{"id":49739,"date":"2018-10-17T20:55:00","date_gmt":"2018-10-18T00:55:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=49739"},"modified":"2025-08-25T20:56:38","modified_gmt":"2025-08-26T00:56:38","slug":"october-17-2018","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=49739","title":{"rendered":"October 17, 2018"},"content":{"rendered":"

We are most used to thinking of financial repression as being applied by governments through a low-interest-rate policy, but as noted on June 2, 2015<\/a>, for instance, another way is to require regulated entities to hold government debt. This sometimes has spectacular effects<\/a>:<\/p>\n

\n

A trio of Canadian banks is facing the fallout from a debt restructuring in Barbados that will slash the value of hundreds of millions of dollars worth of government paper they collectively own.<\/p>\n

Canadian Imperial Bank of Commerce, Royal Bank of Canada and Bank of Nova Scotia are the largest lenders in the Caribbean, and each has direct exposure to Barbados. The country is home to one of the region\u2019s largest economies, but the government\u2019s finances have deteriorated over time.
…<\/b>
To help turn the economy around, the International Monetary Fund is working with Barbados to formulate a financial rescue plan. As part of this effort, the government proposed a debt restructuring in September that would amend the terms of its existing domestic debt. On Sunday, Ms. Mottley announced the restructuring plan will proceed.<\/p>\n

Through the restructuring, Canadian banks will face losses on their debt holdings because Barbados has forced them to hold a greater percentage of their reserves in government debt, to help fund its deficits. These securities must now be held for much longer, and their coupons will also be cut, so the lenders will receive much lower returns on their money.<\/p>\n

The total impact on Canadian lenders is still being calculated, but the three affected banks hold a substantial amount of Barbados debt. As of January, 20 per cent of their Barbadian reserves had to be held in government debt.<\/p>\n<\/blockquote>\n

