September 19, 2014

September 19th, 2014

Interesting to see that having a down-payment for a house isn’t good enough any more:

The Bank of Mom and Dad is playing a growing role as lender of last resort for a housing recovery struggling to provide more traction for the U.S. economy.

Last year, 27 percent of those purchasing a home for the first time received a cash gift from relatives or friends to come up with a down payment, according to data from the National Association of Realtors. That’s up from 24 percent in 2012 and matches the highest share since the group began keeping records in 2009.

Those numbers will probably keep growing this year as younger Americans remain constrained by student debt, tough entry into the job market and stricter mortgage-lending rules that require more cash up front. At the same time, rising stock and property values give their baby boomer parents the ability to assist those wanting to lock in near record-low borrowing costs.

The increase in such cash gifts also has lenders on guard against unstable sources of down payment funds.

“The regulatory agencies are very, very specific about the paper trail requirements,” said Staci Titsworth, a regional loan officer in Pittsburgh who works in the mortgage division of PNC Financial Services Group Inc. “It truly needs to be a gift with no expectation to repay, because once expectation to repay comes into the equation, now you’ve got borrowed funds for down payment, which is unacceptable.”

PNC, as with other lenders such as Regions Financial Corp. and BB&T Corp., requires that the gift be from a relative by blood or marriage, with few exceptions. A “gift letter” with the mortgage application typically must include the amount of the gift, date the funds were transferred, donor’s basic identification and relationship to the buyer, and a statement that no repayment is expected, according to representatives of the three banks.

Financial institutions are careful about determining the source of funds because, while mortgages secured with the help of gifts from family are about as sound as those without any help, gifts linked to the seller were found to have increased default rates during the housing crisis, according to data from the Federal Housing Administration. Gifts from the seller are now banned by the agency.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts down 11bp, FixedResets off 2bp and DeemedRetractibles gaining 4bp. Volatility was muted. Volume was a little below average.

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 -0.0415 % 2,650.7
FixedFloater 4.17 % 3.43 % 24,419 18.50 1 -0.0877 % 4,160.2
Floater 2.91 % 3.04 % 53,403 19.62 4 -0.0415 % 2,741.0
OpRet 4.05 % 1.65 % 91,511 0.08 1 -0.0395 % 2,726.0
SplitShare 4.30 % 3.80 % 110,954 3.91 5 -0.1009 % 3,147.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0395 % 2,492.7
Perpetual-Premium 5.47 % 2.48 % 70,374 0.09 20 -0.0766 % 2,435.9
Perpetual-Discount 5.27 % 5.18 % 101,303 15.15 16 -0.1053 % 2,588.5
FixedReset 4.24 % 3.79 % 187,250 8.49 74 -0.0203 % 2,556.5
Deemed-Retractible 5.00 % 1.95 % 110,346 0.28 42 0.0419 % 2,563.5
FloatingReset 2.61 % -0.95 % 75,689 0.08 6 0.0326 % 2,539.8
Performance Highlights
Issue Index Change Notes
BAM.PF.B FixedReset -1.87 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.07
Evaluated at bid price : 24.63
Bid-YTW : 4.26 %
BAM.PR.X FixedReset 1.10 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 21.81
Evaluated at bid price : 22.06
Bid-YTW : 4.13 %
TRP.PR.B FixedReset 1.22 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 19.96
Evaluated at bid price : 19.96
Bid-YTW : 3.77 %
Volume Highlights
Issue Index Shares
Traded
Notes
FTS.PR.M FixedReset 1,507,011 New issue settled today.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.18
Evaluated at bid price : 25.10
Bid-YTW : 4.02 %
TRP.PR.E FixedReset 375,056 RBC crossed 50,000 at 25.39; TD crossed 300,000 at the same price.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.27
Evaluated at bid price : 25.35
Bid-YTW : 3.94 %
TD.PR.Q Deemed-Retractible 134,350 Scotia crossed 40,000 at 26.27; TD crossed blocks of 40,000 and 48,400 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-19
Maturity Price : 25.75
Evaluated at bid price : 26.20
Bid-YTW : -6.57 %
BAM.PR.P FixedReset 108,512 Called for redemption September 30.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-30
Maturity Price : 25.00
Evaluated at bid price : 24.98
Bid-YTW : 5.91 %
ENB.PR.T FixedReset 82,843 TD crossed 78,000 at 24.03.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 22.76
Evaluated at bid price : 23.92
Bid-YTW : 4.29 %
HSB.PR.C Deemed-Retractible 68,540 TD crossed 62,700 at 25.33.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-19
Maturity Price : 25.00
Evaluated at bid price : 25.25
Bid-YTW : -8.70 %
There were 28 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BAM.PF.B FixedReset Quote: 24.63 – 25.00
Spot Rate : 0.3700
Average : 0.2138

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.07
Evaluated at bid price : 24.63
Bid-YTW : 4.26 %

PWF.PR.O Perpetual-Premium Quote: 26.11 – 26.40
Spot Rate : 0.2900
Average : 0.2076

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-10-31
Maturity Price : 25.25
Evaluated at bid price : 26.11
Bid-YTW : 4.85 %

ELF.PR.G Perpetual-Discount Quote: 22.13 – 22.47
Spot Rate : 0.3400
Average : 0.2581

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 21.79
Evaluated at bid price : 22.13
Bid-YTW : 5.44 %

W.PR.H Perpetual-Premium Quote: 25.10 – 25.45
Spot Rate : 0.3500
Average : 0.2757

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 24.88
Evaluated at bid price : 25.10
Bid-YTW : 5.57 %

RY.PR.Z FixedReset Quote: 25.30 – 25.55
Spot Rate : 0.2500
Average : 0.1758

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.28
Evaluated at bid price : 25.30
Bid-YTW : 3.76 %

CU.PR.E Perpetual-Discount Quote: 24.23 – 24.43
Spot Rate : 0.2000
Average : 0.1346

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.84
Evaluated at bid price : 24.23
Bid-YTW : 5.08 %

FTS.PR.M Firm On Enormous Volume

September 19th, 2014

Fortis Inc. has announced:

that it has closed its public offering (the “Offering”) of Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M (“Series M First Preference Shares”) underwritten by a syndicate of underwriters led by Scotiabank and RBC Capital Markets. Fortis issued 24,000,000 Series M First Preference Shares at a price of $25.00 per share for aggregate gross proceeds to the Corporation of $600,000,000.

