{"id":18889,"date":"2012-06-11T20:22:05","date_gmt":"2012-06-12T00:22:05","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=18889"},"modified":"2012-06-11T20:22:05","modified_gmt":"2012-06-12T00:22:05","slug":"june-11-2012","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=18889","title":{"rendered":"June 11, 2012"},"content":{"rendered":"

Red letter day! For the first time in a long time, somebody’s talking about the flip side of safe banking<\/a>:<\/p>\n

Mr. Flaherty boasts about Ottawa\u2019s strict supervision and holds up the banks\u2019 conservative lending culture as a virtue. What he fails to mention to his audiences in places such as Istanbul, London and Washington is that Canada\u2019s entrepreneurs and smaller businesses are starved for cash.
…<\/b>
According to the Organization for Economic Co-operation and Development, the outstanding debt of Canadian small and medium-sized enterprises (SMEs) essentially has been unchanged since 2000. Lending to smaller companies decreased 0.1 per cent in 2008, increased 3.7 per cent in 2009 and dropped 0.9 per cent in 2010, the 34-member OECD said earlier this year in its first annual scorecard of financing for SMEs and entrepreneurs.
…<\/b>
While there is no longer an outright ban on international lenders setting up in Canada, the rules are structured in such a way that there is little incentive to do so. No investor can hold more than 20 per cent of the voting shares in a bank with equity of more than $12-billion and a majority of the directors must be Canadians.<\/p>\n

So the lenders that are large enough to shake the Canadian banks\u2019 entrenched position \u2013 the Wells Fargos of the world \u2013 either stay small in Canada, or avoid the country altogether.
…<\/b>
There are more than 7,000 banks in the United States insured by the Federal Deposit Insurance Corp. Most of those institutions are small, confining their lending to a specific community. The result is a more competitive credit market. SMEs accounted for 29 per cent of all business lending in the United States in 2010, compared with 18 per cent in Canada.<\/p><\/blockquote>\n

Canada’s banks were left relatively unscathed by the Credit Crunch and that’s a good thing. But next time you hear a regulator boasting about how wonderful the safe Canadian system is, ask what the costs are. All the costs, all the indirect costs of a comfortable oligopoly, not the relatively trivial direct costs. A Lamborghini is a great car … but I wouldn’t pay $10-million for one.<\/p>\n

You can talk about billions, and you can talk about percentages, but sometimes it’s most graphic to talk about the impact on the average guy<\/a>:<\/p>\n

The average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows.<\/p>\n

Median net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the central bank said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600, the central bank said today in Washington.<\/p><\/blockquote>\n

I do enjoy taking pokes at CalPERS, the $200-billion+ fund that doesn’t do its own credit analysis! Their ten-year 90bp underperformance vs. their benchmark<\/a> makes it easy, as the press has noticed<\/a>:<\/p>\n

The California Public Employees\u2019 Retirement System, the largest U.S. pension, has seen its market value decline 4.8 percent this year after stocks fell amid the brewing fiscal crisis in Europe and slowing of the U.S. economic recovery.
…<\/b>
If the trend continues, it would mark the third time in five years that the fund has lost money, including a 23 percent decline in fiscal 2009, the worst on record. While Calpers spreads its return over 15 years to smooth taxpayers\u2019 burden, another loss may make it hard for the fund to meet its assumption of 7.5 percent earnings annually to cover benefits to 1.6 million retired employees and their families. <\/p><\/blockquote>\n

