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(February 19, 2007) RBC Capital Markets announced Monday that it has helped Morgan Stanley issue $2.5 billion in Maple bonds, not only the largest transaction in maple bonds, but the largest corporate bond deal in Canadian financial markets’ history.

RBC said it was Morgan Stanley’s inaugural foray into the Canadian bond market. The transaction consisted of $1.25 billion of five-year fixed rate notes, $900 million of 10-year fixed rate notes and $350 million of five-year floating rate notes. RBC said strong investor interest was driven by Morgan Stanley’s high credit quality, strong brand recognition and a favourable new-issue environment.

Larry Bates, managing director of RBC Capital Markets, said the size of the deal is an indicator of how popular the Maple bond market is becoming. Bates said RBC Capital Markets has the leading market share in Maple bonds, foreign bonds issued in Canadian dollars.

“The success of this transaction shows that the Maple market has a healthy appetite for both high-quality issuers and sizeable issues,” he said. “As a result, we’re seeing a great deal of interest in Maples by global issuers. These borrowers view Canada as a great market for accessing financing.”

“We are extremely pleased with the investor reception to and the success of our inaugural Maple issue. This transaction represents the largest ever inaugural transaction in any global market for Morgan Stanley,” said Jai Sooklal, global head of financing at Morgan Stanley. “We look forward to the Maple market continuing to be a significant part of our global financing program.”

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Sentry Select merges income funds

(February 19, 2007) Sentry Select Capital Corp. has proposed the merger of its Mortgage-Backed Securities Trust and MBS Adjustable Rate Income Fund with Sentry Select MBS Adjustable Rate Income Fund II.

If approved, the terminating funds’ assets will be transferred to Sentry Select MBS Adjustable Rate Income Fund II in exchange for units in the fund on a one-for-one basis. The exchanged ARIF II units will have the same aggregate net asset value of the terminating funds, and the price will be set at the close of business on the effective date of the mergers, expected to be April 4, 2007.

Sentry Select says the mergers will benefit unitholders, as the enlarged ARIF II will have the advantage of increased economies of scale and lower fund-operating expenses. The mergers will eliminate the administrative and regulatory costs of operating separate investment funds, provide greater liquidity on the Toronto Stock Exchange and effect a higher profile in the marketplace, resulting from greater net asset value and market capitalization.

Sentry Select also said unitholders of Mortgage Backed Securities Trust will benefit from minimized currency exchange risk and advantageous tax treatment of distributions because ARIF II provides currency hedging and its distributions are generally treated as capital gains or return of capital.

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Laurentian’s chief economist urges investors to diversify

(February 19, 2007) On Monday, Laurentian Bank of Canada’s chief economist and strategist Carlos Leitao released some RRSP and economic tips for everyday investors.

First and foremost, Leitao suggests that investors revise their investor profiles to confirm their medium-term goals and their level of risk tolerance. Leitao said investors should always feel comfortable with the type of transactions made on their behalf.

Secondly, he stresses diversification both geographically and by sector in order to tap into the foreign stock market performance potential. He views this as necessary because Canada’s stock market, with its focus on natural resources and financial services, has been showing solid performance over the past several years and is approaching its growth cycle peak, so it would be wise to consider other markets for investment.

Leitao suggests that investors consider U.S. investments because the recent American economic slowdown should ease in the second half of 2007 and large multinationals, especially those operating in exports, remain a value.

The stocks of large European corporations, now traded at very reasonable multiples, can be a windfall, Leitao points out, and Asia is also a burgeoning market, with a vigorous rate of economic growth.

As far as diversifying by sector, Leitao suggests investors pay attention to health, more specifically pharmaceuticals, as well as consumer goods and high tech.

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(02/19/07)