The net proceeds of the Offering will be used to repay a portion of the amounts borrowed by Fortis under its acquisition credit facility in connection with the acquisition of UNS Energy Corporation completed on August 15, 2014.

The Series M First Preference Shares were offered by way of a short form prospectus of Fortis dated September 11, 2014 and will commence trading today on the Toronto Stock Exchange under the symbol FTS.PR.M.

Fortis is the largest investor-owned distribution utility in Canada, with total assets approaching $25 billion and fiscal 2013 revenue exceeding $4 billion. Its regulated utilities account for approximately 93% of total assets and serve more than 3 million customers across Canada and in the United States and the Caribbean. Fortis owns non-regulated hydroelectric generation assets in Canada, Belize and Upstate New York. The Corporation’s non-utility investments are comprised of hotels and commercial real estate in Canada.

Additional information about the Corporation can be accessed at www.fortisinc.com or www.sedar.com.

FTS.PR.M is a FixedReset, 4.10%+248, announced and supersized 2014-9-3. The issue will be tracked by HIMIPref™ and has been assigned to the FixedResets subindex.

The issue traded a massive 2,113,711 shares today (consolidated exchanges) in a range of 24.98-12 before closing at 25.10-11, 9×150. Vital statistics are:

FTS.PR.M FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-19
Maturity Price : 23.18
Evaluated at bid price : 25.10
Bid-YTW : 4.02 %

Implied Volatility analysis suggests that FTS.PR.M is cheap relative to other Fortis FixedResets, with a theoretical price of 25.97 … but remember that this conclusion is not necessarily applicable with respect to other issuers! It could just as easily be that the lower-spread FTS issues are expensive relative to the universe!

ImpVol_FTS_140919
Click for Big

September 18, 2014

September 18th, 2014

Nothing happened today.

It was a mixed day for the Canadian preferred share market, with PerptualDiscounts down 15bp, FixedResets up 10bp and DeemedRetractibles gaining 2bp. Volatility was minimal. Volume was low.

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 0.4171 % 2,651.8
FixedFloater 4.17 % 3.42 % 24,543 18.51 1 0.2198 % 4,163.9
Floater 2.91 % 3.04 % 55,250 19.64 4 0.4171 % 2,742.1
OpRet 4.05 % 1.03 % 89,746 0.08 1 -0.0395 % 2,727.1
SplitShare 4.30 % 3.76 % 109,801 3.91 5 0.0930 % 3,150.1
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0395 % 2,493.7
Perpetual-Premium 5.47 % 1.80 % 70,538 0.09 20 0.0138 % 2,437.7
Perpetual-Discount 5.27 % 5.19 % 100,980 15.15 16 -0.1483 % 2,591.3
FixedReset 4.26 % 3.80 % 186,561 6.57 74 0.1011 % 2,557.0
Deemed-Retractible 5.01 % 1.76 % 109,953 0.28 42 0.0200 % 2,562.5
FloatingReset 2.61 % 0.00 % 70,068 0.08 6 0.3534 % 2,539.0
Performance Highlights
Issue Index Change Notes
BAM.PF.E FixedReset 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 23.06
Evaluated at bid price : 24.81
Bid-YTW : 4.22 %
MFC.PR.M FixedReset 1.59 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-12-19
Maturity Price : 25.00
Evaluated at bid price : 25.53
Bid-YTW : 3.55 %
Volume Highlights
Issue Index Shares
Traded
Notes
NA.PR.S FixedReset 378,400 Scotia crossed 368,200 at 25.60. Nice ticket!
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-05-15
Maturity Price : 25.00
Evaluated at bid price : 25.61
Bid-YTW : 3.63 %
NA.PR.Q FixedReset 104,238 Scotia crossed 100,000 at 25.77.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-11-15
Maturity Price : 25.00
Evaluated at bid price : 25.85
Bid-YTW : 2.80 %
TRP.PR.E FixedReset 97,670 RBC crossed 50,000 at 25.39; Scotia crossed 40,000 at the same price.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 23.28
Evaluated at bid price : 25.39
Bid-YTW : 3.93 %
BMO.PR.W FixedReset 91,875 RBC crosse 50,000 at 25.08.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 23.18
Evaluated at bid price : 25.08
Bid-YTW : 3.78 %
FTS.PR.G FixedReset 73,870 Nesbitt crossed 62,300at 24.80.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 23.15
Evaluated at bid price : 24.70
Bid-YTW : 3.79 %
GWO.PR.N FixedReset 55,160 Nesbitt crossed 50,000 at 21.84.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.80
Bid-YTW : 4.67 %
There were 21 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BAM.PF.A FixedReset Quote: 25.32 – 25.74
Spot Rate : 0.4200
Average : 0.2394

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.32
Bid-YTW : 4.14 %

PVS.PR.C SplitShare Quote: 25.92 – 26.90
Spot Rate : 0.9800
Average : 0.8722

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-12-10
Maturity Price : 25.50
Evaluated at bid price : 25.92
Bid-YTW : 3.52 %

