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GIC Interest Rates INCREASED
March 23, 2020
6:52 am
GR
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Canadian Tire Bank has gone against the trend and raised their GIC rates and are now competitive for the first time in a long time.

1 yr. 2.30%
3 yrs. 2.45%

March 23, 2020
9:22 am
Dean
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.
That's at least 3 FI's that have recently gone against the trend ❗

I wonder what's behind these 'contrarian' movement in rates ❓

sf-cool " Live Long And Prosper " sf-cool

March 23, 2020
10:55 am
GICinvestor
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Canadian Tire owns Mark’s Work Wearhouse and FGL Sports, including the retail companies Sport Chek, Atmosphere and Sports Experts.

Does it have anything to do that most stores have closed due to covid19?

March 23, 2020
11:12 am
Loonie
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Interest rates tend to be higher in countries where the currency is considered a higher risk.
They may be affected by a flight to USD, gold or whatever.

March 23, 2020
11:30 am
Doug
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Don't forget what Canadian Tire Bank funds with its GIC deposits: credit cards, which yield at least 19.95% or higher, per annum, excluding fee-based income. Sure, many people pay off their credit cards each month, so on the collective balances, they're not earning 19.95%. As well, being unsecured credit, credit cards will have higher losses than, say, mortgages. So, their spread isn't truly 17%. However, they've been enjoying wildly successful profitability by under-paying on GICs and HISAs for years.

At the same time, the stock of Canadian Tire Bank Corporation Ltd is down on the order of 40-50% or more. They have a lot of debt beyond just their deposit liabilities. They also fund their credit cards through the Glacier Credit Card Trust, and the credit markets have seized up. That's why the Fed and BoC have announced, or are hinting at announcing in the latter case, at unlimited QE. It may well be that they can't do any new issuances under GCCT, or they've had redemption requests at GCCT, and so they're needing to utilize their previously under-utilized deposit channel.

Irrespective of the credit markets generally, CTC may have breached a credit covenant on their non-deposit debt and had to repay some of that debt. In turn and indirectly, that could affect the amount of capital they hold for their Canadian Tire Bank subsidiary by OSFI. I wouldn't be surprised if Canadian Tire Bank is being watched very closely by OSFI right now—others being the smaller private and publicly-traded mid-tier Canadian banks and trust companies.

This is a good example of how deposit rate changes are not tied exclusively to the BoC's Policy Interest Rate. Think of that at as more of an indicator; it's much more influenced by the bond market yields and the access to and liquidity of the credit markets.

Cheers,
Doug

March 23, 2020
11:31 am
Doug
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GICinvestor said
Canadian Tire owns Mark’s Work Wearhouse and FGL Sports, including the retail companies Sport Chek, Atmosphere and Sports Experts.

Does it have anything to do that most stores have closed due to covid19?  

All stores in Ontario will be ordered closed by Premier Doug Ford, effective tomorrow/Wednesday, as they are almost certainly on the list of non-essential services.

But that doesn't really matter to someone booking a CDIC insured GIC.

Cheers,
Doug

March 23, 2020
6:03 pm
Loonie
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It may matter to someone who is planning on paying their credit card bill in-store to meet a deadline.

March 23, 2020
6:10 pm
Jim Sherat
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Hardware Stores made the short list of "Essential Services" in the US announcement today. Guess we'll find out Wed. a.m. (or through earlier leaks) what Ontario has decided. If they follow suit, I'm assuming CTC would fit the criteia ?

March 23, 2020
7:19 pm
Doug
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Jim Sherat said
Hardware Stores made the short list of "Essential Services" in the US announcement today. Guess we'll find out Wed. a.m. (or through earlier leaks) what Ontario has decided. If they follow suit, I'm assuming CTC would fit the criteia ?  

No correlation between U.S. and Ontario "essential service" list. I've heard, or read, rumours that hardware stores are definitely not on that list. CTC has various banners; its Mark's and FGL Sports stores will certainly be ordered closed for that two-week period. Its Party City Canada stores will be ordered closed. Canadian Tire stores will almost certainly be closed—it's mainly housewares and gardening stuff, with the possible exception for their AutoService business being allowed to be open. PartSource may be allowed to be open, as they sell after-market auto parts. CT gas bars will be on the "essential service" list.

Canadian Tire Bank will likely be permitted to maintain one of their offices, either their Oakville, St. Catharines, or Welland operations, to remain open.

Cheers,
Doug

March 24, 2020
4:55 pm
dougjp
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In Ontario: " Hardware stores and stores that provide hardware products necessary to the essential operations of residences and businesses " Presumably that means CTC. " Motor vehicle, auto-supply, auto and motor-vehicle-repair" CTC again. " Safety supply stores (for e.g. work clothes, personal protective equipment)" Mark's?

All of the above can be open.

Looking down the long Ontario list, my eyes glazed over and got tired trying to finish reading. In other words, and I did try unsuccessfully to Google this, I wanted to read a list of businesses that had to close down, beyond things like jewelry, gifts, fashion clothing and perfumes (Shoppers Drug Mart....?).

Confusing, more bark than bite.

March 24, 2020
5:16 pm
Loonie
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These rules seem so porous that a congregation of viruses should be able to leak through them.
It doesn't say, for example, that their business has to be "substantially" hardware or groceries, just that they have to sell some. Sell a few screwdrivers or cookies and you're in.

March 24, 2020
5:58 pm
Doug
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Loonie said
These rules seem so porous that a congregation of viruses should be able to leak through them.
It doesn't say, for example, that their business has to be "substantially" hardware or groceries, just that they have to sell some. Sell a few screwdrivers or cookies and you're in.  

I thought the same thing, Loonie. I was also, for the first time, very disappointed in Premier Doug Ford. I've respected his leadership until now, but at that press conference yesterday, he hinted these were draconian measures and that there would be extremely limited exceptions to what was "non-essential." The fact that hardware stores, houseware stores, liquor stores, and the like are all included as "essential" sends a mixed message. We've already essentially shut in most of the Canadian economy, so this is hardly anything Earth shattering.

If he were truly serious about believing that shutting in nearly everything to stop the spread of the virus, then he would've ordered closed all businesses except for grocery stores, pharmacies, cannabis stores, gas stations, post offices, and Service Ontario or Service Canada offices.

Doug Ford gets a C- from me for his handling of this. He also talks way too slow, it's almost robotic. I have to say, I think Alberta and Nova Scotia have the right approaches.

Cheers,
Doug

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