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’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…
Hung out to dry in emerging Europe
Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe.
Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries,
Erste — exeunt, followed by a CDS bear
Possibly the first bank earnings release in history to tout a complete retreat from the CDS market… though we suppose it would be Erste.
From their Q3 results:
“Following our pre-announcement for the third quarter on 10 October concerns were raised in relation to our CDS exposure.
The Greek collateral grab
From an offering circular for Greece’s May 2012 floating rate note:
It’s a rare case of a negative pledge clause in a Greek bond — most of which lack these clauses, because they were issued under Greek law.
In pursuit of 475,500 stolen European Union Allowances
If you thought illiquid European sovereign markets weren’t enough of a problem — time now to familiarise yourselves with the latest trading quagmire to hit Europe.
On Wednesday, the European Union was forced to suspend transfers of its carbon units,
A guide to eurozone bond auction styles
How much do you want to know about eurozone bond auctions?
How much do you really want to know about eurozone bond auctions?
Given what we’d suggest is a highly premature rapturous reaction to Portuguese and Spanish sales of debt last week,
That EFSM bond crowd
An EFSM crowding out effect? Not necessarily in Spanish or Portuguese bonds.
Europe sold the first (€5bn) tranche of its Ireland-bailout bond on Wednesday. The Commission will pay 2.59 per cent interest on the debt,
The corroding core
Belgium has six months. The rest of the eurozone core has a problem.
Standard & Poor’s didn’t shift the Belgian sovereign’s AA+ rating from a stable to a negative outlook on Tuesday for the usual reasons you might expect with,
Es ist mir (Greek) Wurst [updated again]
If anyone was hoping Tuesday’s Austria-Greek kerfuffle was a slip of the tongue by finance minister Josef Pröll — it seems not. On Wednesday there are multiple reports that payment of Austria’s next tranche of Greek aid will be delayed until January.
Austria invades Greece CDS
To give a flavour of the Greek bailout’s new-found Danube risk — a spike in Greece five-year CDS to 950 basis points on Tuesday. Chart courtesy of Markit:
That’s nearly a 100bps rise intraday. Ouch.
Greek profligacy vs Austrian obstinacy
Tuesday is a big day for European markets, in case you hadn’t noticed.
And not just because eurozone finance ministers are meeting in Brussels this afternoon to talk all-things-Irish. Elsewhere in the currency union — both Spain and Greece had bond auctions earlier this morning.
Adventures in ECB funding – At least Austria’s doin’ all right
Spanish banks’ reliance on funding from the European Central Bank surged to a record in July.
The country’s banks combined use of ECB facilities like the MRO and LTRO rose by €3.5bn to €140bn last month.
Who’s exposed to Hungary (II)
Hungary, look what you’ve kicked off.
JP Morgan published its analysis of which major European banks are exposed to the eastern European nation earlier this Tuesday. And BNP Paribas’ Ivan Zubo and Olivia Frieser have just followed suit with a rundown of country-by-country exposure to Hungary.
Who’s exposed to Hungary
Hungary may be frantically trying to backpedal its way out of the eyebrow-raising, and market-moving, comments made by some of its politicians and spokespeople last week.
But that hasn’t stopped JP Morgan from publishing a table of which European banks are most exposed to the country.
A Grεεk bank run smackdown
Some potentially positive news for Greek banks, for once, and some possible embarrassment for financial blog Zero Hedge on Wednesday.
Harvinder Sian, head of European rates at RBS, is taking the excitable blog to task for its Tuesday story about Greek nationals pulling money out of local banks.
Erste Basel-bothered is Austria
It looks like Austria has one more thing to worry about: The Basel banking reforms.
Part of the Committee’s proposals to `purify’ common equity Tier 1 capital for banks involves excluding minority interests from the regulatory measure.
Austrian CDStrudel
One of the ironies of Greece and now Austria, simultaneously becoming the new sovereign sickmen of Europe, is that this year the two were some of the biggest issuers of government debt.
Per this (dated) note from Deutsche Bank:
A heap of Hypo for Austria
There’s been something of a major bailout in Austria on Monday morning. Hypo Group Alpe Adria, the struggling Austrian lender part-owned by Germany’s Bavarian state, has been nationalised.
For those unfamiliar with the story,
Sovereign CDS liquidity snaps
Did the events of last week in Dubai really send jitters through emerging markets?
Here’s something to ponder in the emerging vs developed market debate — an issue aptly summed up in Deutsche Bank’s 2010 outlook on Wednesday.
Beware the hidden hybrids
Apparently they are not always obvious, as the below press release, from Moody’s, demonstrates.
And spotting hybrids is an important issue right now given that the European Commission is determined to impose the concept of burden-sharing on bondholders — forcing them to share some of the pain involved in state bank bailouts.
Eyeing cash-and-carry bond issues
As has been duly noted by analysts, newspapers and commentators in the last few weeks — the dollar is emerging as the world’s new favourite ‘carry-trade’ currency. (Although, some have suggested it should really be the Great British Kroner.)
With that in mind,
Snap news
Breaking pre-market news on Tuesday,
- Court orders Federal Reserve to disclose emergency loan details — Bloomberg.
- Austrian bank BAWAG, owned by Cerberus Capital, will get a planned €550m of state aid soon — Reuters summary.
Distressed exchange in Austria
There was something of a flurry this week in the world of European debt exchanges, when Austria’s Raiffeisen Bank – the second biggest lender to emerging Europe – pulled without explanation a €500m perpetual exchange offer it had put to market on June 18th.
Emerging market datapoint(s) du jour
Still uncertain as to the relevance of all the fuss over tottering Eastern European, South American or Asian economies? Uncertainty begone. Says JP Morgan’s Joyce Chang, via Felix Salmon:
Total lending to emerging markets is now some $4.7 trillion.
The hills are alive with the sound of Austrian bond auctions
When Eastern Europe was experiencing a spot of difficulty back in the winter of 2009, we saw the crisis spillover into neighbouring of Austria.
Now that the spotlight is once again shining on the region,
Domino theory, Eastern Europe edition
From today’s FT:
Ukraine’s name, by some accounts, means “at the edge” – which is where its economy finds itself today. Austria’s finance minister warned last week of the risk of an economic “catastrophe”