MFC.PR.K FixedReset Quote: 24.70 – 25.05
Spot Rate : 0.3500
Average : 0.2436

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.70
Bid-YTW : 4.02 %

BAM.PR.R FixedReset Quote: 25.33 – 25.59
Spot Rate : 0.2600
Average : 0.1712

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 23.76
Evaluated at bid price : 25.33
Bid-YTW : 3.96 %

MFC.PR.F FixedReset Quote: 22.70 – 23.00
Spot Rate : 0.3000
Average : 0.2244

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.70
Bid-YTW : 4.44 %

TRP.PR.A FixedReset Quote: 22.41 – 22.60
Spot Rate : 0.1900
Average : 0.1304

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-18
Maturity Price : 21.91
Evaluated at bid price : 22.41
Bid-YTW : 4.02 %

DC.PR.B / DC.PR.D Conversion Results Announced

September 18th, 2014

Dundee Corporation has announced:

that 1,720,615 of its 5,200,000 Cumulative 5‐Year Rate Reset First Preference Shares, Series 2 (“Series 2 Shares”) will be converted on September 30, 2014, on a one for one basis, into Cumulative Floating Rate First Preference Shares, Series 3 (“Series 3 Shares”). As a result, on September 30, 2014, Dundee will have 3,479,385 Series 2 Shares and 1,720,615 Series 3 Shares issued and outstanding. The Series 2 Shares are listed on the Toronto Stock Exchange under the symbol DC.PR.B and the Series 3 Shares will be listed on the Toronto Stock Exchange effective September 30, 2014 under the symbol DC.PR.D.

DC.PR.B was extended on August 26 and the company announced the reset to 5.688% on September 2. The issue originally closed 2009-9-15 and is a FixedReset, 6.75%+410.

Both DC.PR.B and the FloatingReset, DC.PR.D, will be tracked by HIMIPref™, but relegated to the Scraps index on credit concerns.

September 17, 2014

September 17th, 2014

The big news of the day was the Fed’s announcement of policy normalization principles and plans:

All FOMC participants but one agreed on the following key elements of the approach they intend to implement when it becomes appropriate to begin normalizing the stance of monetary policy:
  • • The Committee will determine the timing and pace of policy normalization–meaning steps to raise the federal funds rate and other short-term interest rates to more normal levels and to reduce the Federal Reserve’s securities holdings–so as to promote its statutory mandate of maximum employment and price stability.
    • ◦ When economic conditions and the economic outlook warrant a less accommodative monetary policy, the Committee will raise its target range for the federal funds rate.
    • ◦ During normalization, the Federal Reserve intends to move the federal funds rate into the target range set by the FOMC primarily by adjusting the interest rate it pays on excess reserve balances.
    • ◦ During normalization, the Federal Reserve intends to use an overnight reverse repurchase agreement facility and other supplementary tools as needed to help control the federal funds rate. The Committee will use an overnight reverse repurchase agreement facility only to the extent necessary and will phase it out when it is no longer needed to help control the federal funds rate.
  • • The Committee intends to reduce the Federal Reserve’s securities holdings in a gradual and predictable manner primarily by ceasing to reinvest repayments of principal on securities held in the SOMA.
    • ◦ The Committee expects to cease or commence phasing out reinvestments after it begins increasing the target range for the federal funds rate; the timing will depend on how economic and financial conditions and the economic outlook evolve.
    • ◦ The Committee currently does not anticipate selling agency mortgage-backed securities as part of the normalization process, although limited sales might be warranted in the longer run to reduce or eliminate residual holdings. The timing and pace of any sales would be communicated to the public in advance.
  • • The Committee intends that the Federal Reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently and effectively, and that it will hold primarily Treasury securities, thereby minimizing the effect of Federal Reserve holdings on the allocation of credit across sectors of the economy.
  • • The Committee is prepared to adjust the details of its approach to policy normalization in light of economic and financial developments.

This was accompanied by the FOMC release:

Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. On balance, labor market conditions improved somewhat further; however, the unemployment rate is little changed and a range of labor market indicators suggests that there remains significant underutilization of labor resources. Household spending appears to be rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee’s longer-run objective. Longer-term inflation expectations have remained stable.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation.

The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

Voting against the action were Richard W. Fisher and Charles I. Plosser. President Fisher believed that the continued strengthening of the real economy, improved outlook for labor utilization and for general price stability, and continued signs of financial market excess, will likely warrant an earlier reduction in monetary accommodation than is suggested by the Committee’s stated forward guidance. President Plosser objected to the guidance indicating that it likely will be appropriate to maintain the current target range for the federal funds rate for “a considerable time after the asset purchase program ends,” because such language is time dependent and does not reflect the considerable economic progress that has been made toward the Committee’s goals.

The news was largely a wash as far as North American markets were concerned:

Stocks briefly extended gains as the Fed’s statement said the economy is expanding at a moderate pace and inflation is below its goal. It maintained a commitment to keep interest rates near zero for a “considerable time” after asset purchases are completed in October. Fed officials raised their median estimate for the federal funds rate at the end of 2015 to 1.375 percent, compared with 1.125 percent in June. The rate will be 3.75 percent at the end of 2017, the Fed said in its Summary of Economic Projections.

The Summary of Economic Projections shows that most FOMC members expect policy firming in 2015, with a longer-run (post 2017) Fed rate of 3.75-00%.

Meanwhile, here in Canada, the central planners are in charge:

The federal government is imposing a fine on Canadian National Railway Co. for failing to comply with an order that it move a minimum amount of grain each week.

The monetary penalty is the first levelled under the Fair Rail for Grain Farmers Act, which was passed in the spring to address agriculture industry complaints the country’s two major railways were providing poor service that left traders unable to meet demand from buyers and farmers facing cash shortages.

