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Warren Buffett likes the look of Canadian government debt

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Buffett likes Canada debt Like many other investors around the world, Warren Buffett likes the look of Canadian government debt.

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The annual report of Mr. Buffett's Berkshire Hathaway Inc. shows that some 80 per cent of its investments in foreign government securities, as of the end of 2011, were those issued or guaranteed by Germany, Britain, Canada, Australia and the Netherlands.

The document says little else on the subject, though Bloomberg News notes that Berkshire specified at least some of the breakdown of its $10.8-billion (U.S.) in non-U.S. government securities in the latest report, while last year it did not. The report also does not give the Canadian amount or specify how much might be federal and how much provincial.

Global investors increasingly are favouring Canada's fiscal standing. As Europe suffers a debt crisis and the U.S. certainly has its own debt woes, Canada remains rated triple-A.

Separately today, Toronto-Dominion Bank hiked its projections on long-term government yields, believing now that the Canadian 10-year bond will hit 2.85 per cent by the end of the year.

"With the ECB backstopping the European banking system with cheap liquidity, a lower chance now that Greece will imminently default on its debt, and a stronger economic picture emerging from the U.S., we no longer expect a third round of quantitative easing (QE3) by the Federal Reserve," said TD economists Craig Alexander and Leslie Preston.

"That scenario is now a risk to our outlook in the event of a worse-case outcome in Europe, or more signs the U.S. growth is faltering," they said in a report.

"That has led us to raise our forecasts for longer-dated bond yield forecasts both in the U.S. and Canada ... However, unlike the U.S., there has been little to cheer about in the Canadian economic data of late. That has led us to raise our year-end Canadian bond yield targets relatively less than Treasuries."

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Flaherty need not cut aggressively BMO Nesbitt Burns wonders today why there's so much fuss over the need by Canada's finance minister to slash aggressively in his upcoming budget.

Deputy chief economist Douglas Porter notes that Canada's finances are in much better shape than anticipated in its current fiscal year, its deficit narrowing by almost $10-billion in the first nine months to $17.7-billion from $27.4-billion a year earlier.

The fiscal year ends March 31, and Finance Minister Jim Flaherty is preparing his next budget, expected in about a month.

"Even if we assume no further gains in the final three months of fiscal year 2011-2012, and even allow for some slippage, the full-year deficit will still come in at around $25-billion, or less than 1.5 per cent of GDP," Mr. Porter said in a research note.

"That compares with a $33.4-billion gap the prior year, the latest estimate of $31-billion for this year, and even below the forecast of $27.4-billion for next year. For all the talk about Ottawa preparing to cut more aggressively, it's fair to again to ask ... precisely why? The current plan seems to be working quite well all by itself."

As The Globe and Mail's Bill Curry reported this weekend, Mr. Porter is not alone among economists in believing there's little pressure on Mr. Flaherty for deep cuts.

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Who is Buffett's heir? The billion-dollar question floating through markets today is this: Who has Warren Buffett tapped to succeed him at the helm of Berkshire Hathaway Inc. ?

In his weekend letter to shareholders, a widely-watched, annual document, Mr. Buffett said he has a candidate and two backups. But he didn't name them, which appears to have caused some angst as the legendary investor gets on in years. The proposed successor doesn't know either, according to Mr. Buffett.

"Berkshire Hathaway is 100 per cent the product of Warren Buffett's genius," Philip Anthony Quinet, long-time investor, told The Wall Street Journal. "I know the board is comfortable with [his successor] but why can't loyal shareholders know who he is, too?"

It's not like he's leaving or anything like that - indeed, in his letter he said he's not going anywhere - but he did try to calm the waters, though with little apparent success.

S&P hits Greece Standard & Poor's downgraded Greek debt again today, slapping Athens with a "selective default."

That's not a surprise after Greece changed the terms of some of its debt so it could secure a bailout. It has been negotiating with bondholders to take a hefty hit on their paper.

"We lowered our sovereign credit ratings on Greece to 'SD' following the Greek government's retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on Feb. 23, 2012," S&P said in a statement.

"The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms in the event that a predefined quorum of creditors has agreed to do so. In our opinion, Greece's retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring."

If the deal is done as expected in mid-March, S&P said, it will consider the default to be "cured" and the rating put back to triple-C.

"If a sufficient number of bondholders do not accept the exchange offer, we believe that Greece would face an imminent outright payment default," it warned, however.

"This is because of its lack of access to market funding and the likely unavailability of additional official financing."

G20 finance leaders kick the can I returned today from a one-week vacation to find that concerns over Greece still linger, the Germans are arguing over the euro zone bailout fund, and another meeting of G20 finance officials has come and gone, with little apparent progress on the issues haunting the global economy.

I could have stayed on the beach another week.

As The Globe and Mail's Kevin Carmichael writes in today's Report on Business, the finance ministers and central bankers of the Group of 20 held a weekend meeting in Mexico City where they turned up the heat on euro zone leaders to agree on the clout of their bailout schemes, but put off decisions on further support for the International Monetary Fund.

