Canadian Banks

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longinvest
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Re: Canadian Banks

Post by longinvest »

Quebec wrote: Upon further examination of the same table, these 2108 'bonds' must be special issues with unusual features, since they yield a lot less than corporate bonds maturing in 20-30 years. Some of the 2108 bonds have ''Tier 1'' in their names, or 'trust', and the year 2018 is 100 years after the financial crisis.
Quebec,

One needs to know the crucial "earliest call date" information to compare these yields.
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Re: Canadian Banks

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TD announced today that their previously announced NVCC pref share issue would be increased from $300million to $1billion!! This is very unusual. Appetite was huge. Div rate is 4.85%. I will try to figure out what the NVCC related rate premium is.
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Re: Canadian Banks

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I saw that too and was quite puzzled. If you can raise that much capital why not right?
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Re: Canadian Banks

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brad911 wrote:I saw that too and was quite puzzled. If you can raise that much capital why not right?
But you have to deploy the capital otherwise it affects your ROC which is not good for the CEO 's bonus. Although a billion in TD 's case wouldn't have much impact.
Must be looking at a little tack on aquisition or they need to improve certain ratios for the regulators.
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Re: Canadian Banks

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twa2w wrote:
brad911 wrote:I saw that too and was quite puzzled. If you can raise that much capital why not right?
But you have to deploy the capital otherwise it affects your ROC which is not good for the CEO 's bonus. Although a billion in TD 's case wouldn't have much impact.
Must be looking at a little tack on aquisition or they need to improve certain ratios for the regulators.
No, this issue was in the normal course and will be simply used to bolster cap ratios over time, provide for future redemptions, and lower wholesale funding. TD's cap ratios are very strong as it is. When the market cooperates, you go for it.
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Re: Canadian Banks

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SQRT wrote:TD announced today that their previously announced NVCC pref share issue would be increased from $300million to $1billion!! This is very unusual. Appetite was huge. Div rate is 4.85%. I will try to figure out what the NVCC related rate premium is.
Wow! Where are all the sheep coming from? :shock:

It never ceases to amaze me the appetite for shit! :roll:
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Re: Canadian Banks

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scomac wrote:
SQRT wrote:TD announced today that their previously announced NVCC pref share issue would be increased from $300million to $1billion!! This is very unusual. Appetite was huge. Div rate is 4.85%. I will try to figure out what the NVCC related rate premium is.
Wow! Where are all the sheep coming from? :shock:

It never ceases to amaze me the appetite for shit! :roll:
I don't invest in bank prefs as the common seem a much better bet to me, but would you care to explain why you think this issue is "shit" ?
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Re: Canadian Banks

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SQRT wrote:
scomac wrote:
SQRT wrote:TD announced today that their previously announced NVCC pref share issue would be increased from $300million to $1billion!! This is very unusual. Appetite was huge. Div rate is 4.85%. I will try to figure out what the NVCC related rate premium is.
Wow! Where are all the sheep coming from? :shock:

It never ceases to amaze me the appetite for shit! :roll:
I don't invest in bank prefs as the common seem a much better bet to me, but would you care to explain why you think this issue is "shit" ?
Much the same as you, I far prefer the common shares as the value is far superior.

My characterization of shit is simply that you get a 105 beep yield premium over the common in exchange for zero upside and identical downside risk. I guess that the average retail investor has no concept of what risk really is.
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Re: Canadian Banks

Post by SQRT »

scomac wrote:
SQRT wrote:
scomac wrote:
Wow! Where are all the sheep coming from? :shock:

It never ceases to amaze me the appetite for shit! :roll:
I don't invest in bank prefs as the common seem a much better bet to me, but would you care to explain why you think this issue is "shit" ?
Much the same as you, I far prefer the common shares as the value is far superior.

