Monday, February 6, 2012 7:08 PM EST
Bay Street’s got it good, Wall Street not so much
TIM KILADZE
Looking down from the north, the sentiment on Wall Street is hard to read. You hear anecdotal stories from people who visit Canada, or from friends who work down there, but it’s rare to get a clear picture.
Yet this week’s cover story in New York Magazine is long enough, and detailed enough, to provide solid insight. And one fact is made obvious: Bay Street’s got it good. Very good.
The piece, titled “The End of Wall Street as They Knew It,” explains just how negative everyone on Wall Street is right now. The easy money is over, and it is suddently much harder to churn out hefty profits because prop desks are closing, the banks are required to hold more capital and new leverage rules could limit borrowing to a ratio of 12:1.
Job losses are also rampant, and the piece notes that the financial industry laid off about 200,000 people in the last year.
Link to this postMonday, February 6, 2012 2:46 PM EST
Cassels looks west to open new office
JEFF GRAY
Bay Street’s Cassels Brock & Blackwell LLP is opening its first office outside Toronto, establishing a presence in Vancouver as it seeks to solidify its position as a go-to law firm for the mining sector.
The move makes sense for a firm with a focus on mining companies, given their concentration in Vancouver. Cassels says it reflects the number of clients it now has in B.C., and the growing number of “national and international opportunities” it sees coming with a operating a branch in the West.
“We’ve considered expansion into other markets before, but never saw a true strategic imperative to do so,” Mark Young, Cassels managing partner, said in a statement. “But now, for us, the timing is right to make this move.”
Monday, February 6, 2012 1:25 PM EST
Genworth sees opportunity in CMHC's limit
Tara Perkins
Canada’s second-largest mortgage insurer plans to take advantage of government constraints on its Crown corporation rival, Canada Mortgage and Housing Corp.
Genworth MI Canada Inc. executives are making it clear that they see a business opportunity emerging as Ottawa hems and haws about whether to loosen CMHC’s shackles once again.
At the moment, CMHC is restricted to having $600-billion worth of mortgage insurance outstanding. Ottawa places limits on the Crown corporation because its insurance ultimately creates risks for taxpayers. It has increased the limit a number of times in the past, and raised it dramatically this decade, with the most recent move being from $450-billion to $600-billion in 2008.
Monday, February 6, 2012 2:27 PM EST
Scotia CEO Rick Waugh appointed to TransCanada board
TIM KILADZE
Bank of Nova Scotia chief executive officer Rick Waugh has been appointed as an independent director at TransCanada Corp. TRP-T, a rare move for the head of a Canadian bank.
Typically, board appointments work the other way, with the heads of Canada’s biggest corporations getting named to Big Six bank board positions. Before this appointment, it appears that the only board any of the bank CEOs sat on were for organizations such as non-profits and regulatory or governance bodies.
Mr. Waugh’s decision to join TransCanada’s board will only fuel speculation about his future with the bank. He was originally named Scotia’s BNS-T CEO back in 2003, and some people assume that his successor will be named in the near future.
Mr. Waugh assumed his new role at the start of the month. His other board positions include chairing Catalyst Canada’s advisory board, a board seat on MS Society of Canada's Multiple Sclerosis Scientific Research Foundation and a board seat at Toronto's St. Michael’s Hospital.
Monday, February 6, 2012 9:54 AM EST
Talisman bought deal also cost Street millions
TIM KILADZE
New issue deal flow is picking up on Bay Street, but the extra revenue isn’t as sweet as it could be for a number of investment banks who incurred some hefty losses on recent bought deals.
Not only did Triology Energy Corp.’s latest offering turn sour, costing the underwriting syndicate about $6.5-million, but a $200-million bought deal of Talisman Energy Inc. preferred shares also went poorly.
The deal had little appetite from the get-go, with some estimates putting initial sales in the 30 to 40 per cent range, forcing the banks to do a clean-up at $23.75, down from the $25 initial price. The clean-up put the syndicate, co-led by RBC Dominion Securities and CIBC World Markets, in the hole about $5-million -- however, fees paid to the banks help to lower losses.
Monday, February 6, 2012 8:19 AM EST
Gone with Griffiths: Biggest IPO since summer cancelled
The cancellation of the initial public offering of Griffiths Energy International Inc. means that Canada's somnolent IPO market remains just that.
Griffiths, had it gotten done on schedule in 2011, likely would have been the third-largest IPO of last year, and certainly the largest since markets got rough in late summer.
The company was said to be seeking in the range of $300-million, which would have left it trailing only the June offering of $500-million by Gibsons Energy and the $342-million debut of Parallel Energy Trust, which happened in spring.
