Nortel’s carcass is worth big bucks:
Apple Inc. (AAPL) joined with rivals Microsoft Corp. (MSFT) and Research in Motion Ltd. (RIM) to outbid Google Inc. (GOOG) for a patent portfolio from Nortel Networks Corp. and gain rights to technologies for mobile phones and tablet computers.
The group, which also includes Sony Corp. (6758), Ericsson AB and EMC Corp., agreed to pay $4.5 billion in cash for the assets, Ontario-based Nortel said in a statement. The companies aim to complete the sale this quarter pending approval from U.S. and Canadian courts, it said.
The purchase will give Apple, RIM and their bidding partners control over more than 6,000 patents and applications that cover wireless and Internet technologies. The winning offer came after several rounds of bidding and was five times the $900 million Google had offered before the auction for Nortel’s remaining intellectual property.
…
Nortel, which filed for bankruptcy in 2009, fetched more for the patents than the $3 billion it had previously raised by selling almost all its businesses. RIM, maker of the BlackBerry smartphone, will pay about $770 million for its share of the patents, the Waterloo, Ontario-based company said in a statement. Ericsson will pay $340 million, the Stockholm-based networking-equipment maker said. Steve Dowling, a spokesman for Apple, declined to comment beyond the Nortel statement.
The Greek problem has been papered over – at least for now:
The euro area approved its share of a 12 billion-euro ($17.4 billion) aid payment for Greece and pledged to complete work in the coming weeks on a second rescue package for the cash-strapped nation to prevent a default and contagion.
Finance ministers agreed to disburse 8.7 billion euros of loans under last year’s 110 billion-euro bailout, rewarding Greek Premier George Papandreou for pushing an extra austerity plan through parliament. The International Monetary Fund is due to provide the rest of the July aid installment, the fifth under the 2010 package.
The spotlight now turns to a second bailout to which banks and insurers plan to contribute following German demands for taxpayer relief. Euro-area governments and investors will provide 70 percent of new aid that may total as much as 85 billion euros, with the IMF offering the rest, Thomas Wieser, an Austrian Finance Ministry official, said on June 30.
S&P will likely label a Greek term extension as a selective default:
In summary, the growing risk that the Hellenic Republic might engage in a distressed debt restructuring was one of the reasons we lowered its rating on June 13 (see, “Long-term Sovereign Rating On Greece Cut To ‘CCC’; Outlook
Negative”). While we would likely view the FBF proposal, if it proceeds in its current form, as an effective default, we recognize that it is just one of a number of proposals attempting to address the Greek government’s 2011-2014 financing needs and the sustainability of its future debt burden. We
understand that the FBF proposal may change, and it is possible that it could take a form that results in a different rating outcome. Regardless of whether the current FBF proposal is implemented, however, we continue to believe the Hellenic Republic’s uncertain ability to implement the revised EU/IMF program
is a key risk weighing on its credit standing.
This has European shorts in a knot:
That may leave the European Central Bank unable to accept Greek government debt as collateral, impairing the lifeline it has provided the country’s banks.
“It sends all the officials and banks back to drawing board to think something new,” said Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt. “The ECB is saying it won’t accept debt in a default. Someone needs to give in — either Germany or the ratings agencies or the ECB. One of three will have to compromise.”
Despite all this, Greek notes had a good day:
Greek two-year note yield dropped below 26 percent for the first time since June 14.
…
Greek two-year yields slid 73 points to 26.11 percent, at one point dipping to 25.76 percent. The cost of insuring Greek debt against default rose four basis points to 1,865, signaling 80 percent odds the country will miss a bond payment in five years. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed four basis points to 222. The euro slipped 0.1 percent against the dollar and the yen.
There’s a new chapter in the Sino-Forest saga:
Sino-Forest Corp. (TRE), the Chinese tree- plantation operator accused by a short seller of overstating timber holdings, climbed in Toronto after Wellington Management Co. said it owned 11.5 percent of the company.
Sino-Forest rose as much as 56 percent after the Boston- based investment firm said in a regulatory filing it held 28.3 million shares as of June 30. Wellington, which manages $663 billion, held 79,700 Sino-Forest shares, or 0.03 percent, as of Dec. 31, according to data compiled by Bloomberg.
I just finished reading The Taste of Conquest by Michael Krondl. Excellent, and a worthy companion to William Bernstein’s A Splendid Exchange.
