{"id":21810,"date":"2013-04-25T23:49:17","date_gmt":"2013-04-26T03:49:17","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=21810"},"modified":"2013-04-25T23:49:17","modified_gmt":"2013-04-26T03:49:17","slug":"april-25-2013","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=21810","title":{"rendered":"April 25, 2013"},"content":{"rendered":"

Assiduous Reader JP sends in a clipping detailing the interesting defence to the fraud charges against S&P<\/a>:<\/p>\n

Now, lawyers defending the company against the Justice Department’s recent civil lawsuit say that statements about independence and objectivity are “puffery” and were never meant to be taken at face value by investors.
…<\/b>
In its formal defense filed Monday, S&P pointed to two earlier court decisions where judges ruled that such statements by the firm were puffery and therefore can’t form the basis for a fraud claim.
…<\/b>
“Even if it’s a viable legal argument, it’s a pretty unattractive argument for S&P to be putting forward since they’re basically in the business of charging clients for their reputation,” said Samuel Buell, a law professor at Duke University and a former federal prosecutor. “What they’re saying here is, ‘When we’re talking to investors about our own reputation, we’re engaging in meaningless puffery.’ ”<\/p>\n

“That’s the whole point of the rating agencies, their seal of approval,” Mr. Buell said.<\/p><\/blockquote>\n

I disagree with Mr. Buell’s characterization of ‘the whole point of the rating agencies’. They don’t provide a “seal of approval” to anything – they provide an opinion on the credit-worthiness of the firm, or instrument. Since the issuers use this opinion to help sell their product, it can be fairly characterized as puffery, although not entirely meaningless.<\/p>\n

The CRAs do not do anything a competent analyst cannot do – except, of course, for using material non-public information in the course of their work, a provision of Canadian and US securities laws I despise. Their value is: at least it’s a reasonably consistent opinion across companies; their 100-year track record is excellent (they are being blamed for the credit crisis – that’s like blaming the weatherman for Hurricane Sandy); and they serve as a public flash-point for concerns about creditworthiness that may spur action when times are tough.<\/p>\n

