On Wednesday the markets continued a yoyo reaction to the developing bank issues.
With Swiss bank Credit Suisse apparently in trouble, market reacted negatively.
The S&P 500 was down 0.7% and With lower oil prices. Toronto was down 1.7%.
Couche-Tard was down 3.2%. After hours it released earnings that were up only modestly. But that was partly because of unfavorable currency impacts as it reports in U.S. dollars. In Canadian dollars, the currency impact was mostly positive. It’s gasoline margins increased once again and are double the historical levels. I keep expecting those high margins to fall due to competition but so far they have not.
With the 5 year Canada bond yield down, rate reset preferred shares got hammered down. These things just never seem to catch a break. The banks seem to be no longer issuing these. The existing issues are mostly small and illiquid and don’t seem to attract institutional investor interest. When the 5 year bond yield goes down then the projected reset yield is lower which is negative. And the recent high short term interest available on GIC and even certain savings accounts provides stiff competition for the rate resets (although rate resets have the advantage of the dividend tax credit).
Aecon Group announced today that it has sold a 49.9% interest in its Bermuda Airport “Concession” for U.S $128.5 million or about $177 million Canadian. The company said this demonstrates the value of the Bermuda Airport Concession. It’s not clear from the press release whether there is a gain or loss on this sale. Looking at the asset value it would be a loss. But since there was substantial debt against this asset it appears it was a gain. I have written to the company for clarification. To me it seems very poor practice indeed to not indicate the level of gain or loss in the press release.
P.S. I got a quick clarification and it seems there is a nice gain on this sale. They did not give the dollar amount but I calculate roughly $100 million dollars which if I am right is roughly $1.00 per share after income tax.