{"id":1290,"date":"2007-10-11T15:23:43","date_gmt":"2007-10-11T19:23:43","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=1290"},"modified":"2007-10-11T15:23:43","modified_gmt":"2007-10-11T19:23:43","slug":"one-bull-checks-in","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=1290","title":{"rendered":"One Bull Checks In"},"content":{"rendered":"

As mentioned yesterday<\/a>, I received some interesting correspondence recently:<\/p>\n

\n

Love your blog !<\/p>\n

I have been buying preferred shares for the last 10 years and discovered your site last month…<\/p>\n

My porfolio of pref ( middle six figures ) consist only of bank shares and Power Corp \/Power Financial, all perpetual discount.<\/p>\n

Sometime I\u00a0 try to balance my portfolio with the ups and down of the market but I buy for the long term.\u00a0<\/p>\n

But these days I do not understand the pref market : today I\u00a0 bought PWF.PR.G 5,90 perpetual at par ( $25,06) ( in Qc X 1.35 : 7,965 % ), last week NA.PR.K 5,85 at par ( $25)(QC X 1,35 : : 7,90%) .<\/p>\n

Meanwhile you are lucky if you get 5% on a 10 years municipal bond and 5,5% on a 20 years bonds ( ex: Greater Toronto Airport .) and the bank are signing 5 years morgage for 5,69%.<\/p>\n

I understand the risks and the nature of the Pref , but\u00a0 \u00a0I wonder if I am missing something ( market disruption \/Subprime \/long term inflation )or if this is the buying opportunity of the decade ?
\n\u00a0\u00a0\u00a0
\nThank you for your blog<\/p>\n<\/blockquote>\n

Well, this is obviously a very sensible, wise and discerning correspondent – that’s obvious, because he likes the blog.<\/p>\n

But let’s just take a VERY quick look at his question regarding “buying opportunity of the decade”. We’ll compare current yields with those of October 31, 2000, with help from the Bank of Canada’s yield look-up service<\/a>, CanadianBondIndices<\/a>, the HIMIPref\u2122 Indices\u00a0for October 31, 2000<\/a> and yesterday’s values:<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n
Yield Comparisons<\/strong><\/td>\n<\/tr>\n
\u00a0<\/td>\n2000-10-31<\/td>\n2007-10-10<\/td>\n<\/tr>\n
Long Canada Yield<\/td>\n5.61%<\/td>\n4.80%<\/td>\n<\/tr>\n
Long Corporate Yield<\/td>\n7.14%<\/td>\n5.90%<\/td>\n<\/tr>\n
PerpetualDiscount Yield<\/td>\n6.03%<\/td>\n5.42%<\/td>\n<\/tr>\n
Equivalency Factor<\/td>\n1.31<\/td>\n1.40<\/td>\n<\/tr>\n
PerpetualDiscount Interest Equivalent<\/td>\n7.90%<\/td>\n7.59%<\/td>\n<\/tr>\n
Canada Bond \/ Perpetual Discount
\nSpread<\/td>\n		229bp<\/td>\n279bp<\/td>\n<\/tr>\n
Corporate Bond \/ PerpetualDiscount
\nSpread<\/td>\n		76bp<\/td>\n169bp<\/td>\n<\/tr>\n<\/table>\n<\/div>\n

So … I have to agree with my correspondent that spreads look pretty attractive now!<\/p>\n

Note that all this is very approximate. At some indeterminate time in the future, HIMIPref\u2122 2006<\/s> 2007<\/s> 2008 will be ready for testing. This new version of the programme will extend the analytics to bonds; enormous quantities of data will be purchased at ruinous expense; the analysis will allow for swaps between investment universes (although this feature might have to wait until HIMIPref\u2122 2009 is ready) and at that time, with lots of testing and data\u00a0and controls to ensure that, for instance,\u00a0there’s nothing fishy going on with\u00a0the credit quality of the sampled universes,\u00a0I will be much happier about saying whether spreads are wide.<\/p>\n

But it does look pretty good, doesn’t it?\n<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

As mentioned yesterday, I received some interesting correspondence recently: Love your blog ! I have been buying preferred shares for the last 10 years and discovered your site last month… My porfolio of pref ( …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-1290","post","type-post","status-publish","format-standard","hentry","category-reader-initiated-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1290"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1290\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}