November, 2010
Private equity update
All things considered, this seems to have been a decent year for private equity dealmaking:
Private equity-backed M&A is still way below pre-crisis levels, with values of US$74bln for Q3 this year reflecting a 77% drop in activity from the peak in Q2 2007.
Spanish bonds sin liquidez
The ascent of Spanish bond yields continued on Friday (via Bloomberg):
And according to some analysts, much of the price deterioration was connected directly to Spanish bond illiquidity.
Stefano Di Domizio of Lombard Street Research,
Bleak house (prices) Vol. II
The latest Land Registry House Price Index was released today, recording a negative month-on-month house price change in October for properties in England and Wales.
The headline number is -0.8 per cent (bringing the average house price to £165,505).
An outlier in central bank strength
Spot the odd-one-out in this Bank for International Settlements chart:
It is the UK’s very own Bank of England.
A quick explainer here. What the author, Peter Stella, is trying to do is examine the point at which a central bank’s finances would come under pressure — that is,
[Shameless FT Tilt promo] Zimbabwe – a core holding for 2011
FT Tilt is an online service from the Financial Times focusing exclusively on the emerging world. As a prelude to its December launch, we’re offering our readers a selection of op-eds written by emerging market experts.
First you get the money, then you do the restructuring
Presented without comment (except for that title), the below from Morgan Stanley:
(H/T Former FT Alphaviller Sam Jones)
Ireland thwacks the insurers
Late on Wednesday, S&P cut Ireland’s credit rating from AA- to A. On Thursday, they started poking around Ireland-based insurers, placing negative watches on several companies in common with the sovereign’s outlook.
A two-tiered Black Friday
By Greg Lawless
Black Friday – the day when US retailers finally turn profitable, is upon us. So what are US retailers hoping for this weekend, after two turbulent holiday seasons since the fall of Lehman in September 2008?
The early signs look relatively positive,
When quantity may not matter
Interesting graph courtesy of Jeffrey Young at Barclays Capital:
That’s the quantity of liquidity to the value of the US dollar — with the two bearing less relation to each other than you may suppose.
Bondholders will sue every sovereign
A timely paper from the International Capital Markets Association has just hit our inbox.
The title: “ICMA SOVEREIGN BOND CONSULTATION.”
It might sound dry, but you can readily guess the reasons for it.
Why Chinese rate hikes may be futile
We’ve talked on FT Alphaville about how China is openly looking to quantitative tightening tools for battling inflation rather than outright interest rate hikes.
Much of this is down to the Chinese wanting to strike a balance between such factors as the dollar peg and household consumption,
Markets Live transcript 26 Nov 2010
Markets Live chat transcript for the chat ending at 12:27 on 26 Nov 2010. Participants in this chat were: bryce.elder Neil Hume, FT Greg Lawless BEHola BEAnd welcome to another Markets Live
A cash crunch in China
Newswires are reporting that China’s finance ministry failed to attract enough demand for a bill sale on Friday — the first time this has happened since June.
This is important since the failure could indicate a shortage of cash at banks following the lifting of reserve requirements twice in this month.
QE to set sail in Europe?
Spot the odd one out in Friday’s early price action.
That’s right — it’s Spain.
RTRS-SPANISH/GERMAN 10-YR GOVT BOND YIELD SPREAD AT NEW EURO LIFETIME HIGH OF 265 BPS, 9 BPS UP ON DAY
The 10-year bond yield has now risen over 100 basis points since the start of the month,
Setting sights on senior (Irish bank) investors
Consider that senior debt sacred cow heading for the abattoir.
On Friday the Irish Times reported that officials’ sights had switched from sub-debt investors in Ireland’s banks — to senior ones. From the paper:
Gobbling 93 per cent of eurozone liquidity
A datapoint in the (now age-old) story of eurozone bank reliance on the ECB.
CreditSights have on Friday estimated that banks from peripheral members — Greece, Ireland, Portugal and Spain — have tapped a whopping 93 per cent of net liquidity from the eurozone’s various central banks,
Further reading
Elsewhere on Friday,
- The bull market in shoes.
- A time to think about gift economies?
- Unsound money in China.
- Nassim Taleb looks at what will break, and what won’t.
- The retreat of macroeconomic policy.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Philip Stephens: Capitalism can save the planet
Not so long ago governments around the world stepped in to rescue capitalism. It’s time for capitalism to repay the favour by turning its mind to saving the planet.
Snap news
Breaking pre-market news on Friday,
- KKR-led group buys Del Monte for around $4bn excluding debt — report
- Genzyme CEO says he’s open to linking performance of Campath drug to price of Sanofi bid — report
- Mahindra &
A martingale over Europe
Martingales — doubling up your bet after a loss — seem to be quite the fashionable thing to do at the moment in terms of big currency-defining systemic gambles.
Thursday’s example came from plans for that not-really-saving-much European bailout fund.
Uh oh, bailout fallout
For the archives of unintended bailout consequences, via Reuters on Thursday (H/T the FT’s Anousha Sakoui)…
LONDON/ATHENS, Nov 25 (Reuters) – The Irish bailout has triggered a legal clause allowing the underwriters of Piraeus Bank’s <BOPr.AT>
The €90bn Irish small caps
From the annals of slightly confusing Credit Suisse research headlines (underlining in red is ours):
That’s from a report by analyst Niall O’Connor into the still-unknown costings for recapitalising Ireland’s banks.
Bund-watching
Watch those Bunds — and US Treasuries — for signs of the Europe crisis spreading.
The spread of eurozone peripheral debt to German bunds (think here, here, or here) has become the early warning indicator for sovereign stress/contagion.
Shadow banks, shadow sovereigns
This is not your usual sovereign contagion post.
We’ve argued once before that Ireland’s failed bondholder bailout has unleashed contagion that does not just threaten the eurozone. Sudden illiquidity could also strike banking systems across the core,
Fixing the MBS market, improving QE2
Are you one of the gazillions of people not concerned by surging MBS fails?
Perhaps you should be.
Fails to deliver of Mortgage-Backed Securities (MBS) reached an all-time record late last month,
New Year’s resolutions for Spain
2011 promises to be an interesting year for Spain.
Market focus is shifting southwards following the de facto nationalisation of Ireland’s banking sector. Cue some impeccable timing from Nomura, who predict serious headwinds swooshing across Iberia in the next 12 months.
Burdensharing then and now
You know what’s fun? Financial crisis hindsight.
In September 2006, European finance ministers met in Helsinki to discuss all things eurozone — structural reform, economic growth and even … bailouts.
Beware the reflexivity of Irish bonds
Respected economist Paul de Grauwe, of Leuven University, has a big warning for the eurozone — on the back of the Irish and Greek sovereign crises.
According to him, it was the idea of a sovereign debt restructuring mechanism (or burdensharing for investors) proposed on October 18,
Autonomy decrypted
Autonomy has for the past several months been working on a specific acquisition. This work is ongoing. Recent developments within these talks have given rise to an additional opportunity that warrants further examination which could give rise to an acquisition process that exceeds our original planned time scale.
Markets Live transcript 25 Nov 2010
Markets Live chat transcript for the chat ending at 12:24 on 25 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHello Rabble NHsorry we are late NHjust found something amazing on the Autonomy website