CN chief executive Claude Mongeau defended the company’s actions, telling a conference on Wednesday that there has not been enough demand from grain companies for the railway to supply the 5,000 railcars. He said that is an indication the backlog that gripped the rail network last winter has been cleared and the railway is having no trouble keeping up with the fall harvest.

“In fact, to be honest with you, the last several weeks, there has not been enough demand for us to meet the [government order], not enough demand, not enough deliveries in the farm country,” Mr. Mongeau said at an investors’ conference in Montreal. “So we can’t move what they don’t deliver or what they don’t order, and I think that’s a good sign.”

However, through a spokesman, Agriculture Minister Gerry Ritz said he was “concerned” the railway was not meeting the minimum volume requirements.

It was a poor day for the Canadian preferred share market, with PerpetualDiscounts losing 26bp, FixedResets off 4bp and DeemedRetractibles down 10bp. Volatility was average and mostly negative. Volume was low.

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 -0.6355 % 2,640.7
FixedFloater 4.18 % 3.43 % 25,451 18.49 1 0.0000 % 4,154.7
Floater 2.92 % 3.04 % 52,283 19.62 4 -0.6355 % 2,730.7
OpRet 4.05 % 0.41 % 90,960 0.08 1 0.0000 % 2,728.2
SplitShare 4.30 % 3.77 % 111,163 3.91 5 -0.4708 % 3,147.2
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.0000 % 2,494.6
Perpetual-Premium 5.47 % 2.07 % 70,423 0.09 20 -0.0667 % 2,437.4
Perpetual-Discount 5.26 % 5.20 % 101,294 15.14 16 -0.2555 % 2,595.1
FixedReset 4.27 % 3.82 % 187,031 8.09 74 -0.0385 % 2,554.4
Deemed-Retractible 5.01 % 2.29 % 102,126 0.29 42 -0.0970 % 2,562.0
FloatingReset 2.62 % 0.96 % 72,776 0.16 6 0.2230 % 2,530.0
Performance Highlights
Issue Index Change Notes
GWO.PR.R Deemed-Retractible -1.51 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.48
Bid-YTW : 5.59 %
BAM.PR.K Floater -1.39 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 17.08
Evaluated at bid price : 17.08
Bid-YTW : 3.07 %
FTS.PR.F Perpetual-Discount -1.37 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 23.46
Evaluated at bid price : 23.72
Bid-YTW : 5.20 %
BAM.PR.N Perpetual-Discount -1.26 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 21.24
Evaluated at bid price : 21.24
Bid-YTW : 5.62 %
BAM.PF.E FixedReset -1.13 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 22.97
Evaluated at bid price : 24.56
Bid-YTW : 4.27 %
IAG.PR.A Deemed-Retractible 1.25 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.75
Bid-YTW : 5.78 %
Volume Highlights
Issue Index Shares
Traded
Notes
NA.PR.Q FixedReset 114,575 Scotia crossed 103,700 at 25.77.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-11-15
Maturity Price : 25.00
Evaluated at bid price : 25.75
Bid-YTW : 2.93 %
BMO.PR.M FixedReset 104,030 Nesbitt crossed 100,000 at 25.30.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-08-25
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 3.14 %
ENB.PR.Y FixedReset 85,688 Scotia crossed 80,400 at 23.52.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 22.55
Evaluated at bid price : 23.50
Bid-YTW : 4.28 %
TD.PF.B FixedReset 82,389 Scotia crossed blocks of 37,000 and 15,800, both at 25.10.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 23.20
Evaluated at bid price : 25.08
Bid-YTW : 3.82 %
FTS.PR.K FixedReset 82,194 RBC crossed blocks of 42,000 and 15,400, both at 25.00.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 23.12
Evaluated at bid price : 24.75
Bid-YTW : 3.74 %
MFC.PR.M FixedReset 70,875 Scotia crossed 52,000 at 25.09.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-12-19
Maturity Price : 25.00
Evaluated at bid price : 25.13
Bid-YTW : 3.88 %
There were 23 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
PVS.PR.C SplitShare Quote: 25.91 – 26.80
Spot Rate : 0.8900
Average : 0.7539

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-12-10
Maturity Price : 25.50
Evaluated at bid price : 25.91
Bid-YTW : 3.54 %

ENB.PR.B FixedReset Quote: 24.15 – 24.50
Spot Rate : 0.3500
Average : 0.2379

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 23.09
Evaluated at bid price : 24.15
Bid-YTW : 4.18 %

PWF.PR.A Floater Quote: 20.50 – 21.25
Spot Rate : 0.7500
Average : 0.6573

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 20.50
Evaluated at bid price : 20.50
Bid-YTW : 2.57 %

IAG.PR.F Deemed-Retractible Quote: 25.81 – 26.17
Spot Rate : 0.3600
Average : 0.2697

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-03-31
Maturity Price : 25.25
Evaluated at bid price : 25.81
Bid-YTW : 5.13 %

BAM.PR.K Floater Quote: 17.08 – 17.30
Spot Rate : 0.2200
Average : 0.1322

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-17
Maturity Price : 17.08
Evaluated at bid price : 17.08
Bid-YTW : 3.07 %

GWO.PR.R Deemed-Retractible Quote: 23.48 – 23.74
Spot Rate : 0.2600
Average : 0.1753

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.48
Bid-YTW : 5.59 %

AZP On Watch Negative by S&P

September 17th, 2014

Standard & Poor’s has announced:

  • •We are placing our ratings on Atlantic Power Corp. (APC) and affiliate Atlantic Power Ltd. Partnership (APLP), including our ‘B’ corporate credit ratings, on CreditWatch with negative implications.
  • •The CreditWatch placement follows the company’s decision to cut distributions for the second time in two years, and the departure of its CEO.
  • •We will conduct a review of the company’s strategic and financial plan over the next several weeks and resolve the CreditWatch over the next 60 to 90 days.


