Joseph Cotterill
On balkanisation and credit claims
We missed Willem Buiter’s comments on “additional credit claim” ECB collateral when they were published on Monday. But since it’s pretty strong stuff from the Citigroup economist…
(Might need a key.
LTRO credit claims, not so carry trade
Just as “free lunch” appears in a Bloomberg headline on the ECB’s three-year liquidity…
Here’s a pair of interesting analyst reactions to Friday’s details on eurozone central banks’ rules for accepting additional credit claims.
Bailouts and obsolescing bargains
The central administration lacks the management, oversight and co-ordination structures to support effective implementation and long-term management of policy measures, including structural reforms to support sustained economic growth.
Snap news
Breaking pre-market news on Monday,
- Vodafone considering an all-cash offer for Cable & Wireless Worldwide — statement
- Olympus forecasts $412m annual loss, “no concrete talks” on tie-up — statement and report
- Fidessa revenue up six per cent,
Those haircut-heavy credit claims [updated with more haircuts]
Update — apologies for a rather disorganised (and long) post… but we’ve finally gained information from all seven eurozone central banks who’ll accept additional credit claims under the ECB’s new rules…
The EBA bank recap, broken down
No deleveraging because of our recapitalisation exercise, really — or if there is, you’ll hardly notice it. So says the European Banking Authority in a Thursday night release:
(Warning: pie charts follow)
Over three quarters of eurozone bank capital-raising will be about improving the capital side of the capital ratio,
Here be Draghi, on ECB collateral [updated]
Some interesting points about the ECB’s expansion of the collateral it will accept for funding at February’s three-year LTRO, plus a bit on its Greek bonds, from ECB President Mario Draghi at pixel time…
Bank of England ups QE (and tweaks its gilts)
In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus,
Further reading
Elsewhere on Thursday,
- No, banks shouldn’t be in the tail risk-selling business.
- Hempton on Diamond Foods: “There is seldom only one cockroach…”
- Economic recovery complacency?
- Oil &
Pink picks
Comment, analysis, and other offerings from Thursday’s FT,
John Gapper: Don’t put venture capital at risk
Venture capital is now on the same threshold that both banking and private equity crossed before,
Dystopia — safe assets edition
A familiar theme in this year’s Barclays Equity Gilt Study (57th edition, just out)…
(Click charts to enlarge)
But there is a twist — Barclays Capital tried to estimate the percentage of “safe”
Greek funny money
Greece is not printing its own money already. No drachmas are being issued by Greece, nor is there monetisation of public debt. However….
And with that rather tantalising intro — Stephane Deo of UBS blows the lid off something we’ve been wondering about Greece for a while.
Greece’s biggest holdout, dealt with? [updated]
Goodbye to one massive FT Alphaville bugbear, anyway? An interesting story from Stephen Fidler of the WSJ/DJ FX Trader:
The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value,
LTRO-ing, with Magnus
Intesa Sanpaolo’s chief executive says he’ll use ECB funds to buy Italian bonds…
BBVA sells the first senior unsecured bond to be issued by a Spanish bank since October… (like Intesa a few weeks ago.
Glenstrata — some backlash? [updated with more backlash]
The Scheme will be subject to the following conditions:
2.1 its approval by a majority in number of the Scheme Shareholders who are on the register of members of Xstrata at the Scheme Voting Record Time,
Further reading
Elsewhere on Tuesday,
- Stigma (for some) in tapping the ECB’s LTRO.
- Barry Ritholtz has a secret about Hank Paulson.
- MF Global, the preliminary trustee report.
- Why a freezing Europe needs a) Qatar b) shale.
You either love it or you hate it, Morgan Stanley edition
This Bloomberg Markets headline (koan?) attracted puzzlement on Monday:
Gorman Embracing Vegemite in New Wall Street’s 15% Bogey at Morgan Stanley
The anecdote behind the headline is just as off-the-wall:
Otto’s revenge
- Parachuted in by the great powers of the time
- Specifically, parachuted in by the great powers of the time to ensure Greek payment on their sizeable official loans
- Subordinating Greek sovereignty to a German budget commissioner
- Ordinary Greeks taxed to the hilt,
Further reading
Elsewhere on Monday,
- Go to the gym and stop reading the doomers.
- Though… Krugman on jobs: “no, things are not O.K. — not remotely O.K.”
- Theorising January’s jobs report.
- So, we can blame ETFs,
Imagine no recoveries in bank senior debt
Seems kinda churlish to throw this out amidst the biggest bank bond rally since 2009. But…
We believe investors should assume a low (possibly 0%) recovery rate on most senior unsecured bank bonds
In practice,
Squeaky Bumi time
We can’t let this Bumi RNS go unnoticed:
REQUISITION OF GENERAL MEETING
The Company announces that the Directors have received a notice from Borneo Bumi Energi & Metal Pte. Ltd, being the holder of not less than 5 percent of the paid-up voting share capital of the Company,
The preferred, puzzling, ESM
Eurozone states signed the final version of the treaty establishing the European Stabilisation Mechanism on February 2.
(Click the image for the full document)
The ESM treaty now heads for ratification by 17 states,
Breaking the Bank (in gilts)
This’ll be a controversial argument about the Bank of England’s buying of UK government debt, we know… but it comes from Philip Rush of Nomura:
Aggressive quantitative easing brings [gilt] market capacity constraints into play.
CME’s farmer fund
This looks like a sign of the post-MF Global shift in the futures market…
CME Group has unveiled its own $100m insurance fund for family farmers and ranchers, co-operatives etc who are clients of its clearing members.
Who tapped the LTRO, cont’d [updated]
Just one name today, but hopefully it rams home why banks are using the ECB’s three-year liquidity. From BBVA’s latest results:
Making use of the new lending facility provided by the European Central Bank (ECB),
Pink picks
Comment, analysis, and other offerings from Thursday’s FT,
Charles Goodhart: Longer-term forecasts are a step backwards
Neither central bankers, nor anyone else, have a good way of predicting future fluctuations in either output,
We want negative Treasury yields
Interesting exchange in the latest minutes of the TBAC – Treasury Borrowing Advisory Committee, which brings together primary dealers and US Treasury officials… (Hat-tip Bondscoop)
The question was asked if it made sense for Treasury to permit bids and awards at negative interest rates in marketable Treasury bill auctions.
Crunch de crédit continu (et collateral)
There’s a new ‘how is sovereign debt hurting you?’ question in the European Central Bank’s regular bank lending survey…
… which presents an interesting break-out of collateral concerns .
Just under one-third of banks said that sovereign pressures had affected funding between December and January.