It was rather a dull day for the Canadian preferred share market, with PerpetualPremiums down 3bp, FixedResets flat and DeemedRetractibles off 2bp. Volatility was muted. Volume was quite 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>\n-0.4375 %<\/td>\n2,294.8<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.49 %<\/td>\n3.86 %<\/td>\n25,788<\/td>\n17.53<\/td>\n1<\/td>\n0.0000 %<\/td>\n3,508.1<\/td>\n<\/tr>\n
Floater<\/td>\n3.15 %<\/td>\n3.17 %<\/td>\n69,898<\/td>\n19.23<\/td>\n3<\/td>\n-0.4375 %<\/td>\n2,477.8<\/td>\n<\/tr>\n
OpRet<\/td>\n4.79 %<\/td>\n1.92 %<\/td>\n38,288<\/td>\n1.02<\/td>\n5<\/td>\n0.0848 %<\/td>\n2,509.3<\/td>\n<\/tr>\n
SplitShare<\/td>\n5.28 %<\/td>\n-4.19 %<\/td>\n47,301<\/td>\n0.52<\/td>\n4<\/td>\n0.0449 %<\/td>\n2,711.4<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0848 %<\/td>\n2,294.5<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.45 %<\/td>\n3.21 %<\/td>\n78,274<\/td>\n0.58<\/td>\n26<\/td>\n-0.0256 %<\/td>\n2,228.6<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.02 %<\/td>\n5.06 %<\/td>\n122,910<\/td>\n15.26<\/td>\n7<\/td>\n0.1888 %<\/td>\n2,452.6<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.05 %<\/td>\n3.20 %<\/td>\n189,679<\/td>\n7.81<\/td>\n71<\/td>\n-0.0027 %<\/td>\n2,388.5<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.03 %<\/td>\n3.92 %<\/td>\n145,859<\/td>\n2.89<\/td>\n45<\/td>\n-0.0194 %<\/td>\n2,298.4<\/td>\n<\/tr>\n<\/table>\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
MFC.PR.B<\/td>\nDeemed-Retractible<\/td>\n-1.51 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.14
\nBid-YTW : 6.27 %<\/td>\n<\/tr>\n
BAM.PR.B<\/td>\nFloater<\/td>\n-1.07 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 16.57
\nEvaluated at bid price : 16.57
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n
POW.PR.D<\/td>\nPerpetual-Discount<\/td>\n1.01 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 24.57
\nEvaluated at bid price : 24.90
\nBid-YTW : 5.08 %<\/td>\n<\/tr>\n
GWO.PR.H<\/td>\nDeemed-Retractible<\/td>\n1.20 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.41
\nBid-YTW : 5.16 %<\/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
PWF.PR.G<\/td>\nPerpetual-Premium<\/td>\n154,340<\/td>\nTD crossed 150,000 at 25.45.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2012-07-11
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.41
\nBid-YTW : -5.65 %<\/td>\n<\/tr>\n
VNR.PR.A<\/td>\nFixedReset<\/td>\n51,183<\/td>\nRecent new issue<\/a>.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 23.20
\nEvaluated at bid price : 25.20
\nBid-YTW : 3.99 %<\/td>\n<\/tr>\n
FTS.PR.G<\/td>\nFixedReset<\/td>\n37,286<\/td>\nRBC crossed blocks of 29,000 and 14,900, both at 25.67.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 23.99
\nEvaluated at bid price : 25.43
\nBid-YTW : 3.33 %<\/td>\n<\/tr>\n
RY.PR.N<\/td>\nFixedReset<\/td>\n32,747<\/td>\nNational crossed 31,000 at 26.33.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.33
\nBid-YTW : 3.22 %<\/td>\n<\/tr>\n
RY.PR.E<\/td>\nDeemed-Retractible<\/td>\n31,915<\/td>\nTD crossed 25,000 at 25.60.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2016-02-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.56
\nBid-YTW : 3.93 %<\/td>\n<\/tr>\n
ENB.PR.B<\/td>\nFixedReset<\/td>\n31,825<\/td>\nRBC crossed 30,000 at 25.30.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 23.25
\nEvaluated at bid price : 25.26
\nBid-YTW : 3.57 %<\/td>\n<\/tr>\n
There were 17 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
BAM.PR.B<\/td>\nFloater<\/td>\nQuote: 16.57 – 17.88
\nSpot Rate : 1.3100
\nAverage : 0.7444<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 16.57
\nEvaluated at bid price : 16.57
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n

BAM.PR.C<\/td>\nFloater<\/td>\nQuote: 16.74 – 18.14
\nSpot Rate : 1.4000
\nAverage : 1.0716<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 16.74
\nEvaluated at bid price : 16.74
\nBid-YTW : 3.17 %<\/td>\n<\/tr>\n

MFC.PR.B<\/td>\nDeemed-Retractible<\/td>\nQuote: 22.14 – 22.50
\nSpot Rate : 0.3600
\nAverage : 0.2410<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.14
\nBid-YTW : 6.27 %<\/td>\n<\/tr>\n

W.PR.J<\/td>\nPerpetual-Premium<\/td>\nQuote: 25.45 – 25.75
\nSpot Rate : 0.3000
\nAverage : 0.1839<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2012-07-11
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.45
\nBid-YTW : -5.51 %<\/td>\n<\/tr>\n

MFC.PR.F<\/td>\nFixedReset<\/td>\nQuote: 23.68 – 23.96
\nSpot Rate : 0.2800
\nAverage : 0.1889<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.68
\nBid-YTW : 4.02 %<\/td>\n<\/tr>\n

FTS.PR.G<\/td>\nFixedReset<\/td>\nQuote: 25.43 – 25.74
\nSpot Rate : 0.3100
\nAverage : 0.2299<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-06-11
\nMaturity Price : 23.99
\nEvaluated at bid price : 25.43
\nBid-YTW : 3.33 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Red letter day! For the first time in a long time, somebody’s talking about the flip side of safe banking: Mr. Flaherty boasts about Ottawa\u2019s strict supervision and holds up the banks\u2019 conservative lending culture …<\/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-18889","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/18889","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=18889"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/18889\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}