My characterization of shit is simply that you get a 105 beep yield premium over the common in exchange for zero upside and identical downside risk. I guess that the average retail investor has no concept of what risk really is.
Although I agree the common are better, I wouldn't characterize the prefs as"you know". For some institutional investors or retail investors that invest for only income, you could make a case for them I guess. It's just that the common are such wonderful investments. The fact that the banks have access to the pref market in this depth, make the common that much better.
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Re: Canadian Banks

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SQRT wrote:
scomac wrote:
SQRT wrote: I don't invest in bank prefs as the common seem a much better bet to me, but would you care to explain why you think this issue is "shit" ?
Much the same as you, I far prefer the common shares as the value is far superior.

My characterization of shit is simply that you get a 105 beep yield premium over the common in exchange for zero upside and identical downside risk. I guess that the average retail investor has no concept of what risk really is.
Although I agree the common are better, I wouldn't characterize the prefs as"you know". For some institutional investors or retail investors that invest for only income, you could make a case for them I guess. It's just that the common are such wonderful investments. The fact that the banks have access to the pref market in this depth, make the common that much better.
Oh, I'm all for these sorts of prefs as a common shareholder as they are such a one sided deal for the issuer. It works for me! :twisted:
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Re: Canadian Banks

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scomac wrote:My characterization of shit is simply that you get a 105 beep yield premium over the common in exchange for zero upside and identical downside risk. I guess that the average retail investor has no concept of what risk really is.
You didn't make it clear for readers if you are throwing a net around all preferred shares or are you only considering those that are shackled with the NVCC clause to be included in your poop evaluation? I get it, there's not much to protect you on the downside since you could experience immediate conversion of the issue into common shares. I don't own any NVCC bank prefs for that very reason.

But I think other pref shares are fine and I sure wouldn't crap on them. I feel they're a good alternative for fixed income allocation in a non-registered account. Some of the sting of the fixed resets has been removed with a minimum reset feature. Moving to the common isn't really a choice since it requires a change to allocation from fixed income to equity.

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Re: Canadian Banks

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like_to_retire wrote:
scomac wrote:My characterization of shit is simply that you get a 105 beep yield premium over the common in exchange for zero upside and identical downside risk. I guess that the average retail investor has no concept of what risk really is.
You didn't make it clear for readers if you are throwing a net around all preferred shares or are you only considering those that are shackled with the NVCC clause to be included in your poop evaluation? I get it, there's not much to protect you on the downside since you could experience immediate conversion of the issue into common shares. I don't own any NVCC bank prefs for that very reason.
Point taken. I was speaking specifically to NVCC compliant preferred shares. I have no interest in these securities at even a >5% RoR. I want equity like returns for the equity like risk in convertible securities -- end of story. For me that's going to be 10-15% annualized. The only time that's going to happen is in a crisis. A basket of junk bonds looks far better to me than these things regardless of the account type that they're being held in!
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Re: Canadian Banks

Post by kcowan »

I think the fact that they can sell loads of these securities really underlines how good their common shares are. I have no idea who is buying them but I suspect it is portfolio managers who need to maintain their fixed ratio.
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Re: Canadian Banks

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kcowan wrote:I think the fact that they can sell loads of these securities really underlines how good their common shares are.
I don't really know what to think. I wonder how many retail investors who buy this issue or other bank issues really know what Non-Viability Contingent Capital is or whether the pref share they're buying has NVCC provisions in the prospectus? My understanding has always been that retail represents the largest portion of pref sales and that institutional investment is a much smaller percentage. To me, this has a lot to do with their unpredictable and crazy pricing volatility. I spend more time shaking my head at pref pricing than anything else I own.