Friday, February 3, 2012 4:34 PM EST
Trilogy bought deal costs banks $6.5-million
BOYD ERMAN
A bought deal gone bad has left a group of Bay Street banks facing a combined loss of about $6.5-million, and scrambling to get out.
The investment banking arm of Royal Bank of Canada RY-T led a group of banks that bought five million shares of Trilogy Energy Corp. TET-T at $37.90 apiece, planning to resell them to investors.
Alas, about one million shares didn't sell, sources say, and now the stock is trading about $6.50 below the deal price, putting the total loss at about $6.5-million.
Friday, February 3, 2012 1:50 PM EST
Sunshine Oilsands puts Hong Kong IPO on hold
TIM KILADZE
Sunshine Oilsands Ltd. is putting its much anticipated $700-million initial public offering on hold, according to the Wall Street Journal.
For months, investors wondered when Sunshine would finally go public, and just last week reports started to come out stating that it would finally launch in Hong Kong. However, the company quickly realized the appetite in Asia just isn’t there, and there is speculation that opting to go public in Hong Kong instead of Canada may be coming back to haunt the company.
The WSJ reports that Sunshine was supposed to start fielding IPO orders on Monday, but has now postponed its marketing roadshow indefinitely. Apparently people in Hong Kong just couldn’t wrap their heads around Canada's oil sands, and investors were scared away because the company remains unprofitable.
Friday, February 3, 2012 2:59 PM EST
Where is Suncor's long-awaited recovery?
TIM KILADZE
Investors in Suncor Energy Inc. are perplexed. 2011 was a blowout year for the oil giant, yet its stock is nowhere near its pre-crisis highs.
The following figures explain the frustration. Back in 2008, when oil soared north of $140 (U.S.) per barrel, Suncor churned out quarterly profits in the $800-million range, according to Capital IQ, and the shares traded around the $60 mark. Last quarter, profit hit $1.4-billion, and yet Suncor SU-T shares are now worth only $35.
Making the situation even more frustrating, last quarter was the second straight quarter of record oil sands production, and December was a record month with production of 345,000 barrels a day.
No doubt, the stock traded around the $60 mark before the crisis because of expectations about $200 oil and now no one is betting on that, at least not for some time. But today’s profits should speak for themselves.
Friday, February 3, 2012 8:08 AM EST
Finally, solid new issue activity on Bay Street
TIM KILADZE
As the new year started, Bay Street bankers and lawyers held their breath. After a dismal second half of 2011, everyone wondered: Could the new issue dry spell continue into 2012?
For much of January, the answer was yes. New equity issues were spotty, and a good chunk of the deals were small, worth $20-million, maybe $25-million.
But in the last week or so there’s been a plethora of big offerings -- most notably, Bank of Nova Scotia’s $1.5-billion equity raise. The fees from that alone will make up for a good chunk of the lost revenue at the end of 2011.
Connect with us
Follow Streetwise today and stay ahead of the news that will move the market
Seeking Alpha
Follow Boyd Erman's Streetwise on Seeking Alpha
If you want to get to know Rob Carrick better, meet up with him on Facebook
Streetwise Contributors
Boyd Erman
Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance.
In addition, he is a regular commentator and guest host on Business News Network.
Tim Kiladze
Tim Kiladze is a business reporter with The Globe and Mail. Before graduating from Columbia University’s Graduate School of Journalism, he worked in equity capital markets at National Bank Financial and fixed-income sales and trading at RBC Dominion Securities. Tim has a Bachelor of Commerce in finance from McGill University.
Tara Perkins
Tara Perkins has been a business reporter since 2004, following a brief stint as overnight editor of globeandmail.com. She has been writing for the Globe's business section since the spring of 2007, covering the banking sector during the course of the financial crisis. Prior to that, she worked for the Toronto Star. Tara has a Bachelor of Journalism from Ryerson University and a Bachelor of Commerce from the University of Guelph.
Grant Robertson
Grant Robertson joined The Globe and Mail as a business reporter in 2005 after five years as a business writer at the Calgary Herald. His areas of coverage have included the oil and gas industry, the transportation sector and media & telecom. He now covers the banking sector for The Report on Business and writes for Report on Business Magazine.
Jeff Gray
Jeff Gray covers legal affairs for The Report on Business. For five years, he covered Toronto’s city hall and wrote a column about urban transportation. In 2002, he worked for the world desk of BBC News Online in London and freelanced for The Globe. In 2000, he helped launch The Globe’s first breaking-news website. He started at The Globe in 1998.
David Parkinson
David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics.