After our beloved mayor turned down a chance to say hello to umpteen thousand tourists with deep pockets, another councillor suggested cutting off funds for the city’s #2 tourist event – even if it means #1 will become collateral damage. Meanwhile, crappy pseudo-festivals organized by the well-connected get megabucks. Just what exactly do we need to do in this city to get a competent, pro-business administration?
The month – and the quarter – started off on an upbeat for the Canadian preferred share market, with PerpetualDiscounts gaining 4bp, FixedResets up 11bp and DeemedRetractibeswinning 21bp. Decent volatility, volume was average. RBC had a nice day.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.7310 % | 2,427.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.7310 % | 3,650.4 |
| Floater | 2.49 % | 2.29 % | 41,234 | 21.50 | 4 | -0.7310 % | 2,620.7 |
| OpRet | 4.87 % | 2.80 % | 65,221 | 1.82 | 9 | 0.1762 % | 2,435.7 |
| SplitShare | 5.24 % | 1.94 % | 55,392 | 0.64 | 6 | 0.0579 % | 2,508.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1762 % | 2,227.3 |
| Perpetual-Premium | 5.68 % | 5.08 % | 140,533 | 1.28 | 13 | 0.1922 % | 2,083.7 |
| Perpetual-Discount | 5.45 % | 5.47 % | 118,489 | 14.66 | 17 | 0.0398 % | 2,188.0 |
| FixedReset | 5.17 % | 3.26 % | 217,727 | 2.69 | 57 | 0.1090 % | 2,311.8 |
| Deemed-Retractible | 5.08 % | 4.86 % | 277,383 | 8.14 | 47 | 0.2105 % | 2,155.9 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -2.99 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-04 Maturity Price : 22.49 Evaluated at bid price : 22.75 Bid-YTW : 2.29 % |
| IGM.PR.B | Perpetual-Premium | 1.03 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-12-31 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 5.57 % |
| BAM.PR.O | OpRet | 1.06 % | YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.77 Bid-YTW : 3.44 % |
| CM.PR.I | Deemed-Retractible | 1.14 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.88 Bid-YTW : 4.74 % |
| BAM.PR.R | FixedReset | 1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-04 Maturity Price : 23.42 Evaluated at bid price : 25.85 Bid-YTW : 4.48 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.S | FixedReset | 355,342 | RBC crossed four blocks: 275,000 shares, 25,000 shares, 30,000 and 20,000, all at 26.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.12 Bid-YTW : 3.21 % |
| TD.PR.Q | Deemed-Retractible | 246,500 | RBC crossed 240,000 at 26.29. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-01-31 Maturity Price : 25.25 Evaluated at bid price : 26.40 Bid-YTW : 4.69 % |
| BNS.PR.T | FixedReset | 130,550 | RBC crossed four blocks: two of 50,000 each, 15,000 shares and 10,000, all at 27.25. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 27.19 Bid-YTW : 2.84 % |
| MFC.PR.D | FixedReset | 101,202 | RBC crossed 99,900 at 27.25. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-19 Maturity Price : 25.00 Evaluated at bid price : 27.12 Bid-YTW : 3.68 % |
| RY.PR.R | FixedReset | 83,900 | TD crossed 69,900 at 27.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 27.20 Bid-YTW : 3.05 % |
| SLF.PR.F | FixedReset | 79,600 | RBC bought 25,000 from Scotia at 26.90, then crossed 41,900 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.80 Bid-YTW : 3.49 % |
| There were 31 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 22.75 – 23.40 Spot Rate : 0.6500 Average : 0.4243 YTW SCENARIO |
| BNS.PR.Z | FixedReset | Quote: 24.85 – 25.50 Spot Rate : 0.6500 Average : 0.4787 YTW SCENARIO |
| SLF.PR.F | FixedReset | Quote: 26.80 – 27.24 Spot Rate : 0.4400 Average : 0.3017 YTW SCENARIO |
| TRP.PR.B | FixedReset | Quote: 25.18 – 25.51 Spot Rate : 0.3300 Average : 0.1928 YTW SCENARIO |
| TRP.PR.C | FixedReset | Quote: 25.50 – 25.88 Spot Rate : 0.3800 Average : 0.2549 YTW SCENARIO |
| TCA.PR.Y | Perpetual-Premium | Quote: 50.10 – 50.39 Spot Rate : 0.2900 Average : 0.1941 YTW SCENARIO |