PerpetualDiscounts now yield 5.69%, equivalent to 7.40% interest at the standard equivalency factor of 1.3x. Long corporates<\/a> now yield a little over 4.15%, so the pre-tax interest-equivalent spread is now about 325bp, a significant widening from the 315bp reported October 10<\/a>.<\/p>\n\n\n\n\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-0.0526 %<\/td>\n3,185.9<\/td>\n<\/tr>\n
FixedFloater<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.0526 %<\/td>\n5,845.9<\/td>\n<\/tr>\n
Floater<\/td>\n3.41 %<\/td>\n3.60 %<\/td>\n41,252<\/td>\n18.31<\/td>\n4<\/td>\n-0.0526 %<\/td>\n3,369.0<\/td>\n<\/tr>\n
OpRet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0477 %<\/td>\n3,224.8<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.61 %<\/td>\n4.78 %<\/td>\n51,639<\/td>\n4.72<\/td>\n5<\/td>\n0.0477 %<\/td>\n3,851.1<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0477 %<\/td>\n3,004.8<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.62 %<\/td>\n0.82 %<\/td>\n76,719<\/td>\n0.20<\/td>\n12<\/td>\n-0.0565 %<\/td>\n2,912.6<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.54 %<\/td>\n5.69 %<\/td>\n74,813<\/td>\n14.38<\/td>\n21<\/td>\n-0.0925 %<\/td>\n2,961.0<\/td>\n<\/tr>\n
FixedReset Disc<\/td>\n4.20 %<\/td>\n5.10 %<\/td>\n140,719<\/td>\n15.38<\/td>\n45<\/td>\n-0.1782 %<\/td>\n2,590.2<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.29 %<\/td>\n6.59 %<\/td>\n65,040<\/td>\n5.25<\/td>\n27<\/td>\n-0.1105 %<\/td>\n2,926.6<\/td>\n<\/tr>\n
FloatingReset<\/td>\n3.56 %<\/td>\n3.68 %<\/td>\n42,564<\/td>\n5.56<\/td>\n4<\/td>\n0.1615 %<\/td>\n2,873.7<\/td>\n<\/tr>\n
FixedReset Prem<\/td>\n4.88 %<\/td>\n4.21 %<\/td>\n234,576<\/td>\n2.83<\/td>\n34<\/td>\n-0.0115 %<\/td>\n2,567.4<\/td>\n<\/tr>\n
FixedReset Bank Non<\/td>\n3.12 %<\/td>\n3.63 %<\/td>\n72,581<\/td>\n0.35<\/td>\n8<\/td>\n-0.0611 %<\/td>\n2,574.8<\/td>\n<\/tr>\n
FixedReset Ins Non<\/td>\n4.40 %<\/td>\n5.72 %<\/td>\n101,795<\/td>\n5.36<\/td>\n22<\/td>\n-0.3966 %<\/td>\n2,545.5<\/td>\n<\/tr>\n<\/table>\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
IFC.PR.G<\/td>\nFixedReset Ins Non<\/td>\n-3.89 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.74
\nBid-YTW : 5.96 %<\/td>\n<\/tr>\n
IFC.PR.F<\/td>\nDeemed-Retractible<\/td>\n-1.55 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.48
\nBid-YTW : 6.59 %<\/td>\n<\/tr>\n
IFC.PR.E<\/td>\nDeemed-Retractible<\/td>\n-1.55 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 22.86
\nBid-YTW : 7.00 %<\/td>\n<\/tr>\n
MFC.PR.I<\/td>\nFixedReset Ins Non<\/td>\n-1.35 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.05
\nBid-YTW : 5.49 %<\/td>\n<\/tr>\n
BAM.PR.X<\/td>\nFixedReset Disc<\/td>\n1.05 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 19.30
\nEvaluated at bid price : 19.30
\nBid-YTW : 5.07 %<\/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.E<\/td>\nFixedReset Prem<\/td>\n323,470<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2023-11-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.38
\nBid-YTW : 4.63 %<\/td>\n<\/tr>\n
TD.PF.K<\/td>\nFixedReset Prem<\/td>\n83,900<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2023-10-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.16
\nBid-YTW : 4.73 %<\/td>\n<\/tr>\n
EMA.PR.F<\/td>\nFixedReset Disc<\/td>\n77,712<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 23.51
\nEvaluated at bid price : 23.96
\nBid-YTW : 5.22 %<\/td>\n<\/tr>\n
BNS.PR.I<\/td>\nFixedReset Disc<\/td>\n71,398<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 23.15
\nEvaluated at bid price : 25.01
\nBid-YTW : 4.75 %<\/td>\n<\/tr>\n
HSE.PR.G<\/td>\nFixedReset Prem<\/td>\n54,358<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2020-06-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.73
\nBid-YTW : 5.44 %<\/td>\n<\/tr>\n
BAM.PF.E<\/td>\nFixedReset Disc<\/td>\n53,844<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 23.41
\nEvaluated at bid price : 23.84
\nBid-YTW : 5.14 %<\/td>\n<\/tr>\n
There were 28 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
IFC.PR.G<\/td>\nFixedReset Ins Non<\/td>\nQuote: 23.74 – 24.74
\nSpot Rate : 1.0000
\nAverage : 0.5458<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.74
\nBid-YTW : 5.96 %<\/td>\n<\/tr>\n

BMO.PR.W<\/td>\nFixedReset Disc<\/td>\nQuote: 23.10 – 23.49
\nSpot Rate : 0.3900
\nAverage : 0.2631<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 22.60
\nEvaluated at bid price : 23.10
\nBid-YTW : 4.97 %<\/td>\n<\/tr>\n

ELF.PR.H<\/td>\nPerpetual-Discount<\/td>\nQuote: 24.16 – 24.54
\nSpot Rate : 0.3800
\nAverage : 0.2595<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 23.83
\nEvaluated at bid price : 24.16
\nBid-YTW : 5.71 %<\/td>\n<\/tr>\n

HSE.PR.G<\/td>\nFixedReset Prem<\/td>\nQuote: 24.73 – 25.19
\nSpot Rate : 0.4600
\nAverage : 0.3424<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2020-06-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.73
\nBid-YTW : 5.44 %<\/td>\n<\/tr>\n

BAM.PF.B<\/td>\nFixedReset Disc<\/td>\nQuote: 23.80 – 24.15
\nSpot Rate : 0.3500
\nAverage : 0.2359<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2048-10-17
\nMaturity Price : 23.00
\nEvaluated at bid price : 23.80
\nBid-YTW : 5.24 %<\/td>\n<\/tr>\n

MFC.PR.B<\/td>\nDeemed-Retractible<\/td>\nQuote: 20.53 – 20.95
\nSpot Rate : 0.4200
\nAverage : 0.3107<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 20.53
\nBid-YTW : 8.50 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

We are most used to thinking of financial repression as being applied by governments through a low-interest-rate policy, but as noted on June 2, 2015, for instance, another way is to require regulated entities to …<\/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-49739","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49739","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=49739"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49739\/revisions"}],"predecessor-version":[{"id":49740,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/49739\/revisions\/49740"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}