A Comment -- General Comments From an Expert (A Commentary)

Province of Ontario 4.3% March 8/17 Bond: - Still thinks there's going to be some declines in interest rates and you are going to get a little bit more capital gain going out the yield curve. Sticking with something a little less risky provincial bond AA is because he is going further out in the term structure.

Corporate Bonds: - Has been a lot of interest rate cuts in the US and in Canada. Corporate bonds did not react the same as government bonds so the yield spreads between these 2 have widened significantly. A lot of that has been the equity turmoil and subprime issues in the US. What is left is a very attractive historical absolute and relative yield spread; the extra yield that you pick up on your corporate yields over government bonds.

Interest rates: - Thinks the government will cut interest rates by 50 basis points next week followed by later cuts in the 2nd quarter.

BCE Bonds 2016/2017: - When the Ontario Teachers’ pension plan announced the takeover of BCE, he sold these as he knew that on a pro forma basis they would have to lever up the balance sheet. Bonds are now trading like BB credits at a very high yield level. He would not be comfortable with these for that length of time.

Loblaws Bonds 4 to 7 years: - Has been a bit of an under performer. Thinks it is a turnaround situation. They are in a tough cycle and have had some supply chain problems. There is a potential for a downgrade and it is still on credit watch but you are getting paid quite a bit. If you do stay short term, which is a good strategy, there is less risk.

Global Bonds: - Last month was a great month for these. General interest rates across the board have dropped quite a bit. Thinks select global markets will do well. One's that are starting from a higher interest rate level such as the UK, Australia and New Zealand are starting to slow and are starting to cut from a higher level. For North America and Europe, Western Europe in particular, a lot of the rally has been done.

Preferreds: - (Q: Why have these not been snapped up? Very good buy, especially with the credit you get for them.) They do have an equity component to them. In a capital structure debt, bonds will rank higher than the preferred equity. Preferreds are still viewed as a bit lower on the food chain. If a common stock gets hurt, the preferred also get hurt. However, they could be a good long-term investment.

Canadian Municipal Bonds: - (Q: Individual investors don't seem to have access to these. Why? What are current rates?) They are very difficult to get, even for institutional investors. There are not that many issued and usually it is done at the provincial level.

GE Capital bond due June 10/2010: - He has no concern with that AAA rated security and will be holding his until maturity. Came out with an earnings miss last week and the stock got hurt, but from a credit standpoint he does not have a problem with that credit.

Bank of Nova Scotia Preferreds: - Bank of Nova Scotia is definitely one of the better run banks. There was a bit of a dip because of credit issues because of the stock market itself.

Canadian Financials: - Chart does not look good but by far has done better than any of the other international and US banks. Tainted by the same brush but they are quite a bit better run. Economy is weaker. No M&A. Dividends and valuations will hold them up so you can own them now and collect the dividends while you wait. Expect they will start to go up later in the year.

Bell Canada bonds 2016 and 2017:- Had avoided these for quite awhile but have now purchased them. About an 8% return, which is 450 over Government of Canada. If the Bell (BCE-T) deal doesn't go through the bonds will rally tremendously. If it does go through, the bonds will be soft and will sell off a little bit. Good risk/reward.

National Bank 4.7% F/F Bond maturing Nov 2/20. In the last 8 years, he has never seen spreads and pick up of yields in financials (like this?). A lot of value in the corporate bond space.

Sprott IPO: - Sprott has done everything correct and have also been correct on their predictions of the price of gold. Have a demonstrated track record of delivery. Depends on the price you have to pay.

Natural Gas: - LNG imports have gone down 80% in one year, so he is very bullish on natural gas. This is the shoulder season right now, so it is a good time to Buy. A lot of stocks might be weak over the next few weeks and this is when he would be looking to buy these. Could see it getting back up to the $12 range.