Atlantic Power has lowered its dividend by 70% (C$0.12 annually from C$0.40), a second distribution cut in 18-months, following a 65% reduction in February 2013. The company has also revised its distribution payments to a quarterly schedule from monthly payouts. The company has cited a reevaluation of its medium-term plan, including debt maturities and recontracting risk from 2017 onwards that have caused a change in its payout policy. Atlantic plans to focus on optimization its assets and delevering its balance sheet to improve both its cost of capital and ability to compete for new investments. In addition, the company plans to assess other potential options, including asset sales or the contribution of assets to a joint venture to raise additional capital for growth and/or debt reduction. Our review will also evaluate if the distribution reductions have the potential of weighing negatively on the company’s ability to access the markets competitively as well as its future strategy given management transition.

The company’s announcement of changes, and the effect of these changes on its equity and preferred prices, was discussed on PrefBlog on September 16. S&P’s note did not mention that the previously trumpeted sale process has been cancelled, which I consider significant.

The company has two issues of preferred shares outstanding, AZP.PR.A and AZP.PR.B.

September 16, 2014

September 17th, 2014

I don’t know whether this article on changes in the FX market makes me want to laugh or cry:

RBS and Barclays this year stopped traders and salespeople from seeing colleagues’ forthcoming deals and their banks’ buy and sell orders in aggregate, four of the people said. Such information is useful for traders looking to protect themselves or profit from future market moves, they said.

RBS now segregates client requests for currency trades at the benchmark rate from the rest of the order book, according to two of the people. Only the trader handling the order at the reference rate is able to see it. The Edinburgh-based bank also stopped taking orders at WM/Reuters rates for some emerging-market currencies, which are more vulnerable to manipulation because they’re less widely traded, the people said.

At Barclays, deals of more than $20 million now show only basic information, two people said. If a salesperson or trader tries to view the details of the order on the firm’s internal computer system, a pop-up box appears, warning them that their interest will be logged and an e-mail sent to compliance.

Bloomberg News reported in June that banks including New York-based Goldman Sachs were charging less-sophisticated clients excessive markups. Since then, the firm has prohibited its Alpha desk, which deals with hedge funds that specialize in equities and trade currencies infrequently, from adding more than 30 basis points to trades, one of the people said. A basis point is 0.01 percent.

This is ridiculous. Let’s take the last bit first, so-called excessive markups. These are institutional desks, people! The clients are handling – at least – tens of millions of dollars, if not hundreds of millions, if not billions. These clients spend half their lives telling their clients what hard-nosed top-guns they are. And the regulators are squaring their rots for a good boo-hoo-hoo about how they’re being taken advantage of by an FX salesman? It’s ridiculous, there’s a much bigger problem here.

I had a consulting job once where as part of my duties I had to maintain a CAD/USD hedge with one-month forward contracts, about $80-million worth. This is not exactly my specialty. So when it was time to trade, I GOT MULTIPLE QUOTES. And I made damn sure the dealers knew I was getting multiple quotes. Is that so hard? Any moron who’s hired a contractor for a big job has gotten multiple quotes, because when you don’t know what you’re doing that’s how you protect yourself.

You also get multiple quotes on corporate bonds, too, just as a matter of course; that’s not only because you don’t have a clue where the damn market is at, but because there was a very good chance that the dealer doesn’t either. I remember particularly well the time when I was looking at a decent sized corporate trade – decent sized for Canada, anyway, about $1-million face – and got three quotes. The difference between the high and low bid was just over a buck. A buck! And this wasn’t some obscure name, either, this was a blue-chip with a lot of issues in the market … as a rule, you’d figure it would be among the more tightly priced names.

But lordy, it seemingly never occurs to many of the clowns running money, and never to any of the clowns regulating them, that maybe multiple quotes is a good idea.

The other bit in that story that makes blood gush from my eyeballs is the restriction of information about flow. Information about flow is the dealers only advantage. That’s why they’re willing to call a two way market in size. Take away that information, you take away their advantage, you take away their profits, and they take away their capital … just like what is happening now with corporate bonds.

By and large, these problems – such as they are, which isn’t much – are due not so much to sell-side cupidity as buy-side stupidity. But the regulators – who, I am sure, have earnest three hour discussions with their financial advisors with multiple signed conflict of interest declarations before choosing which mutual fund gets their $500 saving this month – ignore this, in their perpetual attempts to make the world a cooperative game, just like in kiddie school.

Eventually, I forsee the dealing business going over to hedge funds, de facto if not de jure, with today’s dealers becoming mere brokers. And then we’ll see a little of life in the raw, because the funds will care as much about the long term relationship as a twenty year old sailor on pay night. Because when you have stupid people making big decisions … eventually, somehow, the chickens come home to roost.

And looks what’s being ignored in this rush to eliminate capital markets!

The U.K. Financial Conduct Authority hasn’t arrested anyone for insider trading this year, prompting lawyers and lawmakers to question whether cross-border cases like currency manipulation are over-taxing the regulator.

The agency — criticized for failing to criminally prosecute an insider-trading case until 2008 — has made 64 such arrests since then, according to data obtained through a freedom-of-information request. There were 15 last year, when the FCA opened the first inquiry in what’s now a global foreign-exchange rate-rigging case.

This is the first year without insider-trading arrests since the regulator began bolstering prosecution efforts after facing criticism from lawmakers for not doing enough to punish wrong-doers. Before 2008, it had only brought civil penalties for inside trades.

