PrefBlog

The Investment Industry Regulatory Organization of Canada is going after Deutsche Bank for not functioning as Coventree’s Investor Relations department in the ABCP affair. Assiduous readers will recall that domestic banks are expected to enter a golden age:

But Mr. Downe said the exit of a number of non-bank competitors in the lending market means that the banks should be able to earn more on their loans.

“I think that the prospects for good asset growth at better margins over the next couple of years are quite realistic,” he told analysts on a conference call, adding that the banking system is absorbing more than $1-trillion worth of short-term financing previously done by other lenders.

PrefBlog anticipates that this golden age will bring with it the necessity of hiring many experienced compliance personnel at fat salaries. The whole thing is laughable: it is impossible to determine whether domestic banks’ BAs are junior, senior or pari passu with BDNs, but this lack of disclosure doesn’t worry their future staff members in the least.

It should be clear, however, that Alistair Darling will not be looking for work in finance:

Chancellor of the Exchequer Alistair Darling imposed a 50 percent levy on banker bonuses and said he will increase income taxes after elections next year as the worst recession on record drives up U.K. government borrowing.

But then, perhaps he likes living in London.

DBRS has placed Dexia preferreds and sub-debt on review negative following their October 30 announcement that, in order to get state aid, they had to agree that they would (among other things):

not to make any payment of any discretionary coupons, or to exercise any call options on any hybrid Tier 1 instruments or on any Upper Tier 2 perpetual instruments issued by any entity of the Group. Within this context, Dexia undertakes in particular (a) not to pay the coupons relating to the Tier 1 issues of Dexia Funding Luxembourg S.A. (November 2, 2009) and Dexia Crédit Local (November 18, 2009), and (b) to waive exercise of the call option on the Upper Tier 2 issue of Dexia Bank Belgium (Isin BE0116241358) dated November 18, 2009. The Dexia Group will issue a further communication in relation to the payment of the coupons for the Upper Tier 2 issue of Dexia Bank Belgium (Isin BE0116241358);

Volume jumped considerably today although price action was muted, with PerpetualDiscounts gaining 6bp and FixedResets up 1bp.

PerpetualDiscounts now yield 5.88%, equivalent to 8.23% interest at the standard equivalency factor of 1.4x. Long Corporates now yield just a hair under 6.0%, so the pre-tax interest-equivalent spread (also referred to as the Seniority spread) is now about 225bp, a slight tightening from the 230-235bp level reported on December 2.

This entry was posted on Wednesday, December 9th, 2009 at 8:18 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.