"This weekend's G20 meeting in Mexico saw countries lining up to turn the heat up on Germany to relax its opposition to an increasing of the €500-billion limit on the new bailout fund, the ESM, as well as the combining of it and the remaining €250-billion in the EFSF," CMC Markets analyst Michael Hewson said of the two rescue mechanisms.

"There does appear to be some signs of that pressure starting to distil into a softening of this stance; after German finance minister Schaeuble said that such a move might be considered when Europe meets later this week in Brussels, after the latest vote on the Greek bailout in the German parliament," he said in a research note.

Key, though, is the fact that global officials want the euro zone to step up its efforts before the IMF gets anything more.

"There were some developments that came out of this past weekend's G20 meetings of finance officials (finance ministers and central bankers) in Mexico but, unfortunately (and not terribly surprisingly) nothing concrete," said senior economist Jennifer Lee of BMO Nesbitt Burns.

"There was general agreement that some sort of European firewall had to be set up but the amount was still under debate," she said.

"There were reports that it could be as much as $2-trillion but much would depend on how much Europe is willing and able to beef up the existing bailout fund ... and knowing what that amount will be will determine how much other countries (China, Japan, the U.K., etc) kick in to the IMF. It appears that a decision or a plan will be made by (or at) the next G20 meeting in Washington at the end of April."

Separately today, Germany's Parliament voted to approve a fresh bailout for Greece.

TransCanada eyes two-piece Keystone XL TransCanada Corp. plans to build the southern portion of its controversial Keystone XL pipeline as a stand-alone project, using the administration's own words to push what now would be a two-piece program.

The Canadian energy giant also said today that it will reapply for a presidential permit for the pipeline, from Canada at the Montana border to Steele City, Nebraska. It will name an alternate Nebraska route as soon as it chooses one, the company said.

The portion running from the Cushing hub to the Gulf Coast, however, will not be part of that, though it will need regulatory approval, The Globe and Mail's Carrie Tait reports. TransCanada said this new stand-alone project, which has "its own independent value to the marketplace," will cost about $2.3-billion (U.S.) and is expected to be in service by mid-2013 or later next year. The White House welcomed the decision.

"The Gulf Coast project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas," chief executive officer Russ Girling said of the new plan, noting that producers don't have enough pipeline capacity to get to Gulf refiners.

"Gulf Coast refineries can then access lower cost domestic production and avoid paying a premium to foreign oil producers," he said in a statement. "This would reduce the United States' dependence on foreign crude and allow Americans to use more of the crude oil produced in their own country."

TransCanada cited comments by President Barack Obama, who denied the initial application, in reference to its new plan, quoting him as pledging to search for new ways "to partner with the oil and gas industry to increase our energy security - including the potential development of an oil pipeline from Cushing, Oklahoma to the Gulf of Mexico."

The company said it's still working with Nebraska on an alternate route that would skirt an environmentally sensitive region.

"Our application will include the already reviewed route in Montana and South Dakota," Mr. Girling said. "The over three-year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross-border pipeline. Based on that work, we would expect our cross-border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined."

Fiera Sceptre in Natcan deal Fiera Sceptre Inc. and National Bank of Canada are reshaping the ranks of wealth managers.

Fiera today struck a deal to acquire National Bank's Natcan Investment Management for $309.5-million, while the bank gets 35 per cent of the newly merged business, with an option to go to 40 per cent, The Globe and Mail's Shirley Won writes.

"Our goal is to quickly become a major player in the ranks of North American asset managers," chief executive officer Jean-Guy Desjardins said in a statement. "Fiera will have approximately $54-billion in assets under management as a result of the transaction, vaulting our firm into the ranks of the largest independent asset managers in Canada."

Fiera, controlled by Mr. Desjardins, said the deal will put it in the top five of Canadian independent asset managers.

"The transaction fits perfectly with our plan of developing key partnerships in order to grow our reach in selected areas of our wealth management business," said Luc Paiement, the executive vice-president for wealth management at National Bank. "It also helps us keep focused on our own core business of growing our advice-based distribution capabilities, which is one of our strategic priorities."

Enbridge chief to retire Canada's Enbridge Inc. is getting a new CEO.

The giant energy transporter announced today that Patrick Daniel, who joined the company in 1982 and has been CEO for more than a decade, is retiring this year.

Mr. Daniel will remain CEO until he leaves by the end of 2012, but the board appointed to the president's job Al Monaco, who heads the gas pipelines unit and has been with the company since 1995.

"As a board, we place very high priority on succession planning and on developing people to ensure the company's continuing success," said chairman David Arledge.

"Enbridge has an outstanding management team; choosing one individual to lead was not an easy decision. Over his 30 years of experience in the energy industry, Al Monaco has demonstrated exceptional leadership capabilities across the range of Enbridge's businesses."

The company pointed out that its share price has increased by 250 per cent under Mr. Daniel.

Trial delayed BP PLC and the parties in a civil trial are scrambling to reach a settlement related to the massive oil spill in the Gulf of Mexico in 2010.

The trial had been scheduled to begin today, but both BP and the lawyers for the plaintiffs said in a statement yesterday that the court agreed to delay it by a week to allow the company and the plaintiffs' steering committee, or PSC, more time to strike a deal.

"BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill," they said. "There can be no assurance that these discussions will lead to a settlement agreement."

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