The Kansas City Financial Stress Index declined in December but it still above pre-crisis levels.
Comrade Peace-Prize’s plans for a punitive bank tax are getting clearer:
The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.
The government’s $700 billion rescue plan contributed to a record $1.4 trillion deficit last year.
Tax experts, who discussed the possibilities before the president’s plan was disclosed, say all of the administration’s structural options, which include an income surtax, an excise tax, or a fee pegged on the value of assets or some other measure, are likely to be so porous that financial institutions would be able to sidestep most of them.
Not to worry! The FDIC is always willing to grandstand:
The Federal Deposit Insurance Corp., in a bid to help align bank pay practices with risk management, is considering whether to link compensation with fees the agency charges lenders to support the fund protecting deposits.
The FDIC board today voted 3-2 to seek comment for 30 days on the proposal on bank compensation before deciding whether to begin a formal rule-making process, which may take several months.
“This is clearly a contributor to the crisis and to the losses we are suffering,” FDIC Chairman Sheila Bair said.
With all this micromanagement, soon the financial system will be as well run as, say, Toronto’s water distribution!
Hedge funds are increasingly operating as shadow-banks:
Today, hedge fund firms are loaning a record amount of money to unprofitable and bankrupt companies, according to New York-based HedgeFund.net. As banks that are recovering from the credit crackup avoid financing companies in distress, hedge fund firms are filling the gap, says Sean Egan, president of Haverford, Pennsylvania- based Egan-Jones Ratings Co.
Some hedge funds and other nonbank lenders charge interest rates as high as 19 percent in this mostly unregulated corner of the debt market, according to a survey by Malibu, California- based Pepperdine University’s Graziadio School of Business and Management. Firms also layer on fees, including costs as high as 12 percent of the loan for monitoring the value of a borrower’s collateral assets, according to the survey. Some lenders demand closing charges of up to 4 percent.
The preferred share market backtracked a bit today, with PerpetualDiscounts down 2bp and FixedResets losing 27bp – taking their median weighted average yield all the way up to 3.56%! Perhaps three new issues in two days (AER, 6.50%+375, BPO, 6.15%+307 and FTS, 4.25%+145) is just a bit too much, too fast. Volume was heavy.
| 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 | -0.3886 % | 1,702.8 |
| FixedFloater | 5.63 % | 3.79 % | 35,109 | 19.02 | 1 | 0.2077 % | 2,765.0 |
| Floater | 2.30 % | 2.64 % | 110,760 | 20.69 | 3 | -0.3886 % | 2,127.2 |
| OpRet | 4.84 % | -1.96 % | 118,014 | 0.09 | 13 | -0.2148 % | 2,321.2 |
| SplitShare | 6.36 % | -1.04 % | 190,214 | 0.08 | 2 | 0.0000 % | 2,113.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2148 % | 2,122.5 |
| Perpetual-Premium | 5.77 % | 5.59 % | 145,099 | 5.87 | 12 | 0.0890 % | 1,901.7 |
| Perpetual-Discount | 5.72 % | 5.76 % | 184,349 | 14.26 | 63 | -0.0201 % | 1,835.6 |
| FixedReset | 5.40 % | 3.56 % | 325,423 | 3.86 | 41 | -0.2716 % | 2,179.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| W.PR.J | Perpetual-Discount | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-01-12 Maturity Price : 23.49 Evaluated at bid price : 23.76 Bid-YTW : 5.92 % |
| BAM.PR.O | OpRet | -1.72 % | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.75 Bid-YTW : 4.14 % |
| TD.PR.G | FixedReset | -1.35 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-30 Maturity Price : 25.00 Evaluated at bid price : 27.77 Bid-YTW : 3.49 % |
| TD.PR.A | FixedReset | -1.14 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 26.10 Bid-YTW : 3.77 % |
| BNS.PR.Q | FixedReset | -1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-11-24 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 3.52 % |
| RY.PR.L | FixedReset | -1.06 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 27.07 Bid-YTW : 3.65 % |
| TD.PR.R | Perpetual-Premium | 1.01 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-05-30 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 5.59 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| GWO.PR.E | OpRet | 202,384 | Nesbitt crossed 200,000 at 25.85. Nice ticket! YTW SCENARIO Maturity Type : Call Maturity Date : 2010-04-30 Maturity Price : 25.25 Evaluated at bid price : 25.60 Bid-YTW : 0.49 % |
| ACO.PR.A | OpRet | 128,426 | Nesbit crossed two blocks: 50,000 and 75,000 shares, at 26.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2010-02-11 Maturity Price : 25.50 Evaluated at bid price : 26.07 Bid-YTW : -13.02 % |
| MFC.PR.D | FixedReset | 117,005 | Desjardins crossed 100,000 at 28.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-19 Maturity Price : 25.00 Evaluated at bid price : 28.14 Bid-YTW : 3.72 % |
| PWF.PR.D | OpRet | 82,100 | Nesbitt crossed 65,000 at 26.42. YTW SCENARIO Maturity Type : Call Maturity Date : 2010-02-11 Maturity Price : 25.60 Evaluated at bid price : 26.23 Bid-YTW : -26.05 % |
| BNS.PR.P | FixedReset | 59,070 | Nesbitt bought one block of 11,400 from HSBC at 26.35, followed by three blocks of 10,000 each at 26.37. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-25 Maturity Price : 25.00 Evaluated at bid price : 26.30 Bid-YTW : 3.28 % |
| BMO.PR.P | FixedReset | 56,826 | TD crossed 22,600 at 27.22. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-03-27 Maturity Price : 25.00 Evaluated at bid price : 27.21 Bid-YTW : 3.67 % |
| There were 52 other index-included issues trading in excess of 10,000 shares. | |||