TD.PF.M & CM.PR.Y: Still Expensive

Aug 25 04:08 2019 Print This Article

Assiduous Reader coolmesh asked on the August 20 post:

I’ve been watching TD.PF.M getting hammered the last four weeks. Good rate, good reset rate and good quality company. Any thoughts on what’s going there?

TD.PF.M is a FixedReset 5.10%+356, NVCC, that commenced trading 2019-6-4 after being announced 2019-5-24. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

CM.PR.Y is a FixedReset, 5.15%+362, NVCC, that commenced trading 2019-6-4 after announced May 24. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

June 4 was the last date we saw a new issue start to trade, as the new issue market is currently ‘closed for re-pricing’, we might say. We might normally expect a bank issue or two to be announced once the banks have gotten their 19Q3 earnings announcements out of the way, but given the tone of the market it won’t be surprising if they just give this opportunity a miss. On the other hand, the grossly foreshortened 5-year call-lockout period for FixedResets means that issuers have relatively little at risk in offering so-called perpetual product in times of elevated yields (this has always been a crucial point with this structure) so who knows?

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PrefBlog

PrefBlog is presented as a public service by Hymas Investment Management Inc., Manager / Trustee of Malachite Aggressive Preferred Fundand publisher of PrefLetter, a monthly newsletter directed towards long term buy-and-hold retail investors. James Hymas, president of Hymas Investment Management Inc, with years of experience designing quantitative investment technology and applying this technology to conservative portfolios, seeks to provide institutions and retail investors with the information and advice necessary to produce top quartile returns in the preferred share market without the assumption of excess risk.

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