67	-0.1288 %	1,812.5
FixedReset	5.50 %	4.00 %	483,272	4.12	40	-0.1369 %	2,104.2

Performance Highlights
Issue	Index	Change	Notes
BAM.PR.P	FixedReset	-3.83 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-30 Maturity Price : 25.00 Evaluated at bid price : 26.40 Bid-YTW : 6.16 %
POW.PR.D	Perpetual-Discount	-2.74 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-08-31 Maturity Price : 21.37 Evaluated at bid price : 21.65 Bid-YTW : 5.85 %
BAM.PR.I	OpRet	-2.63 %	YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-12-30 Maturity Price : 25.00 Evaluated at bid price : 25.56 Bid-YTW : 5.19 %
MFC.PR.B	Perpetual-Discount	-1.94 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-08-31 Maturity Price : 20.27 Evaluated at bid price : 20.27 Bid-YTW : 5.76 %
NA.PR.L	Perpetual-Discount	-1.39 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-08-31 Maturity Price : 21.31 Evaluated at bid price : 21.31 Bid-YTW : 5.75 %
CIU.PR.B	FixedReset	-1.39 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-01 Maturity Price : 25.00 Evaluated at bid price : 27.71 Bid-YTW : 4.26 %
GWO.PR.E	OpRet	1.16 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2009-09-30 Maturity Price : 25.50 Evaluated at bid price : 26.21 Bid-YTW : -30.79 %
BNS.PR.O	Perpetual-Discount	1.20 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-05-26 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 5.53 %
CM.PR.R	OpRet	1.79 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2009-09-30 Maturity Price : 25.60 Evaluated at bid price : 26.78 Bid-YTW : -40.35 %

Volume Highlights
Issue	Index	Shares Traded	Notes
BAM.PR.P	FixedReset	44,640	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-30 Maturity Price : 25.00 Evaluated at bid price : 26.40 Bid-YTW : 6.16 %
BMO.PR.L	Perpetual-Premium	43,803	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-24 Maturity Price : 25.00 Evaluated at bid price : 25.15 Bid-YTW : 5.76 %
CM.PR.I	Perpetual-Discount	30,940	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-08-31 Maturity Price : 20.70 Evaluated at bid price : 20.70 Bid-YTW : 5.75 %
RY.PR.Y	FixedReset	26,300	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-12-24 Maturity Price : 25.00 Evaluated at bid price : 27.50 Bid-YTW : 4.07 %
BNS.PR.X	FixedReset	23,568	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.82 Bid-YTW : 3.82 %
BAM.PR.N	Perpetual-Discount	23,507	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-08-31 Maturity Price : 18.53 Evaluated at bid price : 18.53 Bid-YTW : 6.54 %
There were 44 other index-included issues trading in excess of 10,000 shares.

This entry was posted on Monday, August 31st, 2009 at 7:41 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.