PrefBlog

The Fortis perpetuals, mentioned earlier as a new issue seemed determined to prove me wrong on their opening day: 152,035 shares traded at prices between $25.05 and $25.25, closing at $25.10-14.
This comes on top of the news that Sunlife is bringing out another new issue, paying 4.45% compared to Fortis’ 4.90%. The funny thing is, I think the Sunlife new issue is also expensive. And I think – on the other hand – that 45bp is actually a pretty reasonable spread between issues with these two credit ratings.
But look, for instance, at the PerpetualDiscount index (as it stands today! Rebalancing is tomorrow, and there may be changes!)

These are good traders and accumulating a stake would certainly take more than a day, but work pays off! These things have an average Modified Duration (of their YTW scenario, which is the 30-year HIMIPref™ limit) of about 16.25 years. Which means that every basis-point of yield is worth 16 basis-points of price … and 16bp on $25 is four cents.

It doesn’t sound like much, I know … but this is FIXED-INCOME analysis! This is the site where we CARE about our pennies … because four cents is nearly two week’s coupon.

This entry was posted on Thursday, September 28th, 2006 at 6:42 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.