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Re: Canadian Banks

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It's a bitch trying to do swaps of prefs too due to thin trading volumes.
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Re: Canadian Banks

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In the end, it is pretty clear to me , and has been for a long time, that an event that would convert these prefs to common, is extremly unlikely. So "extremely"that the market had virtually discounted the probability to nil. Makes you wonder a bit about the people who spend so much time trying to maximize their CDIC coverage. This by definition is an even more unlikely event.
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Re: Canadian Banks

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Makes you wonder a bit about the people who spend so much time trying to maximize their CDIC coverage. This by definition is an even more unlikely event.
We don't all park our money with the Big 6 some of us are at Home Trust where the coverage may be required as soon as the Real Estate market crashes again.
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Re: Canadian Banks

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BRIAN5000 wrote:
Makes you wonder a bit about the people who spend so much time trying to maximize their CDIC coverage. This by definition is an even more unlikely event.
We don't all park our money with the Big 6 some of us are at Home Trust where the coverage may be required as soon as the Real Estate market crashes again.
Valid point, but seems to me that many people still worry about CDIC coverage at the big banks as well. I don't.
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Re: Canadian Banks

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SQRT wrote:
BRIAN5000 wrote:
Makes you wonder a bit about the people who spend so much time trying to maximize their CDIC coverage. This by definition is an even more unlikely event.
We don't all park our money with the Big 6 some of us are at Home Trust where the coverage may be required as soon as the Real Estate market crashes again.
Valid point, but seems to me that many people still worry about CDIC coverage in the big banks as well. I don't.
The problem with maintaining accounts under $100,000 for CDIC protection is that it may require a multiplicity of accounts (one million requires ten different accounts) which can become an administrative nightmare as you age and for your executor when you pass on.From the point of view of estate planning consolidation makes things simpler.
The big players also are so linked together that failure of one could produce a domino effect and the risk of CDIC default ,though unlikely, is certainly not zero.The fact that the big banks tend to maintain multiple entities for CDIC coverage probably indicates that an increase in coverage to $500,000 is overdue.
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Re: Canadian Banks

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izzy wrote:
SQRT wrote:
BRIAN5000 wrote:
We don't all park our money with the Big 6 some of us are at Home Trust where the coverage may be required as soon as the Real Estate market crashes again.
Valid point, but seems to me that many people still worry about CDIC coverage in the big banks as well. I don't.
The problem with maintaining accounts under $100,000 for CDIC protection is that it may require a multiplicity of accounts (one million requires ten different accounts) which can become an administrative nightmare as you age and for your executor when you pass on.From the point of view of estate planning consolidation makes things simpler.
The big players also are so linked together that failure of one could produce a domino effect and the risk of CDIC default ,though unlikely, is certainly not zero.The fact that the big banks tend to maintain multiple entities for CDIC coverage probably indicates that an increase in coverage to $500,000 is overdue.
Yes, totally agree.
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Re: Canadian Banks

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that an increase in coverage to $500,000 is overdue.
Totally agree but that would only help the "rich" which is politically incorrect.
(one million requires ten different accounts)
No one million (or 1.2mil) all non-registered at BNS would only require 3 accounts His, hers and there's and ten different GIC's if you could stomach the rates they are offering. Getting some of the better going rates requires some complexity but how hard is it really for an executor. Here's a list of 5 banks close the accounts, amalgamate, distribute the funds.
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Re: Canadian Banks

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BRIAN5000 wrote:but how hard is it really for an executor. Here's a list of 5 banks close the accounts, amalgamate, distribute the funds.
Not especially hard BUT a lot of paperwork. Providing a copy of a death certificate, also a copy of a certified (or notarized) copy of the will to confirm the executor is who s/he says s/he is, and a letter of direction often in the specific format insisted on by the individual institution. potential receipt and depositing of cheques into the estate account, etc. I would expect to be paid if I had to manage a widely diversified estate.

IOW, how much do you really hate your executor?
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Re: Canadian Banks

Post by ockham »

AltaRed wrote:
IOW, how much do you really hate your executor?
Nice summary. Put it on a bumper sticker! Especially apt where the executor is not a primary beneficiary.
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Re: Canadian Banks

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:thumbsup: Good clarification. If I was also a beneficiary, I'd shut up and do the work.... :lol:
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Re: Canadian Banks

Post by SQRT »

Just seems like such an unlikely event for the big 5. I presume somebody who feels they need to split deposits to maximize CDIC coverage would also avoid investing in their common shares?
Last edited by SQRT on 01 Sep 2016 07:47, edited 1 time in total.
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