{"id":15790,"date":"2011-07-25T23:56:15","date_gmt":"2011-07-26T03:56:15","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=15790"},"modified":"2011-07-25T23:56:15","modified_gmt":"2011-07-26T03:56:15","slug":"july-25-2011","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=15790","title":{"rendered":"July 25, 2011"},"content":{"rendered":"

This is getting monotonous<\/a>:<\/p>\n

Greece\u2019s sovereign credit rating was cut three steps by Moody\u2019s Investors Service, which said the European Union\u2019s financing package for the debt-laden nation implies \u201csubstantial economic losses\u201d for private creditors.<\/p>\n

Greece\u2019s long-term foreign currency debt was downgraded to Ca from Caa1, the ratings company said in a statement in London today. Moody\u2019s assigned a developing outlook to the ratings and said it will re-assess the credit risk profile of any outstanding or new securities issued by the Greek government after Greece\u2019s debt exchange has been completed.<\/p><\/blockquote>\n

It occurs to me … one way that the Greek government hid debt was to enter into currency swaps with a present value far different from zero at trade-time. This was not just allowable under the rules at that time, but even encouraged and everybody knew they were doing it; this made it a little harder for the politicians to say it was all the brokers’ (Goldman Sachs’) fault, but somehow they managed.<\/p>\n

I haven’t seen anything about these things for a while. Could it be possible that lenders through a swap facility will get off scot-free?<\/p>\n

Who wants to take responsibility for this bond market effect<\/a>?<\/p>\n

A cut in the U.S. government\u2019s AAA grade could force investors to sell asset-backed securities tied to student loans, causing spreads to widen \u201csignificantly,\u201d according to Citigroup Inc.<\/p>\n

\u201cA ratings downgrade would be a significant blow\u201d to the $250 billion government-guaranteed sector, Citigroup analysts led by Mary Kane said in a July 22 report. \u201cThe likelihood of forced selling is elevated.\u201d<\/p>\n

Citigroup sees a 50 percent chance of a ratings cut this year as the U.S. struggles to reduce its long-term debt. Many investors buy student-loan securities specifically because they\u2019re so highly rated and a U.S. government credit risk, according to analysts at the New York-based lender. Money managers with rating-based guidelines would be forced to sell into a sinking market, affecting the sector more than other asset-backed debt tied to consumers, commercial mortgages and corporate loans, they wrote.<\/p><\/blockquote>\n

The situation worries me. I don’t think there’s any imminent danger, and I’ve written about this before … but remember the last days of the Roman Republic. You had two parties: the “good men” and the “populists”, nominally representing basically the old traditional oligarchy and the new guys looking in, respectively. Their main political purpose was to ensure that the other party couldn’t do anything – so little got done and everybody got frustrated and angry. Then along came Julius Caesar: smart, ambitious and ruthless, who staged a coup. All the US needs is another two decades or so of log-jam, and I’ll start taking bets.<\/p>\n

S&P revised its outlook on BAM<\/a>:<\/p>\n

\n
    \n
  • We are revising our outlook on Brookfield Asset Management to stable from negative.\n
  • At the same time, we are affirming our ratings on the company, including our ‘A-‘ corporate credit and ‘A-2’ short-term ratings.\n
  • We base the outlook revision on the improved operating performance and outlook in Brookfield’s operating subsidiaries. It also reflects the
    \ncompany’s continued ability to execute its asset management strategy by attracting external investment capital, while maintaining company-level cash flow coverage measures in line with our expectation for the ratings.<\/ul>\n<\/blockquote>\n

