{"id":17366,"date":"2011-12-16T23:14:31","date_gmt":"2011-12-17T03:14:31","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=17366"},"modified":"2011-12-16T23:14:31","modified_gmt":"2011-12-17T03:14:31","slug":"december-16-2011","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=17366","title":{"rendered":"December 16, 2011"},"content":{"rendered":"

BMO will be exiting the annuity business<\/a>:<\/p>\n

Ottawa is wading into a high-stakes battle between banks and life insurers, ordering the banks to stop selling products that resemble annuities.<\/p>\n

The decision is a win for the country\u2019s life insurers and a blow to Bank of Montreal … which kicked off this battle in January when it began selling a product called BMO Lifetime Cash Flow, which provided buyers 55 and older with guaranteed payments for life.
…<\/b>
Finance Minister Jim Flaherty said Friday that the Conservative government will introduce legislation to prevent banks from offering financial products that function like life annuities.<\/p><\/blockquote>\n

Some of the best investment advice I’ve ever recieved was given to me before I was ten years old. My Dad always said: When the little guys get in …<\/a>:<\/p>\n

Royal Canadian Mint\u2019s retail gold fund is an unheralded success.<\/p>\n

Since the books opened three weeks ago, the initial public offering has raised $600-million. That technically makes it the largest IPO of the year.<\/p><\/blockquote>\n

… it’s time to get out<\/a>:<\/p>\n

While bullion\u2019s slide of as much as 9 percent this week took its drop from the record $1,923.70 an ounce reached in September to almost 20 percent, the common definition of a bear market, investors are still holding the most metal ever in exchange-traded products, a wager now valued at $119.2 billion.<\/p><\/blockquote>\n

We’re starting to get a little clarity on the MF Global situation<\/a>. It seems that after six weeks of very costly forensic analysis, the CME looked at its notes from an October 31 meeting:<\/p>\n

CME Group detailed its dealings with MF Global in documents released yesterday by the oversight panel of the House Financial Services Committee. Christine Serwinski, chief financial officer for North America at MF Global, and Edith O\u2019Brien, a treasurer, told Mike Procajlo, an exchange auditor, at around 1 a.m. on Oct. 31 in Serwinski\u2019s Chicago office that the customer money was transferred on Oct. 27 and Oct. 28 and possibly Oct. 26, according to a CME Group timeline.
…<\/b>
MF Global had its credit rating cut to junk on Oct. 27 by Moody\u2019s Investors Service and Fitch Ratings as its shares plunged and bonds began trading at distressed levels amid a crisis of investor confidence over the Europe trades.<\/p>\n

The downgrades \u201csparked an increase in margin calls\u201d that were \u201cthreatening overall liquidity,\u201d Bradley Abelow, MF Global\u2019s president and chief operating officer, said in the company\u2019s bankruptcy filing.<\/p>\n

Customer funds were also used to make a $175 million loan to MF Global\u2019s U.K. subsidiary, Duffy said yesterday.
…<\/b>
A revised MF Global customer segregation report was sent to CME Group on Oct. 31 that showed $891.5 million in missing customer money as of Oct. 28, the CME Group chronology shows.<\/p><\/blockquote>\n

This has not been previously disclosed because muttering darkly about “missing” funds is a better regulatory career move. Assiduous Readers will doubtless remember that on November 2<\/a> I wrote:<\/p>\n

Experience suggests to me that the actual players know very well what the answer to the segregated account mystery is, but are posturing for political purposes.<\/p><\/blockquote>\n

Fitch is gloomy on Europe<\/a>:<\/p>\n

The euro declined against the dollar after Fitch Ratings said it may downgrade Belgium, Spain, Slovenia, Italy, Ireland and Cyprus, adding to concern the region\u2019s debt crisis hasn\u2019t been contained.
…<\/b>
The euro fell 0.1 percent to $1.3004 per euro at 12:53 p.m. in New York. It dropped 0.2 percent to 101.17 yen.<\/p>\n

Fitch said a \u201ccomprehensive solution\u201d to the euro-zone crisis is \u201ctechnically and politically beyond reach.\u201d<\/p><\/blockquote>\n

After years of government waffling, the Belgians have been cut<\/a>:<\/p>\n

Belgium\u2019s credit rating was cut two levels to Aa3 by Moody\u2019s Investors Service, which said rising borrowing costs, slowing growth and liabilities arising from Dexia SA\u2019s breakup threaten to inflate the euro area\u2019s fifth- highest debt load.<\/p>\n

