MFA BC bonds as told by an investor
38 views • 3/30/2016
Central Bank of Colombia or maybe the city of Bogota
| 00:00 - 00:05 | So 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 theres a Canadian new municipal issue coming down. I want you to stay on top of this. Make sure we dont miss this one. |
| 00:11 - 00:16 | Because, 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 - 00:21 | So the deal launches and it turns out its an MFA BC 5-year bond with a yield of 1.68% ...Thats all!! |
| 00:22 - 00:26 | Thats all? Thats the yield? |
| 00:28 - 00:32 | I 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 - 00:38 | 1.68% Thats all! |
| 00:42 - 00:46 | Thats not a bond yield, thats more like a fraction of the credit spread where we come from |
| 00:47 - 00:52 | Who 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 - 01:02 | This cant be real -you want me to buy this? What am I supposed to do with this rate? Its one-fifth of my countrys annual inflation rate! |
| 01:04 - 01:08 | How are my clients going to react when they hear Im investing at these rates? Kevin De Sousa might be able to get away with it, but it will never work for me! |
| 01:13 - 01:15 | You know what they do to soccer players in my country when they dont deliver? It not pretty! |
| 01:16 - 01:20 | Its like what happened to Fleckenstein when Sunil took over at National. That could be me if I invest at these rates. |
| 01:21 - 01:27 | And you know what the best part is? These Canadian municipalities are upset that their relative spreads have been widening. |
| 01:35 - 01:38 | Widening credit spreads? Are you joking? Do you know where I fund? Theyve never had it so good!! |
| 01:41 - 01:47 | But seriously, seriously though. I am mandated to have Canadian dollars in my portfolio so what am I supposed to do? |
| 01:50 - 01:53 | So I said to my assistant call the syndicate members and see what we can get. |
| 01:54 - 01:56 | We start with the leads: Scotia, RBC, National Bank - all sold out. |
| 01:57 - 02:00 | Scotias sold out? Theyre supposed to be Canadas most international bank what gives? |
| 02:11 - 02:13 | So we go down the list of dealers in the syndicate: |
| 02:15 - 02:19 | CIBC, Karen Yeung reported sold out and said the spread should have been much tighter. |
| 02:21 - 02:25 | Laurentian, Mark Warren reported sold out and wanted to sell me corporate bonds instead. |
| 02:28 - 02:32 | TD, Trevor Thom reported sold out and said they could have used way, way more bonds. |
| 02:34 - 02:38 | BMO, Olivier Ruta reported sold out and asked if I wanted to buy some TransLink bonds they still owned. |
| 02:40 - 02:44 | Casgrain, Pierre reported sold out and lectured me on the virtues of being a non-bank owned dealer |
| 02:50 - 02:54 | So I said: I have to call the issuer myself and see what their secret is whos in charge at the MFA BC? |
| 02:56 - 02:59 | So 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 - 03:08 | After a nice chat with Shelley I learn that Robin Stringer is the man I want to talk to. |
| 03:09 - 03:15 | So 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 - 03:20 | And Robin says to me: Its not my concern Im retiring its Peter Urbanks and Graham Egans problem now! |
| 03:23 - 03:27 | Robins retiring! Hes like the Frank Leonard of municipal bond issuance hes going out on top!! |
| 03:31 - 03:39 | Good for you Señor Stringer best wishes to you and Ruth for a long and happy retirement! |
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