    It was a good day for the Canadian preferred share market, with PerpetualDiscounts winning 19bp, FixedResets up 1bp and DeemedRetractibles gaining 17bp. Volatility was minimal; volume was low.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
    HIMIPref™ Preferred Indices
    These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
    Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
    Index<\/td>\nMean
    Current
    Yield
    (at bid)<\/td>\n    		Median
    YTW<\/td>\n    		Median
    Average
    Trading
    Value<\/td>\n    		Median
    Mod Dur
    (YTW)<\/td>\n    		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
    Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.3066 %<\/td>\n2,455.7<\/td>\n<\/tr>\n
    FixedFloater<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.3066 %<\/td>\n3,693.4<\/td>\n<\/tr>\n
    Floater<\/td>\n2.47 %<\/td>\n2.24 %<\/td>\n38,826<\/td>\n21.69<\/td>\n4<\/td>\n0.3066 %<\/td>\n2,651.6<\/td>\n<\/tr>\n
    OpRet<\/td>\n4.84 %<\/td>\n1.99 %<\/td>\n57,920<\/td>\n0.18<\/td>\n9<\/td>\n0.1110 %<\/td>\n2,456.4<\/td>\n<\/tr>\n
    SplitShare<\/td>\n5.23 %<\/td>\n1.44 %<\/td>\n51,791<\/td>\n0.59<\/td>\n6<\/td>\n-0.1330 %<\/td>\n2,511.2<\/td>\n<\/tr>\n
    Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1110 %<\/td>\n2,246.1<\/td>\n<\/tr>\n
    Perpetual-Premium<\/td>\n5.67 %<\/td>\n4.96 %<\/td>\n134,826<\/td>\n0.58<\/td>\n13<\/td>\n0.0806 %<\/td>\n2,097.2<\/td>\n<\/tr>\n
    Perpetual-Discount<\/td>\n5.42 %<\/td>\n5.42 %<\/td>\n109,456<\/td>\n14.75<\/td>\n17<\/td>\n0.1858 %<\/td>\n2,211.7<\/td>\n<\/tr>\n
    FixedReset<\/td>\n5.14 %<\/td>\n3.08 %<\/td>\n198,269<\/td>\n2.64<\/td>\n58<\/td>\n0.0130 %<\/td>\n2,327.4<\/td>\n<\/tr>\n
    Deemed-Retractible<\/td>\n5.06 %<\/td>\n4.69 %<\/td>\n268,234<\/td>\n7.88<\/td>\n47<\/td>\n0.1725 %<\/td>\n2,174.9<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n
    Performance Highlights<\/strong><\/td>\n<\/tr>\n
    Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
    GWO.PR.I<\/td>\nDeemed-Retractible<\/td>\n1.07 %<\/td>\nYTW SCENARIO
    \nMaturity Type : Hard Maturity
    \nMaturity Date\t: 2022-01-31
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 22.76
    \nBid-YTW : 5.71 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
    Volume Highlights<\/strong><\/td>\n<\/tr>\n
    Issue<\/td>\nIndex<\/td>\nShares
    Traded<\/td>\n    		Notes<\/td>\n<\/tr>\n
    BMO.PR.M<\/td>\nFixedReset<\/td>\n511,230<\/td>\nAn extraordinary number of block trades went through today, every single one of them at 26.23! Nesbitt crossed 157,900 and RBC bought 25,000 and 10,000 from anonymous. RBC then bought 16,400 and 23,600 from Nesbitt; then crossed another 50,000. Scotia crossed 10,000; TD bought 10,000 from Nesbitt. RBC bought 43,400 from Nesbitt. TD crossed 25,000; RBC crossed blocks of 25,000 shares, 10,000 and 24,100; and TD closed off proceedings by crossing 26,700.
    \nYTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2013-08-25
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 26.26
    \nBid-YTW : 2.92 %<\/td>\n<\/tr>\n
    BNS.PR.Z<\/td>\nFixedReset<\/td>\n135,688<\/td>\nNational sold 10,000 to TD at 24.20, then 10,000 to anonymous at 24.08, then blocks of 20,000 and 11,500 to RBC at 24.00; then 36,900 to TD at 24.05. TD crossed 25,000 at 24.16.
    \nYTW SCENARIO
    \nMaturity Type : Hard Maturity
    \nMaturity Date\t: 2022-01-31
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 24.20
    \nBid-YTW : 3.92 %<\/td>\n<\/tr>\n
    TD.PR.M<\/td>\nOpRet<\/td>\n101,500<\/td>\nNesbitt crossed 50,000 at 25.55; Desjardins and RBC both crossed 25,000 at the same price.
    \nYTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2011-08-24
    \nMaturity Price : 25.50
    \nEvaluated at bid price : 25.56
    \nBid-YTW : 0.82 %<\/td>\n<\/tr>\n
    BAM.PR.X<\/td>\nFixedReset<\/td>\n78,495<\/td>\nNational crossed 60,000 at 24.98.
    \nYTW SCENARIO
    \nMaturity Type : Limit Maturity
    \nMaturity Date\t: 2041-07-25
    \nMaturity Price : 23.06
    \nEvaluated at bid price : 24.85
    \nBid-YTW : 4.00 %<\/td>\n<\/tr>\n
    BMO.PR.N<\/td>\nFixedReset<\/td>\n72,800<\/td>\nRBC crossed 65,000 at 27.61.
    \nYTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2014-02-25
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 27.60
    \nBid-YTW : 2.76 %<\/td>\n<\/tr>\n
    TD.PR.K<\/td>\nFixedReset<\/td>\n71,274<\/td>\nNesbitt crossed 67,000 at 27.33.
    \nYTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2014-07-31
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 27.34
    \nBid-YTW : 2.97 %<\/td>\n<\/tr>\n
    There were 22 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
    Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
    Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
    POW.PR.B<\/td>\nPerpetual-Discount<\/td>\nQuote: 24.40 – 24.74
    \nSpot Rate : 0.3400
    \nAverage : 0.2172<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Limit Maturity
    \nMaturity Date\t: 2041-07-25
    \nMaturity Price : 24.15
    \nEvaluated at bid price : 24.40
    \nBid-YTW : 5.51 %<\/td>\n<\/tr>\n