In an otherwise good column about preferred shares, Rob Carrick of the Globe makes a mistake that many will find costly and surprising:

Almost all of the preferred shares I hold are perpetuals, which means they don’t have the rate-reset feature that most pref shares issued today have.

FixedResets are just as perpetual as Straights are. Mitigation of interest rate risk has no effect on spread risk or on credit risk.

Atlantic Power, proud (indirect) issuer of AZP.PR.A and AZP.PR.B, got hammered today:

Shares of Atlantic Power Corp (ATP.TO) (AT.N) fell by about a third on Tuesday after the struggling utility removed its chief executive and decided against selling itself.

Faced with mounting debts in a volatile power market, the company also slashed its annual dividend by 70 percent, the second time since February 2013 that it has cut the dividend.

Boston-based Atlantic Power has been caught between falling demand in a volatile wholesale power market and a recovery in the price of the natural gas that feeds its plants in several U.S. states and Canadian provinces.

In May, Atlantic hired Goldman Sachs and Greenhill & Co to explore a sale or merger. The company said on Tuesday, however, that its best option would be to continue as an independent company.

Barry Welch, who ran the company for 10 years, stepped down as president and chief executive by “mutual agreement,” Atlantic said. Ken Hartwick, a director, took over as interim president and CEO but will not be a candidate for the permanent job.

Atlantic Power also said it would consider selling assets or entering joint ventures to raise capital and reduce its debt.

The company’s long-term debt almost quadrupled between 2010 and the end of June, Thomson Reuters data shows. At about $1.8 billion, the debt is equivalent to about three times its annual revenue for 2013.

The stock shed more than two-thirds of its value in the same period.

The commencement of the abortive sale process was reported on PrefBlog on May 5.

IGM.PR.B was confirmed at Pfd-2(high) [Stable] by DBRS:

DBRS has today confirmed the Issuer Rating and Unsecured Debentures rating of IGM Financial Inc.’s (IGM or the Company) at A (high) and its First Preferred Shares at Pfd-2 (high). All trends are Stable.

Selling and distribution expenses are somewhat variable, with certain distribution expenses also tied to the level of gross sales and AUM. This has the benefit of maintaining margins in a business downturn. The Company has demonstrated good administrative expense management, benefiting from good economies of scale, efficient work processes and shared service arrangements with its sister companies.

In addition to strong profitability, the Company’s credit rating also benefits from strong cash flows (which easily cover the upfront distribution costs of mutual fund sales), strong liquidity and a conservative financial profile. Debt plus preferred shares-to-EBITDA was just over one times in 2013 and for 6M 2014, which is conservative. The Company’s ratio of debt plus preferred shares-to-total capitalization remains appropriate for the rating at just under 25%.

As a member of the Power Financial Corporation (Power) group of companies, IGM benefits from the additional financial flexibility of having a strategic shareholder and the associated strong governance and risk avoidance management model that is typical of Power subsidiaries.

It was a rotten day for the Canadian preferred share market, with PerpetualDiscounts losing 42bp, FixedResets down 13bp and DeemedRetractibles off 5bp. Volatility was high and almost entirely negative, with Enbridge and Fortis issues notable amongst the losers – the Enbridge new issue, FixedReset 4.40%+268, settles September 23, and the Fortis monster new issue, FixedReset, 4.10%+248 settles September 19 … perhaps there’s a little market indigestion? Volume was average, but notably headed by Enbridge issues, with RBC writing some nice tickets.

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 -0.3030 % 2,657.6
FixedFloater 4.18 % 3.43 % 26,307 18.50 1 -0.7417 % 4,154.7
Floater 2.90 % 3.02 % 48,420 19.67 4 -0.3030 % 2,748.2
OpRet 4.05 % 0.28 % 90,219 0.08 1 -0.1577 % 2,728.2
SplitShare 4.27 % 3.74 % 112,713 3.92 5 0.1488 % 3,162.1
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.1577 % 2,494.6
Perpetual-Premium 5.46 % 1.44 % 70,679 0.09 20 -0.0392 % 2,439.0
Perpetual-Discount 5.24 % 5.14 % 101,146 15.19 16 -0.4178 % 2,601.8
FixedReset 4.27 % 3.82 % 177,141 6.57 74 -0.1278 % 2,555.4
Deemed-Retractible 5.00 % 1.83 % 103,478 0.29 42 -0.0494 % 2,564.4
FloatingReset 2.63 % 1.44 % 75,661 0.16 6 -0.0590 % 2,524.4
Performance Highlights
Issue Index Change Notes
IAG.PR.A Deemed-Retractible -1.92 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.47
Bid-YTW : 5.93 %
PWF.PR.A Floater -1.53 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 20.55
Evaluated at bid price : 20.55
Bid-YTW : 2.57 %
FTS.PR.J Perpetual-Discount -1.50 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 23.35
Evaluated at bid price : 23.70
Bid-YTW : 5.03 %
FTS.PR.F Perpetual-Discount -1.43 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 23.62
Evaluated at bid price : 24.05
Bid-YTW : 5.11 %
IFC.PR.A FixedReset -1.30 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.49
Bid-YTW : 4.44 %
FTS.PR.K FixedReset -1.29 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 23.04
Evaluated at bid price : 24.55
Bid-YTW : 3.78 %
ENB.PR.P FixedReset -1.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.75
Evaluated at bid price : 23.86
Bid-YTW : 4.30 %
ENB.PR.F FixedReset -1.26 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 23.02
Evaluated at bid price : 24.30
Bid-YTW : 4.23 %
ENB.PR.T FixedReset -1.08 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.75
Evaluated at bid price : 23.89
Bid-YTW : 4.29 %
CIU.PR.C FixedReset 1.70 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 20.90
Evaluated at bid price : 20.90
Bid-YTW : 3.75 %
Volume Highlights
Issue Index Shares
Traded
Notes
ENB.PR.H FixedReset 319,970 RBC crossed two blocks of 150,000 each, both at 23.20. TD crossed 10,000 at 23.15.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.40
Evaluated at bid price : 23.09
Bid-YTW : 4.15 %
ENB.PR.Y FixedReset 257,615 RBC crossed two blocks of 123,000 each, both at 23.55.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.58
Evaluated at bid price : 23.56
Bid-YTW : 4.26 %
RY.PR.E Deemed-Retractible 78,350 RBC crossed 50,000 at 25.65. Scotia crossed 25,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-02-24
Maturity Price : 25.25
Evaluated at bid price : 25.61
Bid-YTW : 1.83 %
GWO.PR.N FixedReset 66,541 Nesbitt crossed blocks of 35,000 and 21,600, both at 21.84.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.80
Bid-YTW : 4.67 %
BMO.PR.T FixedReset 64,000 TD crossed 50,000 at 25.26.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 23.25
Evaluated at bid price : 25.26
Bid-YTW : 3.82 %
BNS.PR.N Deemed-Retractible 56,550 TD crossed 50,000 at 26.10.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-16
Maturity Price : 25.75
Evaluated at bid price : 26.08
Bid-YTW : -2.48 %
There were 27 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: 20.55 – 21.47
Spot Rate : 0.9200
Average : 0.5557

