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Below you can see an infographic courtesy of creditscore.net, that shows the United States’ credit rating compared to that of other countries that rank in the top 20 of Sovereign Credit Ratings.
Via: Credit Score
The graphic is a bit outdated, because as you can see, the United States still holds its highly valued AAA Credit Ranking, but in fact it lost that coveted status in July from the very agency whose data was used on the creation of the above graphic, the Beijing-based entity called Dagong Global Credit Rating .
Criticism has aroused over the downgrade, since its results differ sharply from those offered by the Big Three (Standard & Poor’s, Moody’s Investors Service and Fitch Ratings). For one Dagong granted higher scores to developing nations like China, Russia and Brazil, while coming out with lower ratings for other established developed economies including Britain, France or Canada. In the end, Dagong deemed China’s creditworthiness superior to that of America.
“The U.S. is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings,” Guan Jianzhong, chairman and president of Dagong, recently complained to the Financial Times.
Many share Guan’s skepticism. Seemingly oblivious to its mounting trillion-dollar deficits, the Big Three continue to rate the U.S. with an AAA and a “stable” outlook. But they’ve been wrong before. Over the past decade, they failed to predict the implosions of Enron and Lehman Bros and they handed AAAs to dodgy mortgage-backed securities, thus contributing to America’s housing bubble.
Dagong’s describes its Sovereign Rating Methodology as “a complex process of analysis”, that has met with some approving nods in Asia, where resentment over the Big Three’s perceived bias abounds.
In investment, the bond credit rating assesses the credit worthiness of a corporation’s debt issues. It is analogous to credit ratings for individuals and countries. The credit rating is a financial indicator to potential investors of debt securities such as bonds. These are traditionally assigned by credit rating agencies such as the Big Three (Standard & Poor’s, Moody’s Investors Service and Fitch Ratings) to have letter designations (such as AAA, B, CC) which represent the quality of a bond.
Read more:
Interest Rates Forecasts from Canada’s Big 5 banks
Canadian Mortgage Trends has put together a summary of the latest year-end interest rate projections from each of Canada’s Big 5 banks.
These forecasts come from each of the banks’ economic teams, that obviously have access to every data source, academic study, historical back-test, and analysis tool imaginable. Having said that, Canadian Mortgage Trends also warns that “economist projections are often wrong”, although “they are still one of the better sources of educated opinion on interest rates.”
Among the forecasts presented are:
- Overnight Rate Forecast
(Bank of Canada’s overnight target has a direct impact on variable mortgage rates) - 5-Year Government Bond Yield Forecast
(Government bond yields are major drivers of fixed mortgage rates) - Variable-Rate Mortgage Forecast
(On average, major economists now expect a 150 basis point increase in the overnight rate over the next 16 months) - Fixed-Rate Mortgage Forecast
(Banks foresee 5-year bond yields climbing 127 basis points in the same 16-month timeframe)
Please visit Canadian Mortgage Trends website to view the full reports, but take into account that the forecasts are made by the banks and are subject to frequent change. Data Sources come from BMO, CIBC, RBC, Scotiabank and TD.
Please always discuss your needs and risk tolerance with a mortgage professional before acting on any information you read online. History has shown that it’s near impossible to accurately predict interest rates long-term so remember to use these predictions only as a rough guide because rate outlooks have considerable margins of error.
Home Adaptations for Seniors’ Independence program
The Home Adaptations for Seniors’ Independence (HASI) program offers financial assistance for minor home adaptations that will help low-income seniors to perform daily activities in their home independently and safely.
Who Can Apply?
Homeowners and landlords may qualify for assistance if:
- The occupant is 65 years of age or over and has difficulty with daily living activities due to loss of ability brought on by aging.
- The total household income is at or below the program income limit for the area.
- The home is a permanent residence.
Eligible Adaptations:
Adaptations should be minor items related to loss of ability. The adaptations must:
- Be permanently installed or fixed to the dwelling.
- Improve access to basic facilities within the home.
- Increase the physical safety for the resident. Examples of eligible adaptations are handrails in hallways, easy-to-reach work and storage areas in the kitchen, lever handles on doors and grab bars in the bathroom.
Ineligible Adaptations:
Supportive care and portable aids, such as walkers and household appliances, are not eligible. Repairs, alterations or adaptations not related to the resident’s loss of ability are not eligible under this program.
Work carried out before the HASI application has been approved in writing by CMHC is not eligible.
Financial Assistance
Financial assistance is available in the form of a forgivable loan of up to $3,500. The loan does not have to be repaid provided the homeowner agrees to continue to live in the home for six months (the loan forgiveness period). Where assistance is provided for adaptations for a rental unit, the landlord must agree not to increase the rents as a result of the adaptations.
To find out how to apply for financial assistance, or for more information about this program, please call CMHC toll free at 1-800-668-2642.
Getting Real
After one of the longest bull runs in Canada’s housing history, everyone from real estate agents and mortgage brokers to consumers should get set for a reality check:
* TSX: +25.20
* DOW: -21.42
* Dollar: -1.08c to 97.29 USD
* Oil: -1.31to $80.70 USD per barrel
* Gold: +6.20 $1203.40 per ounce
* Canadian 5 yr bond yields: +.20bps to 2.25.
The spread (based on the NEW MERIX 5 yr rate published rate of 4.19%) is above the comfort zone at 1.94.
| Term | Security | Bid
Yield |
Ask
Yield |
Yield
Change |
Bid
Price |
Ask
Price |
Price
Change |
|
|---|---|---|---|---|---|---|---|---|
| 3 Month | CTB 11/10/2010 | 0.680% | 0.660% | +0.000 | 99.829 | 99.834 | +0.002 | |
| 6 Month | CTB 02/03/2011 | 0.940% | 0.930% | +0.000 | 99.546 | 99.551 | +0.002 | |
| 1 Year | CTB 08/04/2011 | 1.160% | 1.140% | +0.010 | 98.872 | 98.891 | -0.006 | |
| 3 Year | CAN 2.000 09/01/2012 | 1.454% | 1.446% | +0.005 | 101.100 | 101.117 | -0.013 | |
| 5 Year | CAN 2.500 06/01/2015 | 2.257% | 2.249% | +0.001 | 101.099 | 101.133 | -0.003 | |
| 10 Year | CAN 3.500 06/01/2020 | 3.079% | 3.074% | +0.003 | 103.532 | 103.575 | -0.030 | |
| 30 Year | CAN 5.000 06/01/2037 | 3.656% | 3.651% | +0.002 | 122.835 | 122.928 | -0.035 | |
| Last Updated: 10 August 2010 10:21 ET | ||||||||
Benchmarks
Benchmark securities serve as a general indicator of the level and directional movement of the overall market. In the Canadian fixed income market, benchmark (also known as bellwether) securities are the current 3-month, 6-month, and 1 Year Government of Canada Treasury Bills and 2-year, 5-year, 10-year and 30-year Government of Canada Bonds. Benchmark Treasury Bills and Bonds are often used to determine the relative values of other fixed income securities.
About CanDeal
CanDeal is Canada’s leading multi-dealer-to-institutional investor online debt securities trading network (www.candeal.ca). CanDeal’s world class platform provides its participants with continuous access to the deepest pool of liquidity for fixed income products. The CanDeal electronic marketplace is open and available to all institutional investors and investment dealers across Canada. In addition to straight-through processing, online trade allocations, real time trade blotters and confirmations, the system also provides its users with superior compliance and audit functionality. In addition to supporting the entire trade cycle functionality, the CanDeal infrastructure also provides Market Data, Analytics and Compliance Reporting.