Moody\u2019s lowered Belgium\u2019s debt rating to the fourth-highest investment grade, from Aa1, with a negative outlook, the ratings company said today in a statement. The action follows Standard & Poor\u2019s one-step downgrade of Belgium to AA on Nov. 25. Fitch Ratings put Belgium\u2019s AA+ on review for a downgrade today.
…<\/b>
Belgian borrowing costs touched the highest level in 11 years in November, with the yield on the benchmark 10-year bond closing at 5.86 percent before S&P\u2019s downgrade on Nov. 25. They started surging almost two months earlier as the caretaker government bought Dexia SA (DEXB)\u2019s Belgian banking unit for 4 billion euros ($5.2 billion) and agreed to guarantee as much as 54.5 billion euros of the crisis-hit lender\u2019s liabilities for as long as 10 years.<\/p>\n

The yield on the 4.25 percent securities due September 2021 was little changed today at 4.26 percent. That\u2019s 240 basis points, or 2.4 percentage points, more than German Bunds of similar maturity.<\/p><\/blockquote>\n

And Dealbreaker<\/i> has a very interesting piece on the difficulties of making money on a bet against Greece: It\u2019s Not So Easy To Get Away From This Voluntary Greek Bond Swap<\/a>. Which will be fine for the politicians – the last thing they want is honest price discovery!<\/p>\n

Rob Carrick has a good piece in the Globe: Bond ETFs confuse you? Here’s a simple guide<\/a>. [Update: Assidiuous Reader prefhound points out in the comments that the article does not mention the horrific effects of taxation on returns when bond ETFs are held in taxable accounts<\/i>]<\/p>\n

But there was some good news today<\/a>:<\/p>\n

The 100-watt incandescent light bulb has been spared from a U.S. phaseout in a spending deal reached by Republican and Democratic leaders in Congress.<\/p>\n

Legislation debated today will prohibit the Energy Department from enforcing elimination of the traditional, pear- shaped bulb. Tea Party activists and their Republican allies campaigned against the energy efficiency requirement as an example of government overreach.<\/p>\n

The federal standards limited the \u201cfreedom of average Americans\u201d to buy whatever type of bulb they wanted, Representative Michael Burgess, a Texas Republican, said today in an interview. The House passed the bill today 296-121.<\/p><\/blockquote>\n

Never mind petty details like the mercury in fluorescent bulbs … if you want people to use less electricity, just raise the price. What’s so hard about that?<\/p>\n

