00:00 - 00:05So I see the green banner new issue alert come across my Bloomberg screen and I yell at my assistant
00:06 - 00:09“Hey, get ready there’s a Canadian new municipal issue coming down. I want you to stay on top of this. Make sure we don’t miss this one.”
00:11 - 00:16Because, you know, Canadian bankers like Doug Bartlett and Les Peterdy keep telling us that the yields on these Canadian municipal bonds were nice and juicy…
00:17 - 00:21So the deal launches and it turns out its an MFA BC 5-year bond with a yield of 1.68% ...That’s all!!
00:22 - 00:26That’s all? That’s the yield?
00:28 - 00:32I said ok there must be something wrong, maybe Belanger and Mansoor at RBC made a mistake when they input the details on Bloomberg.
00:34 - 00:381.68% … That’s all!
00:42 - 00:46That’s not a bond yield, that’s more like a fraction of the credit spread where we come from
00:47 - 00:52Who is this magical bond issuer: The Municipal Finance Authority of British Columbia and how in the world are they able to issue at such low rates?
00:58 - 01:02This can’t be real -you want me to buy this? What am I supposed to do with this rate? It’s one-fifth of my country’s annual inflation rate!
01:04 - 01:08How are my clients going to react when they hear I’m investing at these rates? Kevin De Sousa might be able to get away with it, but it will never work for me!
01:13 - 01:15You know what they do to soccer players in my country when they don’t deliver? It’ not pretty!
01:16 - 01:20It’s like what happened to Fleckenstein when Sunil took over at National. That could be me if I invest at these rates.
01:21 - 01:27And you know what the best part is? These Canadian municipalities are upset that their relative spreads have been widening.
01:35 - 01:38Widening credit spreads? Are you joking? Do you know where I fund? They’ve never had it so good!!
01:41 - 01:47But seriously, seriously though. I am mandated to have Canadian dollars in my portfolio so what am I supposed to do?
01:50 - 01:53So I said to my assistant – “call the syndicate members and see what we can get.”
01:54 - 01:56We start with the leads: Scotia, RBC, National Bank - all sold out.
01:57 - 02:00Scotia’s sold out? They’re supposed to be “Canada’s most international bank” what gives?
02:11 - 02:13So we go down the list of dealers in the syndicate:
02:15 - 02:19CIBC, Karen Yeung reported sold out and said the spread should have been much tighter.
02:21 - 02:25Laurentian, Mark Warren reported sold out and wanted to sell me corporate bonds instead.
02:28 - 02:32TD, Trevor Thom reported sold out and said they could have used way, way more bonds.
02:34 - 02:38BMO, Olivier Ruta reported sold out and asked if I wanted to buy some TransLink bonds they still owned.
02:40 - 02:44Casgrain, Pierre reported sold out and lectured me on the virtues of being a non-bank owned dealer…
02:50 - 02:54So I said: “I have to call the issuer myself and see what their secret is – who’s in charge at the MFA BC?”
02:56 - 02:59So I phone the MFA and I get Jane, who pleasantly passes me to Shannon, who tactfully transfers me to Cindy, who sweetly sends me to Andrew…
03:00 - 03:04… who duly dishes me to Renata, who finally forwards me to the real person in charge: Shelley.
03:05 - 03:08After a nice chat with Shelley I learn that Robin Stringer is the man I want to talk to.
03:09 - 03:15So I get through to Robin and I say: “Señor Stringer, this is a very impressive issuance - tell me, how will you be able to top this?”
03:16 - 03:20And Robin says to me: It’s not my concern I’m retiring – it’s Peter Urbank’s and Graham Egan’s problem now!
03:23 - 03:27Robin’s retiring! He’s like the Frank Leonard of municipal bond issuance – he’s going out on top!!
03:31 - 03:39Good for you Señor Stringer – best wishes to you and Ruth for a long and happy retirement!