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 20.55
Evaluated at bid price : 20.55
Bid-YTW : 2.57 %

NEW.PR.D SplitShare Quote: 32.80 – 33.37
Spot Rate : 0.5700
Average : 0.4720

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-06-26
Maturity Price : 32.07
Evaluated at bid price : 32.80
Bid-YTW : 2.41 %

IFC.PR.A FixedReset Quote: 23.49 – 23.82
Spot Rate : 0.3300
Average : 0.2439

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.49
Bid-YTW : 4.44 %

PWF.PR.P FixedReset Quote: 23.02 – 23.35
Spot Rate : 0.3300
Average : 0.2485

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.58
Evaluated at bid price : 23.02
Bid-YTW : 3.66 %

IAG.PR.A Deemed-Retractible Quote: 22.47 – 22.75
Spot Rate : 0.2800
Average : 0.1995

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.47
Bid-YTW : 5.93 %

BAM.PR.G FixedFloater Quote: 22.75 – 23.00
Spot Rate : 0.2500
Average : 0.1718

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-16
Maturity Price : 22.79
Evaluated at bid price : 22.75
Bid-YTW : 3.43 %

September 15, 2014

September 15th, 2014

Nothing happened today.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts up 16bp, FixedResets off 3bp and DeemedRetractibles gaining 3bp. Volatility was minimal. Volume was very low.

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 0.7074 % 2,665.7
FixedFloater 4.14 % 3.40 % 25,854 18.56 1 0.0000 % 4,185.8
Floater 2.89 % 3.03 % 46,407 19.65 4 0.7074 % 2,756.6
OpRet 4.04 % -1.77 % 91,665 0.08 1 0.1975 % 2,732.5
SplitShare 4.28 % 3.72 % 110,343 3.92 5 0.0626 % 3,157.4
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1975 % 2,498.6
Perpetual-Premium 5.46 % 1.75 % 70,587 0.09 20 0.0000 % 2,440.0
Perpetual-Discount 5.22 % 5.14 % 102,449 15.20 16 0.1583 % 2,612.7
FixedReset 4.26 % 3.80 % 177,882 6.49 74 -0.0329 % 2,558.7
Deemed-Retractible 5.00 % 1.90 % 102,068 0.29 42 0.0323 % 2,565.7
FloatingReset 2.63 % 1.92 % 75,135 0.08 6 -0.1048 % 2,525.9
Performance Highlights
Issue Index Change Notes
PWF.PR.A Floater 1.80 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-15
Maturity Price : 20.87
Evaluated at bid price : 20.87
Bid-YTW : 2.53 %
FTS.PR.J Perpetual-Discount 1.91 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-09-15
Maturity Price : 23.68
Evaluated at bid price : 24.06
Bid-YTW : 4.95 %
Volume Highlights
Issue Index Shares
Traded
Notes
BNS.PR.L Deemed-Retractible 41,912 RBC bought blocks of 10,000 and 10,600 from anonymous, both at 25.75, then crossed 10,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-10-15
Maturity Price : 25.50
Evaluated at bid price : 25.75
Bid-YTW : -0.75 %
NA.PR.S FixedReset 31,373 National crossed 19,100 at 25.74.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-05-15
Maturity Price : 25.00
Evaluated at bid price : 25.65
Bid-YTW : 3.59 %
TD.PR.P Deemed-Retractible 22,247 RBC crossed two blocks of 10,000 each, both at 25.96.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-11-01
Maturity Price : 25.50
Evaluated at bid price : 25.90
Bid-YTW : -2.04 %
TD.PF.A FixedReset 21,500 Scotia crossed 15,000 at 25.31.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-10-31
Maturity Price : 25.00
Evaluated at bid price : 25.30
Bid-YTW : 3.55 %
BNS.PR.Z FixedReset 20,384 TD crossed 10,000 at 24.50.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2022-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.43
Bid-YTW : 3.60 %
IFC.PR.C FixedReset 20,305 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.46
Bid-YTW : 3.19 %
There were 16 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
NEW.PR.D SplitShare Quote: 32.79 – 33.28
Spot Rate : 0.4900
Average : 0.3644

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-06-26
Maturity Price : 32.07
Evaluated at bid price : 32.79
Bid-YTW : 1.11 %