It was an inconsequential day on the Canadian preferred share market, with PerpetualPremiums down 5bp, FixedResets off 4bp and DeemedRetractibles gaining 2bp. Volatility was low. Volume was on the high side of 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-0.1403 %<\/td>\n2,594.7<\/td>\n<\/tr>\n
FixedFloater<\/td>\n3.97 %<\/td>\n3.20 %<\/td>\n33,820<\/td>\n18.73<\/td>\n1<\/td>\n-0.4167 %<\/td>\n4,133.4<\/td>\n<\/tr>\n
Floater<\/td>\n2.68 %<\/td>\n2.87 %<\/td>\n86,876<\/td>\n20.07<\/td>\n4<\/td>\n-0.1403 %<\/td>\n2,801.6<\/td>\n<\/tr>\n
OpRet<\/td>\n4.80 %<\/td>\n1.30 %<\/td>\n60,980<\/td>\n0.15<\/td>\n5<\/td>\n-0.0077 %<\/td>\n2,609.6<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.80 %<\/td>\n4.26 %<\/td>\n120,166<\/td>\n4.11<\/td>\n5<\/td>\n-0.0079 %<\/td>\n2,959.7<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.0077 %<\/td>\n2,386.3<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.19 %<\/td>\n3.60 %<\/td>\n91,979<\/td>\n0.84<\/td>\n32<\/td>\n-0.0454 %<\/td>\n2,379.5<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n4.84 %<\/td>\n4.86 %<\/td>\n180,079<\/td>\n15.71<\/td>\n4<\/td>\n-0.1519 %<\/td>\n2,685.9<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.91 %<\/td>\n2.80 %<\/td>\n256,150<\/td>\n3.56<\/td>\n80<\/td>\n-0.0431 %<\/td>\n2,506.3<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n4.88 %<\/td>\n3.50 %<\/td>\n135,277<\/td>\n1.53<\/td>\n44<\/td>\n0.0203 %<\/td>\n2,453.7<\/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
TRP.PR.B<\/td>\nFixedReset<\/td>\n1.02 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-04-25
\nMaturity Price : 23.45
\nEvaluated at bid price : 24.75
\nBid-YTW : 2.47 %<\/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
MFC.PR.D<\/td>\nFixedReset<\/td>\n177,264<\/td>\nNesbitt crossed 24,100 at 26.39. Scotia bought two blocks from Desjardins, of 25,000 and 16,900 shares, both at 26.34. Scotia crossed 15,000 at the same price. Finally Nesbitt bought 13,500 from Desjardins at 26.34.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-06-19
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.33
\nBid-YTW : 2.49 %<\/td>\n<\/tr>\n
CIU.PR.B<\/td>\nFixedReset<\/td>\n64,400<\/td>\nNesbitt crossed 50,000 at 26.56.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-06-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.55
\nBid-YTW : 1.93 %<\/td>\n<\/tr>\n
BNS.PR.T<\/td>\nFixedReset<\/td>\n56,720<\/td>\nNesbitt crossed 50,000 at 26.00.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-04-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.90
\nBid-YTW : 2.50 %<\/td>\n<\/tr>\n
GWO.PR.P<\/td>\nDeemed-Retractible<\/td>\n56,378<\/td>\nNesbitt crossed 50,000 at 26.50.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-03-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.50
\nBid-YTW : 4.58 %<\/td>\n<\/tr>\n
TD.PR.Y<\/td>\nFixedReset<\/td>\n53,975<\/td>\nRBC bought 10,000 from CIBC at 25.00, then crossed 16,000 at 24.99.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.93
\nBid-YTW : 2.99 %<\/td>\n<\/tr>\n
CU.PR.F<\/td>\nPerpetual-Premium<\/td>\n43,260<\/td>\nScotia crossed 40,000 at 25.55.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2022-06-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.45
\nBid-YTW : 4.34 %<\/td>\n<\/tr>\n
There were 36 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.PF.A<\/td>\nFixedReset<\/td>\nQuote: 26.50 – 26.92
\nSpot Rate : 0.4200
\nAverage : 0.2887<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2018-09-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.50
\nBid-YTW : 3.36 %<\/td>\n<\/tr>\n

MFC.PR.F<\/td>\nFixedReset<\/td>\nQuote: 25.11 – 25.54
\nSpot Rate : 0.4300
\nAverage : 0.3164<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.11
\nBid-YTW : 3.02 %<\/td>\n<\/tr>\n

HSE.PR.A<\/td>\nFixedReset<\/td>\nQuote: 25.76 – 26.33
\nSpot Rate : 0.5700
\nAverage : 0.4612<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-04-25
\nMaturity Price : 23.63
\nEvaluated at bid price : 25.76
\nBid-YTW : 2.81 %<\/td>\n<\/tr>\n

BAM.PR.X<\/td>\nFixedReset<\/td>\nQuote: 25.61 – 25.91
\nSpot Rate : 0.3000
\nAverage : 0.2112<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-04-25
\nMaturity Price : 23.42
\nEvaluated at bid price : 25.61
\nBid-YTW : 3.01 %<\/td>\n<\/tr>\n

BAM.PR.G<\/td>\nFixedFloater<\/td>\nQuote: 23.90 – 24.30
\nSpot Rate : 0.4000
\nAverage : 0.3157<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-04-25
\nMaturity Price : 22.92
\nEvaluated at bid price : 23.90
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n

TD.PR.O<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.75 – 26.02
\nSpot Rate : 0.2700
\nAverage : 0.1915<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-05-25
\nMaturity Price : 25.50
\nEvaluated at bid price : 25.75
\nBid-YTW : -7.77 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Assiduous Reader JP sends in a clipping detailing the interesting defence to the fraud charges against S&P: Now, lawyers defending the company against the Justice Department’s recent civil lawsuit say that statements about independence and …<\/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-21810","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21810","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=21810"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21810\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}