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts down 9bp, FixedResets gaining 6bp and DeemedRetractibles winning 13bp. There was continued good volatility skewed to the downside, with the SLF FixedResets being prominent on the loser list. Volume was average.<\/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>\n-0.5245 %<\/td>\n2,004.9<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.92 %<\/td>\n4.67 %<\/td>\n36,443<\/td>\n17.01<\/td>\n1<\/td>\n-0.4126 %<\/td>\n3,132.4<\/td>\n<\/tr>\n
Floater<\/td>\n3.32 %<\/td>\n3.70 %<\/td>\n69,817<\/td>\n18.09<\/td>\n3<\/td>\n-0.5245 %<\/td>\n2,164.8<\/td>\n<\/tr>\n
OpRet<\/td>\n4.92 %<\/td>\n1.37 %<\/td>\n61,301<\/td>\n1.41<\/td>\n6<\/td>\n0.1094 %<\/td>\n2,482.5<\/td>\n<\/tr>\n
SplitShare<\/td>\n5.51 %<\/td>\n3.13 %<\/td>\n63,248<\/td>\n0.97<\/td>\n4<\/td>\n0.1250 %<\/td>\n2,537.1<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1094 %<\/td>\n2,270.0<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.49 %<\/td>\n2.06 %<\/td>\n88,335<\/td>\n0.09<\/td>\n18<\/td>\n0.1516 %<\/td>\n2,172.5<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.22 %<\/td>\n5.18 %<\/td>\n107,769<\/td>\n15.09<\/td>\n12<\/td>\n-0.0928 %<\/td>\n2,321.6<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.11 %<\/td>\n3.02 %<\/td>\n215,365<\/td>\n2.48<\/td>\n64<\/td>\n0.0620 %<\/td>\n2,339.5<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.04 %<\/td>\n3.97 %<\/td>\n186,746<\/td>\n3.10<\/td>\n46<\/td>\n0.1318 %<\/td>\n2,225.7<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
BAM.PR.K<\/td>\nFloater<\/td>\n-2.31 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-12-16
\nMaturity Price : 13.97
\nEvaluated at bid price : 13.97
\nBid-YTW : 3.75 %<\/td>\n<\/tr>\n
SLF.PR.G<\/td>\nFixedReset<\/td>\n-2.22 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.00
\nBid-YTW : 4.85 %<\/td>\n<\/tr>\n
SLF.PR.H<\/td>\nFixedReset<\/td>\n-1.38 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.15
\nBid-YTW : 5.15 %<\/td>\n<\/tr>\n
IAG.PR.F<\/td>\nDeemed-Retractible<\/td>\n-1.32 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2019-03-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.36
\nBid-YTW : 5.65 %<\/td>\n<\/tr>\n
BAM.PR.B<\/td>\nFloater<\/td>\n-1.25 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-12-16
\nMaturity Price : 14.18
\nEvaluated at bid price : 14.18
\nBid-YTW : 3.70 %<\/td>\n<\/tr>\n
SLF.PR.I<\/td>\nFixedReset<\/td>\n-1.20 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-12-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.07
\nBid-YTW : 5.14 %<\/td>\n<\/tr>\n
NA.PR.O<\/td>\nFixedReset<\/td>\n1.08 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-15
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.21
\nBid-YTW : 2.66 %<\/td>\n<\/tr>\n
PWF.PR.O<\/td>\nPerpetual-Premium<\/td>\n1.11 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2018-10-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.30
\nBid-YTW : 5.06 %<\/td>\n<\/tr>\n
PWF.PR.A<\/td>\nFloater<\/td>\n1.37 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-12-16
\nMaturity Price : 19.26
\nEvaluated at bid price : 19.26
\nBid-YTW : 2.74 %<\/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
IFC.PR.A<\/td>\nFixedReset<\/td>\n108,384<\/td>\nTD crossed 99,800 at 24.85.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.86
\nBid-YTW : 3.82 %<\/td>\n<\/tr>\n
RY.PR.Y<\/td>\nFixedReset<\/td>\n69,859<\/td>\nScotia crossed blocks of 50,000 and 18,000, both at 27.40.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-11-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.33
\nBid-YTW : 2.92 %<\/td>\n<\/tr>\n
MFC.PR.G<\/td>\nFixedReset<\/td>\n49,925<\/td>\nRecent underwriters’ clearance<\/a>.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.74
\nBid-YTW : 4.98 %<\/td>\n<\/tr>\n
BAM.PR.N<\/td>\nPerpetual-Discount<\/td>\n33,459<\/td>\nRBC crossed 30,000 at 23.44.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-12-16
\nMaturity Price : 22.91
\nEvaluated at bid price : 23.34
\nBid-YTW : 5.08 %<\/td>\n<\/tr>\n
TD.PR.G<\/td>\nFixedReset<\/td>\n32,695<\/td>\nTD crossed 25,000 at 27.10.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-04-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.15
\nBid-YTW : 2.83 %<\/td>\n<\/tr>\n
SLF.PR.I<\/td>\nFixedReset<\/td>\n31,550<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-12-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.07
\nBid-YTW : 5.14 %<\/td>\n<\/tr>\n
There were 31 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
SLF.PR.I<\/td>\nFixedReset<\/td>\nQuote: 23.07 – 23.60
\nSpot Rate : 0.5300
\nAverage : 0.3150<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-12-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.07
\nBid-YTW : 5.14 %<\/td>\n<\/tr>\n

IAG.PR.F<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.36 – 25.83
\nSpot Rate : 0.4700
\nAverage : 0.3349<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2019-03-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.36
\nBid-YTW : 5.65 %<\/td>\n<\/tr>\n

BNA.PR.E<\/td>\nSplitShare<\/td>\nQuote: 22.77 – 23.73
\nSpot Rate : 0.9600
\nAverage : 0.8385<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2017-12-10
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.77
\nBid-YTW : 6.75 %<\/td>\n<\/tr>\n

HSB.PR.D<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.26 – 25.61
\nSpot Rate : 0.3500
\nAverage : 0.2382<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-12-31
\nMaturity Price : 25.25
\nEvaluated at bid price : 25.26
\nBid-YTW : 4.85 %<\/td>\n<\/tr>\n

NA.PR.P<\/td>\nFixedReset<\/td>\nQuote: 27.05 – 27.45
\nSpot Rate : 0.4000
\nAverage : 0.2930<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-15
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.05
\nBid-YTW : 2.96 %<\/td>\n<\/tr>\n

BAM.PR.K<\/td>\nFloater<\/td>\nQuote: 13.97 – 14.33
\nSpot Rate : 0.3600
\nAverage : 0.2531<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-12-16
\nMaturity Price : 13.97
\nEvaluated at bid price : 13.97
\nBid-YTW : 3.75 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

BMO will be exiting the annuity business: Ottawa is wading into a high-stakes battle between banks and life insurers, ordering the banks to stop selling products that resemble annuities. The decision is a win for …<\/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-17366","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/17366","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=17366"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/17366\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}