Yeah, for sure. It's a decent pickup now, but for those that owned it before it's unfortunately been a real downer. That will teach me not to be so sure that interest rates are going to rise.scomac wrote:Not a terrible trade-off IMO.
ltr
Yeah, for sure. It's a decent pickup now, but for those that owned it before it's unfortunately been a real downer. That will teach me not to be so sure that interest rates are going to rise.scomac wrote:Not a terrible trade-off IMO.
The real kick in the nether regions would be if Basel III requirements are never enforced on the lifecos.scomac wrote:I switched out of MFC.PR.C for the above issue based on a pick up in YTW assuming that at some point Basel III requirements would be enforced upon lifecos. At present YTW is running ~10.17% assuming no change in dividend rate upon subsequent resets and a retraction on or about 01-31-2025. It's all about the potential capital gain with a call option on the GoC 5 yr. going forward. Not a terrible trade-off IMO.
That's why I'm not lining up to buy a whole bunch of them! That said, the very nature of the preferred share market suggests that there will be an opportunity to get out at a gain without the above eventuality ever coming to pass. Unfortunately, they don't ring a bell when it comes.AltaRed wrote:The real kick in the nether regions would be if Basel III requirements are never enforced on the lifecos.scomac wrote:I switched out of MFC.PR.C for the above issue based on a pick up in YTW assuming that at some point Basel III requirements would be enforced upon lifecos. At present YTW is running ~10.17% assuming no change in dividend rate upon subsequent resets and a retraction on or about 01-31-2025. It's all about the potential capital gain with a call option on the GoC 5 yr. going forward. Not a terrible trade-off IMO.
Mmmm. I own MFC.PR.F. It reset in June to a yield of 2.178%.Thegipper wrote:I loaded up on MFC.PR.F. Efficient market theory doesn't work in the preferred market? This one just reset in June with a yield of 7.7%. The next reset date is June 2021. Another potential is Basel and the real possibility that the issuer may be required to redeem in order to meet their tier 1 capital requirements. If that happens I am looking at a great capital gain. From $13.65 to $25.00. I can be patient with this one while I am collecting 7.7% in dividends.
Thanks for clearing this up. Both my brokerage firm and Globeinvester gave me this 7.7 return. I guess the lesson is to look at the actual distribution and do your own calculation. Just the same the 4% yield might not be so bad. I will live with this mistake.like_to_retire wrote:Mmmm. I own MFC.PR.F. It reset in June to a yield of 2.178%.Thegipper wrote:I loaded up on MFC.PR.F. Efficient market theory doesn't work in the preferred market? This one just reset in June with a yield of 7.7%. The next reset date is June 2021. Another potential is Basel and the real possibility that the issuer may be required to redeem in order to meet their tier 1 capital requirements. If that happens I am looking at a great capital gain. From $13.65 to $25.00. I can be patient with this one while I am collecting 7.7% in dividends.
The dividend became $0.136125 per quarter/per share. That's $0.5445 a year per share.
At $13.53 bid today, the current yield is 4.024%.
I can hope (since it's an insurance pref) that it will be called in 9 years at PAR, but that's a long time and a bit of a pipe dream.
Personally, I'd rather steer my money toward non-financial prefs that are able to offer minimum reset dividend guarantees.
ltr
Google Finance also has trouble with companies that have more than one of regular shares, preferred shares and split shares - sometimes stating the correct dividend/distribution, but the wrong yield, or vice versa.Thegipper wrote: I guess the lesson is to look at the actual distribution and do your own calculation.
I don't think one would have to wait 9 years. If OFSI imposed this requirement they might call the shares well before the imposed date. Even if they didn't I am sure the announcement would give these shares an immediate boost in share pricing.like_to_retire wrote:Mmmm. I own MFC.PR.F. It reset in June to a yield of 2.178%.Thegipper wrote:I loaded up on MFC.PR.F. Efficient market theory doesn't work in the preferred market? This one just reset in June with a yield of 7.7%. The next reset date is June 2021. Another potential is Basel and the real possibility that the issuer may be required to redeem in order to meet their tier 1 capital requirements. If that happens I am looking at a great capital gain. From $13.65 to $25.00. I can be patient with this one while I am collecting 7.7% in dividends.
The dividend became $0.136125 per quarter/per share. That's $0.5445 a year per share.
At $13.53 bid today, the current yield is 4.024%.
I can hope (since it's an insurance pref) that it will be called in 9 years at PAR, but that's a long time and a bit of a pipe dream.
Personally, I'd rather steer my money toward non-financial prefs that are able to offer minimum reset dividend guarantees.
ltr
The date that James Hymas uses is Jan 31, 2025, but he admits that it doesn't appear to be likely and says he will extending it again to Jan 31, 2027. That's in 11 years away, and that's still a dream. I'm not holding my breath.Thegipper wrote:I don't think one would have to wait 9 years. If OFSI imposed this requirement they might call the shares well before the imposed date. Even if they didn't I am sure the announcement would give these shares an immediate boost in share pricing.
If that means even further (to 2027) to the start of Calls by the insurers, I may have one foot in the casket by the time I can make good on some cap gains from the insurers. Best not to put all eggs in THAT basket me thinks.Due to the footdragging by OSFI, I will be extending the DeemedMaturity date for insurance issues by another two years in the near future.
James has been making that statement for at least 2 years now. See http://prefblog.com/?p=26162 from August 2014.AltaRed wrote:Had not noticed this before on PrefBlog but it may be that I don't read all of James' verbosity From James' Sept 5th entry,Due to the footdragging by OSFI, I will be extending the DeemedMaturity date for insurance issues by another two years in the near future.
Heck, I gave up on that whole situation long ago and don't recognize the deemed maturity date any longer with my insurance prefs.snowback96 wrote:James has been making that statement for at least 2 years now.
I agree but the question is the definition of "long term". My theory is that OSFI intended to get this done by now; however, to everybody's surprise interest rates continued to drift downwards to the point where they flinched.AltaRed wrote:I still believe the insurance industry will have to comply someday with NVCC compliant issues. It simply makes the playing field between banking and insurance inequitable long term.
IAIS wrote:249. The IAIS may consider that a principal loss absorbency mechanism is required for Tier 1 Limited financial instruments to qualify as capital resources. Without such mechanisms these instruments could be considered to only provide going concern loss absorbency through cancellation of distributions.
I expect that OSFI will adopt substantially all of IAIS' standards, once they come out.IAIS wrote:Question 70. Should Tier 1 Limited financial instruments be required to have a principal loss absorbency mechanism?
(1) If "no" to Question 70, should the principal be considered to provide loss absorbency on a going concern basis? Please explain how does the instrument demonstrates loss absorbency on a going concern basis. [sic]
big easy wrote:CPD 5 year total return is -1.2% according to Morningstar and eyeballing the graph, 7 year return looks about the same. Any income generated appears to be offset by (temporary?) capital losses.