SLF.PR.G FixedReset Quote: 22.15 – 22.42
Spot Rate : 0.2700
Average : 0.1724

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.15
Bid-YTW : 4.58 %

PVS.PR.C SplitShare Quote: 25.99 – 26.90
Spot Rate : 0.9100
Average : 0.8292

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2015-12-10
Maturity Price : 25.50
Evaluated at bid price : 25.99
Bid-YTW : 3.27 %

MFC.PR.F FixedReset Quote: 22.70 – 23.00
Spot Rate : 0.3000
Average : 0.2286

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.70
Bid-YTW : 4.43 %

RY.PR.Z FixedReset Quote: 25.34 – 25.51
Spot Rate : 0.1700
Average : 0.1047

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-05-24
Maturity Price : 25.00
Evaluated at bid price : 25.34
Bid-YTW : 3.75 %

SLF.PR.A Deemed-Retractible Quote: 23.62 – 23.81
Spot Rate : 0.1900
Average : 0.1395

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.62
Bid-YTW : 5.46 %

September PrefLetter Released!

September 15th, 2014

The September, 2014, edition of PrefLetter has been released and is now available for purchase as the “Previous edition”. Those who subscribe for a full year receive the “Previous edition” as a bonus.

The regular appendices reporting on DeemedRetractibles and FixedResets are included.

PrefLetter may now be purchased by all Canadian residents.

Until further notice, the “Previous Edition” will refer to the September, 2014, issue, while the “Next Edition” will be the October, 2014, issue, scheduled to be prepared as of the close October 10 and eMailed to subscribers prior to market-opening on October 14 (the Monday is Thanksgiving).

PrefLetter is intended for long term investors seeking issues to buy-and-hold. At least one recommendation from each of the major preferred share sectors is included and discussed.

Note: My verbosity has grown by such leaps and bounds that it is no longer possible to deliver PrefLetter as an eMail attachment – it’s just too big for my software! Instead, I have sent passwords – click on the link in your eMail and your copy will download.

Note: The PrefLetter website has a Subscriber Download Feature. If you have not received your copy, try it!

Note: PrefLetter eMails sometimes runs afoul of spam filters. If you have not received your copy within fifteen minutes of a release notice such as this one, please double check your (company’s) spam filtering policy and your spam repository – there are some hints in the post Sympatico Spam Filters out of Control. If it’s not there, contact me and I’ll get you your copy … somehow!

Note: There have been scattered complaints regarding inability to open PrefLetter in Acrobat Reader, despite my practice of including myself on the subscription list and immediately checking the copy received. I have had the occasional difficulty reading US Government documents, which I was able to resolve by downloading and installing the latest version of Adobe Reader. Also, note that so far, all complaints have been from users of Yahoo Mail. Try saving it to disk first, before attempting to open it.

Note: There have been other scattered complaints that double-clicking on the links in the “PrefLetter Download” email results in a message that the password has already been used. I have been able to reproduce this problem in my own eMail software … the problem is double-clicking. What happens is the first click opens the link and the second click finds that the password has already been used and refuses to work properly. So the moral of the story is: Don’t be a dick! Single Click!

Note: Assiduous Reader DG informs me:

In case you have any other Apple users: you need to install a free App from the apple store called “FileApp”. It comes with it’s own tutorial and allows you to download and save a PDF file.

TLM.PR.A Downgraded to Pfd-3 by DBRS, Trend Negative

September 13th, 2014

DBRS has announced that it:

DBRS has today downgraded the Issuer Rating and Unsecured Debentures & Medium-Term Notes rating of Talisman Energy Inc. (Talisman or the Company) to BBB from BBB (high), and changed the trend to Negative. DBRS has also downgraded the Company’s Preferred Shares rating to Pfd-3 from Pfd-3 (high), with a Negative trend.

On April 16, 2014, DBRS placed the ratings of Talisman Under Review with Negative Implications. The rating action reflected DBRS’s concern about the continued challenging natural gas market environment in North America (approximately 40% of total production in H1 2014), high capital expenditures (capex) (despite a 20% reduction from 2012), ongoing operational and production reliability issues in the North Sea, and its implication on Talisman’s credit risk profile. The Company recently released its H1 2014 financial results, which remained relatively weak due to the aforementioned negative driving factors. The reduced operating performance and weakened credit metrics have resulted in a credit risk profile that is no longer consistent with a BBB (high) rating.

DBRS has changed the trend to Negative on the ratings as DBRS believes a meaningful recovery will remain challenging, largely driven by the ongoing weak natural gas market outlook in North America, continued growth capex initiatives and capex commitment associated with the North Sea operations. In the absence of much stronger commodity prices, Talisman will have to continue to execute a combination of the following to maintain an adequate financial profile: (1) growth capital spending curtailment; (2) asset sales; and (3) joint venture agreements with upfront cash receipts, with the proceeds being used to reduce leverage. While DBRS acknowledges the Company’s track record on divesting non-core assets on a timely basis, DBRS views further significant non-core asset divestitures to remain challenging, particularly the announced North Sea assets with significant decommissioning obligations and production reliability issues. Kurdistan assets (the other non-core assets announced for sale) are exposed to heightened political instability in Iraq. If Talisman is successful in returning to a free cash flow neutral position while improving its credit metrics on a sustainable basis, which would largely be influenced by the timing of the North Sea asset divestiture (the North Sea operations have continued to result in significant cash flow deficits), DBRS may consider changing the trend to Stable. However, continued weak operating performance and cash flow deficits in the absence of timely asset divestitures would result in further rating pressure.

TLM.PR.A was last mentioned on PrefBlog when the underwriters held a clearance sale. This issue is a FixedReset, 4.20%+277, announced 2011-12-5. It is tracked by HIMIPref™, but relegated to the Scraps index on credit concerns.