    FTS.PR.F<\/td>\nPerpetual-Discount<\/td>\nQuote: 24.60 – 24.98
    \nSpot Rate : 0.3800
    \nAverage : 0.2921<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Limit Maturity
    \nMaturity Date\t: 2041-07-25
    \nMaturity Price : 24.31
    \nEvaluated at bid price : 24.60
    \nBid-YTW : 5.04 %<\/td>\n<\/tr>\n

    RY.PR.N<\/td>\nFixedReset<\/td>\nQuote: 26.81 – 27.13
    \nSpot Rate : 0.3200
    \nAverage : 0.2411<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2014-02-24
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 26.81
    \nBid-YTW : 3.12 %<\/td>\n<\/tr>\n

    RY.PR.E<\/td>\nDeemed-Retractible<\/td>\nQuote: 24.31 – 24.71
    \nSpot Rate : 0.4000
    \nAverage : 0.3242<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Hard Maturity
    \nMaturity Date\t: 2022-01-31
    \nMaturity Price : 25.00
    \nEvaluated at bid price : 24.31
    \nBid-YTW : 4.82 %<\/td>\n<\/tr>\n

    FTS.PR.E<\/td>\nOpRet<\/td>\nQuote: 27.15 – 27.52
    \nSpot Rate : 0.3700
    \nAverage : 0.2962<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Call
    \nMaturity Date\t: 2013-06-01
    \nMaturity Price : 25.75
    \nEvaluated at bid price : 27.15
    \nBid-YTW : 2.15 %<\/td>\n<\/tr>\n

    W.PR.H<\/td>\nPerpetual-Discount<\/td>\nQuote: 24.74 – 24.99
    \nSpot Rate : 0.2500
    \nAverage : 0.1830<\/p>\n

    YTW SCENARIO
    \nMaturity Type : Limit Maturity
    \nMaturity Date\t: 2041-07-25
    \nMaturity Price : 23.64
    \nEvaluated at bid price : 24.74
    \nBid-YTW : 5.55 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

    This is getting monotonous: Greece\u2019s sovereign credit rating was cut three steps by Moody\u2019s Investors Service, which said the European Union\u2019s financing package for the debt-laden nation implies \u201csubstantial economic losses\u201d for private creditors. Greece\u2019s …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-15790","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/15790","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=15790"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/15790\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}