Consider Corporate Bonds over Alberta Capital Bonds

The Alberta government announced the rate on Capital bonds on Friday with a rate of 3.3%. The rate is equivalent to what is available on 5 year GIC’s. Considering limited liquidity, you may want to consider buying corporate bonds or 5 year Fixed Rate Reset Preferred shares.

The rates on corporate bonds can be as high as 7% depending on quality and maturity and a select number of preferreds are yielding above 5% with preferrential tax treatment.

Call your Rothenberg Investment Advisor today discuss the various options available in the market place. Your comments and thoughts are always appreciated.

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Corporate Bond Spreads Improving

Canadian Corporate bond rates are coming down, prices are going up which could signal better times for the stock market in weeks to come.  With yields in excess of 8% on longer term maturities of investment grade companies, investors are finding them hard to ignore. Yields on these bonds were less than 5% a little over a year ago.

Preferred shares which were yielding in the 8% – 9.25% just a month ago have gone up in price more than 25% bringing yields into the low 7% range.

Another sign of improvement is the lower rates on long-term mortgages as can be seen by clicking the link to the following article indicating that mortgage refinances in the US are going through the roof which will free up some cash for the currently strapped consumer.

http://www.reuters.com/article/ousivMolt/idUSTRE50D2ZQ20090114?pageNumber=1&virtualBrandChannel=0

What are your thoughts on this? Will these lower rates bring investors back into the stock market or do we have a long wait ahead of us?

Shaw Communications, Precision Drilling, Epcor Preferred Shares

The highlight of today in the Canadian markets on the last trading day of the month, quarter and half of the year is Shaw Communications up 4.20% with a couple of hours left in the trading day. With Shaw (SJR.B), you have an excelleng growth story and steady dividend increases. Shaw reported a 40% increase in profits and an 11% dividend increase. For cash flow investors, you are getting a growing dividend of just under 4% annualized and paid monthly.

Shaw is also anticipated to make a very competitive move by entering into the wireless arena as they have entered into the auction to become a participant.

Updating the takeover play of Grey Wolf by Precision Drilling (PD), Grey Wolf has rejected the third offer of $10.00 still stating that its planned merger is a better long term play for shareholders.

In Fixed Income Markets, there are some interesting buys available as spreads between government debt and corporate debt continue to widen. Epcor Edmonton Power (EPP.PR.A) preferred shares now have a current yield of 7% with preferrential tax treatment for Canadian investors.  Laurentian Bank Preferreds (LB.PR.D) are yielding 6.60%

There are National Bank bonds with a 10 year maturity paying over 6.50% and Royal Bank Capital Trust securities with a 3 year maturinty yielding 5.3%. All of these are interesting buys considering the volatility and long term returns of the general markets.

Your comments relating to the attractiveness of corporate bonds would be greatly appreciated. Have a great Canada Day.