Posts tagged 'sovereigns'

Disrupting the nation state

Float the idea that borders could soon be a thing of the past and that markets under price this risk, and you may find yourself being laughed out of the room.

But seriously. We do think this is a thing now. More so, it’s a thing that needs the attention of markets.

We’re not alluding to the idealistic visions of hippies, John Lennon or Henry Kissinger. What we’re on about is the potentially disruptive effect of technology (here today) on the relevance of nation states, especially when those states are defined by borders more than they are by cohesive cultural ties. Read more

The naked derivative exposures of banks to sovereigns

As spreads of all colours blow out due to the perpetually unresolved sovereign crisis in Europe, FT Alphaville has been wondering what non-fundamental factors are driving these moves. The bond market is in some places broken and in other places potentially being driven by regulation.

To the extent that the market for credit default swaps influences the bond market, we ponder the technicals of these derivatives that reference it. Here we look at the role played by trades directly between banks and sovereigns. Read more

How dare you, I’m a sovereign

Don’t mess with a non-US sovereign. They still have the power, even if they have deficits.

Risk reported reported in April that US regulators were proposing to make collateral-posting for sovereigns compulsory. Read more

How sovereign bonds should be rated

What happens when you attempt to derive the value of sovereign bonds as indicated by their credit default swap levels? Analysts at Standard Chartered have tried to find out, and FT Alphaville has their results. Teaser: ‘Asian sovereigns generally appear to be rated below where they ‘deserve’ to be, given where the market currently quotes their respective CDS.’ Read more

Sacrebleu! Mon rating est (encore) AAA

Hot off the ratings wire on Tuesday: Fitch has affirmed France’s sovereign rating at AAA.

Quel soulagement.  Read more

Goodbye to the risk-free rate

Morgan Stanley’s Graham Secker has put out an interesting note on the rising cost of capital on Monday.

And it’s not a cheery read if you happen to be a sovereign issuer, given the shift of private-sector debt into the public sector. Read more