Jump on the long corporate express!
Johnson & Johnson sold $1.1 billion of bonds at the lowest interest rates on record for 10-year and 30-year securities amid surging investor demand for the highest- rated corporate debt.
The drugmaker, in the first offering by a nonfinancial AAA rated company in 15 months, sold $550 million of 2.95 percent, 10-year notes and the same amount of 4.5 percent, 30-year bonds, according to data compiled by Bloomberg. That’s the lowest coupons for those maturities on record, according to Citigroup Inc. data going back to 1981.
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The company’s 10-year debt yields 43 basis points more than similar-maturity Treasuries, and the 30-year bonds pay a spread of 68 basis points, Bloomberg data show. A basis point is 0.01 percentage point.
Greece’s recession deepened in the second quarter, according to official estimates released Thursday, as the country felt the painful consequences of the government’s drive to reduce its debt load with aggressive austerity cuts.
Gross domestic product declined by 1.5 per cent from the previous quarter as the government reduced spending. The unemployment rate, meanwhile, rose to 12 per cent in May from 11.9 per cent, the statistics agency said.
Manulife common took another hit today:
Worries about deteriorating economic conditions pushed the TSX financial sector down 1.56 per cent as TD Bank (TSX:TD) fell 90 cents to $70.82. Manulife Financial was down 62 cents or 4.62 per cent at $12.79 in heavy trading. Its stock has plunged 20 per cent since surprising investors with a $2.4-billion quarterly loss last week, followed by a downgrade by DBRS.
The PerpetualDiscount preferreds, MFC.PR.B and MFC.PR.C have underperformed their index sharply, but not ridiculously, since August 4, the day before the earnings announcement: -1.67% and -1.71% vs. +0.41%. However, they go ex-Dividend tomorrow and we may well see a rush for the exits.
The Canadian preferred share market was strong today on average volume, with PerpetualDiscounts up 10bp and FixedResets up 15bp. The win by the FixedResets took their yield to the sixth-lowest of all time, just a hair higher than the recent low set on August 4.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| 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 | -0.2361 % | 2,066.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2361 % | 3,130.7 |
| Floater | 2.53 % | 2.14 % | 37,065 | 21.97 | 4 | -0.2361 % | 2,231.4 |
| OpRet | 4.88 % | 1.41 % | 104,205 | 0.21 | 9 | 0.0986 % | 2,358.8 |
| SplitShare | 6.07 % | -1.70 % | 66,993 | 0.08 | 2 | 0.8870 % | 2,284.4 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0986 % | 2,156.9 |
| Perpetual-Premium | 5.81 % | 5.54 % | 97,808 | 5.66 | 7 | -0.1584 % | 1,946.4 |
| Perpetual-Discount | 5.79 % | 5.81 % | 174,581 | 14.04 | 71 | 0.0992 % | 1,873.7 |
| FixedReset | 5.30 % | 3.39 % | 278,778 | 3.40 | 47 | 0.1498 % | 2,236.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BMO.PR.H | Perpetual-Discount | 1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 22.97 Evaluated at bid price : 23.86 Bid-YTW : 5.53 % |
| NA.PR.L | Perpetual-Discount | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 21.55 Evaluated at bid price : 21.55 Bid-YTW : 5.66 % |
| TD.PR.O | Perpetual-Discount | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 22.07 Evaluated at bid price : 22.21 Bid-YTW : 5.50 % |
| GWO.PR.J | FixedReset | 1.61 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 27.79 Bid-YTW : 2.83 % |
| BNA.PR.C | SplitShare | 1.97 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 21.26 Bid-YTW : 6.88 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.B | FixedReset | 50,800 | RBC crossed 25,000 at 25.01. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 24.95 Evaluated at bid price : 25.00 Bid-YTW : 3.68 % |
| RY.PR.B | Perpetual-Discount | 37,618 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 21.01 Evaluated at bid price : 21.01 Bid-YTW : 5.62 % |
| RY.PR.I | FixedReset | 36,890 | Nesbitt crossed 35,200 at 26.35. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 26.33 Bid-YTW : 3.34 % |
| BNS.PR.Y | FixedReset | 27,420 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 24.85 Evaluated at bid price : 24.90 Bid-YTW : 3.41 % |
| TRP.PR.C | FixedReset | 26,100 | Desjardins crossed 10,000 at 25.26. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 23.20 Evaluated at bid price : 25.23 Bid-YTW : 3.82 % |
| CM.PR.H | Perpetual-Discount | 24,850 | Nesbitt crossed 10,500 at 21.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-08-12 Maturity Price : 20.98 Evaluated at bid price : 20.98 Bid-YTW : 5.77 % |
| There were 25 other index-included issues trading in excess of 10,000 shares. | |||