June, 2010
Ambaaaac! Trouble in mezzanine tranches of CDOs, that is
Here’s a structured finance blast from the past; some trouble in mezzanine tranches of ABS CDOs.
Last week the ailing (in fact, almost dead) bond insurer Ambac announced it would commute its remaining $16.4bn of of exposure to Collateralised Debt Obligations of Asset-Backed Securities.
Fitch slashes BP rating to BBB from AA
Fitch cut BP’s credit rating a full six notches to BBB from AA on Tuesday.
The agency also set its rating watch on BP to ‘evolving’ from negative, as credit risks from the Deepwater Horizon spill remained unclear.
Markets Live transcript 15 Jun 2010
Markets Live chat transcript for the chat ending at 11:19 on 15 Jun 2010. Participants in this chat were: Neil Hume, FT Paul Murphy Bryce Elder NHGood morning NHhola NHand welcome to Markets Live
Blue BSkyB thinking (updated)
The price action in BSkyB on Tuesday morning following confirmation a highly conditional proposal from its biggest shareholder News Corporation.
As you can see, Sky was trading above 700p at pixel time.
Greek government bonds go back to the EM indices
Well, some of ‘em.
Reuters reports that Citi is about to eject Greek government bonds from its World Government Bond Index (WGBI), after Moody’s, the last agency to rate the Hellenic Republic above junk status,
All eyes on broker-dealer internalisation
Last December, the SEC’s Mary Schapiro announced the regulator would be seeking public comment from the start of the year “on a range of issues relating to dark liquidity in all of its forms, as well as the impact of high frequency trading in our markets.”
While the issue of dark pools and electronic communication networks (ECNs) has fetched a fair share of attention in the media,
What €56bn of bond buying gets you
The European Central Bank has purchased €56bn worth of covered bonds via the purchasing programme (CBPP) it announced back in May 2009. The result so far, via Deutsche Bank:
That’s spreads on peripheral Eurozone CBs back at pre-ECB buying levels.
Charting Europe’s grim sovereign-bank loop
“If the Spanish state has difficulty in financing itself outside Spain, then the difficulties will be even greater for those in the private sector.”
- BBVA chairman, Francisco Gonzalez
June 14, 2010 (Via Reuters)
‘If you drill, and you spill, we’re going to make you pay the bill’
That soundbite is from the Democratic majority leader in the Senate, who helped trigger Monday’s 10 per cent slide in the BP share price with his call for a $20bn escrow account. From his website:
Nevada Senator Harry Reid,
Further reading
Elsewhere on Tuesday,
- What the World Cup can teach us about modern portfolio theory.
- The bad logic of fiscal austerity.
- The euro is safer than ever.
- ‘Boy did the Russians screw up,’ or,
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: Love and loathing across the ocean
We now have it on the authority of President Barack Obama himself, notes the FT columnist.
Snap news
Breaking pre-market news on Tuesday,
- News Corp offers 700p a share for BSkyB; Sky’s independent directors want 800p– statement and statement.
- Tesco Q1 group sales up 8.2 per cent — statement.
Moody’s cuts Greece four notches to Ba1 from A3
Moody’s downgraded Greece’s sovereign credit rating four notches on Monday, to Ba1 from A3, outlook stable.
The rating action effectively leaves Greek government debt with junk status.
Here were the rating agency’s reasons for the cut:
[GAIM conference 2010] Arrival of the superhedgies
The great and the good of the European hedge fund industry are arriving by plane, helicopter, superyacht and… bus (me) to Monaco today in preparation for the opening of the 2010 GAIM conference tomorrow – the hedge fund industry’s biggest annual bash.
BP and the vortex of fear
With BP’s share price taking another beating on Monday – it finished 9.3 per cent lower in London – JPMorgan has been drawing clients’ attention to cross current circularity – a situation whereby equity and credit markets look at each other for pricing information,
A US derivatives compromise?
…Well, we’re about to find out.
Details of a compromise on the most controversial bit of US financial reform still outstanding — derivatives trading — emerged on Monday, as legislators tried to merge the House and Senate bills.
Götterdämmerung for Greek banks
Just when you thought it was safe to go back into the Aegean…
The Greek sovereign is already covered by its bailout and has made a (fairly good) start on fiscal austerity (so far) — but the story has just begun for Greek banks.
For BP, breaking up is hard to do
(Click to enlarge).
That’s the corporate structure of BP, according to Citigroup, who supposedly went to the trouble of flow-charting the oil firm in response to client enquiries.
Understandably,
Vince Volcker
As far as the post-crisis cottage industry in ‘the future of banking’ reports goes, here’s one that looks like it’s going places — in the UK, at least.
As the FT reports on Monday:
[UK Chancellor]
Markets Live transcript 14 Jun 2010
Markets Live chat transcript for the chat ending at 11:22 on 14 Jun 2010. Participants in this chat were: Neil Hume, FT Bryce Elder Paul Murphy NHgood morning NHand welcome to Markets Live
Déjà vu all over again in the UK insurance sector
Does this sound familiar?
UK insurance company announces plan for transformational acquisition, funding by a large rights issue, deal maths only stack up if ambitious cost and revenue synergies are achieved.
Seoul unleashes its ‘magic won-booster’
South Korea on Monday deployed what it could call its ‘magic won-booster’, following its weekend announcement of measures to curb forward currency trading and control currency volatility.
The steps,
UK growth forecasts revised downwards
The first growth and public finance forecasts from Britain’s new Office for Budget Responsibility are out and — as expected — they’re lower than the last predictions, made in March.
Britain’s economy is forecast to grow 2.6 per cent in 2011,
Attention Frank Timis! Warzone investment opportunity awaits
International commodity explorers – send for your tin hats and Kevlar vests.
The New York Times reported on Sunday that the US has discovered nearly $1,000bn in untapped mineral deposits in Afghanistan.
Ackermann whiplash
Presenting a new condition for financial markets — Ackermann whiplash.
Whiplash Ackermann Disorder. Symptoms include a market dislocation caused by the abrupt about-face of Deutsche Bank CEO Josef Ackermann on Greece-related subjects.
Sterling in the spotlight
It’s looking like a fun week ahead for the Great British Krona, as we head further into austerity mode for the UK’s economy.
Kicking off the action on Monday are the first economic growth forecasts from the UK’s brand spanking new Office for Budget Responsibility. These will probably cut prospects down from the previous government’s estimates,
Caption contest: Wink, and you’ll miss him (Cuomo, that is)
He’s set his sights on BofAML and the rating agencies. And now they’re set on you!
Felix Salmon points out there’s a lot of 
going on in this ad from Andrew Cuomo.
Come up with a caption for it below (competition details are here).
The phantom securities which haunt the BoE, quantified
Some moral hazard maths du jour, courtesy of the Bank of England.
In the depths of the financial crisis, the Old Lady began expanding the bank collateral eligible for use at its various liquidity operations,
Back to the future, by BIS
Lehman-Greece parallels we are familiar with.
But in the latest edition of the BIS Quarterly Review, the Bank for International Settlements argues that the current eurozone debt crisis has more in common with the slow-burn start of subprime than a sudden Lehman-esque collapse.