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(October 2, 2007) DBRS is in a whole lot of trouble with the OSFI. Julie Dickson, the banking regulator’s new superintendent says the credit-rating agency is responsible for the turmoil related to Canada’s asset-backed commercial paper markets.

She says that Canadians were buying ABCP that had only one rating and limited liquidity lines. While S&P wouldn’t report on a product like this, DBRS did.

“[DBRS] believed that general market disruption lines were sufficient, given the higher level of credit enhancement in Canadian structures compared to international structures,” she said at a speech in Montreal. “Sophisticated investors and advisors supported the DBRS view.”

Dickson wants people to know that the OSFI isn’t to blame for the $40 billion ABCP market crash. She points out that there are two types of ABCP vehicles — one sponsored by Canadian banks, and the other by non-banks. The latter type, which DBRS sponsored, was the one that failed.

“Such vehicles chose to negotiate general market disruption liquidity lines exclusively,” she says. “When market confidence waned, these conduits could not negotiate global-style lines and were unsuccessful in availing themselves of liquidity under general market disruption lines, given disagreements over the terms they had agreed to with their liquidity providers.

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Sarbit hires new manager, adds three funds

(October 2, 2007) Former Tetrem Capital Management founder Sam Pellettieri has joined Sarbit Asset Management.

The experienced portfolio manager will head up three new core funds — the Canadian Equity Trust, the Global Equity Trust and the Balanced Equity Trust.

“By adding Sam, an equity portfolio manager who has a similar discipline and approach to investing, we can now offer our style and disciplined approach of money management in the asset classes most requested by our advisors,” says Larry Sarbit, president and CEO of Sarbit Asset Management.

The company is also launching new Sarbit Income Solutions T-Class Funds, which will be available November 1. The funds will offer investors a choice of three different annualized, monthly income options. The T4 class has a 4% annualized target distribution, while the T6 and T8 have a 6% and 8% ATD rate, respectively.

Offered in the T-class series will be the Canadian Equity Trust, the Global Equity Trust, the Global Balanced Trust and the U.S. Equity Trust.

Sarbit also introduced online access for advisors and investors on Tuesday. Now, people can view asset reports, 10% free DSC reports and client statements all online.

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Canadian IPO market reaches new low

(October 2, 2007) Canadian IPOs have been few and far between for 2007, according to a new survey from PricewaterhouseCoopers. So far this year, just 63 new issues are on Canadian exchanges, compared with 95 new issues for the first nine months of 2006. And unless there’s a surge of activity in the fourth quarter, this could be the lowest year for IPOs in a decade, the survey notes.

“At the current rate of activity, it is unlikely we will even reach the 10-year low-water mark, set in the aftermath of the collapse of tech stocks in 2001,” said Ross Sinclair, national leader for PwC’s IPO and income trust services. “We will need almost $1 billion of activity in the fourth quarter just to match the 2001 results.”

Only four new issues made it to the TSX in the third quarter. The TSX Venture Exchange fared slightly better, with 15 new issues, which Sinclair attributes to high metal and commodity prices.

As for the trend in lower IPOs, Sinclair notes that “the loss of the market for income trusts last October has had a number of knock-on effects. Not only did a huge segment of the market disappear, it created a feeling of uncertainty among both investors and issuers. There would appear to be a significant perception of a ‘policy limbo,’ as we see new proposals for the tax treatment of trusts proposed against the background of a possible federal election. In a market with so much uncertainty, everyone is treading carefully.”

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ScotiaMcLeod replaces portfolio advisors

(October 2, 2007) ScotiaMcLeod announced portfolio advisor changes for three of its Pinnacle funds on Tuesday.

Logan Circle Partners replaces Delaware Investment Advisors as portfolio advisor for the Pinnacle American Core-Plus Bond Fund. Munder Capital Management replaces Boston Company Asset Management as portfolio advisor for the Pinnacle International Small to Mid Cap Value Equity Fund. These changes take effect on November 1.

Effective on January 2, 2008, Montreal-based Montrusco Bolton Investments Inc. takes over from Foyston, Gordon & Payne Inc. as portfolio advisor for the Pinnacle Canadian Mid Cap Value Equity Fund.

(10/02/07)