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’Barclays visits the securitisation BISTRO
FT Alphaville has outlined how securitisation is getting back to its roots lately, allowing banks to reduce capital holdings at a time when fresh capital is hard to come by.
Basically, they buy protection on slices of their own assets,
Back to the BISTRO for today’s securitisations — Part 2
In Part 1, FT Alphaville discussed the recent resurgence of so-called “BISTRO-type” securitisation deals. These allow banks to lower their capital requirements and defer losses by buying protection on portfolios of assets.
Back to the BISTRO for today’s securitisations — Part 1
The airwaves are once again aflutter with tales of the “shadow banking” sector, owing to the chief of the relatively new Financial Stability Board.
As the FT’s Tracy Alloway also recently reported, the sector was already back to its pre-crisis size at the end of 2010 at a healthy $60,000bn of assets.
Abstractions and morality in modern finance
Over the last three years, modern finance has been bailed out by policymakers and, by extension, taxpayers. But policymakers and financiers are taxpayers too, and hence themselves bear at least some of the costs of the crisis.
Isda has a bone to pick with you (and so can we!)
Alright, you lot, stop it with the ridiculous CDS posts. Stop it! We mean it. And Isda means it too:
It’s hard to overstate the amount of nonsensical chatter on credit default swaps (CDS) in the past few days.
Citi, Credit Suisse settle SEC CDO probe
Sums involved: $285m for Citigroup, $2.5m for Credit Suisse.
From the SEC release:
Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S.
S&P takes away (CDO) diversification candy
Some very interesting proposed changes to Standard & Poor’s rating methodology for CDOs made of stuff like ABS, in the following request for comment, we think:
Standard & Poor’s Ratings
Levering the EFSF — privately… and painfully
Or, old-fashioned fun with default correlation.
By this point it is not looking good (if it ever really did) for the touted levering of the EFSF’s resources by borrowing from, or insuring in some way,
Pre-funding the EFSF
Interesting spot from Credit Suisse’s fixed income analysts on the matter of the EFSF buying bonds (i.e. the ECB’s exit strategy, if it plans to stop the SMP). As they write:
The EFSF is widely thought not to pre-fund,
Eventually, French Spreads Fail (E.F.S.F.)
Or — when markets really do go straight to the senior tranche.
Everyone seems to be waking up to the record spread between French bonds and Bunds at the moment. Having risen in July, it’s reached another record eurozone high on Wednesday of 81bps.
Turn on, tune in. Step out, bail out. Blow up
Therefore we need better tools to ensure that financial market reactions do not endanger countries while they are in the process of implementing reforms…
– François Baroin and Wolfgang Schäuble
These aren’t the eurobonds you’re looking for
Funny old take on fiscal union from the Greek prime minister on Wednesday (via Reuters):
The decision of our European partners to lend us at 3.5 percent, an interest rate just above the one at which Germany itself is borrowing,
Eurozone CDO – it’s triple-A time
Readers may recall a likening of the eurozone to a giant collateralised debt obligation earlier this week.
Greece, Ireland and Portugal formed the equity slice, with Italy in the middling mezzanine,
Eurozone CDO – we have a mezzanine problem
The EFSF is like a CDO. So is the entire eurozone — an analogy which has been made ad nauseum.
The point being that the eurozone is now all about sharing and portioning its members’ debt.
So if you think the eurozone saga has suddenly turned to Italy’s current debt dynamics — think again.
An indecent (Greek) proposal
Confused about the French proposal for Greece? Everyone seems to be.
Here’s what we know — or at least, what we think we know given that nothing has been made public.
Greek government bonds (GGBs) that were to be redeemed between 2011 and 2014 will now be partially reinvested into brand spanking new 30-year GGBs.
Lehman in SCDO trial down under
Bloomberg reports Wednesday on the first day of an Australian trial involving a long-running dispute with potentially interesting consequences for notions of fiduciary duty:
Wingecarribee Shire Council,
Unlucky Corsair Finance
We’ve heard of CDOs swashbuckling with risk, but this is just silly…
On Tuesday, Moody’s junked €200m of notes of Corsair Finance (Ireland) No. 2 Limited, a collateralised debt obligation referencing several corporate entities.
The EFSF chief executive writes in…
Klaus Regling, the chief executive of the European Financial Stability Facility, strives to argue in a recent letter to the FT that he is not in charge of a massive collateralised debt obligation.
For argument’s sake,
Aladdin’s synthetic CDO lawsuit
There are two nominations that go along with this post. One is for headline of the year; the other is the award for worst (synthetic) CDO ever made, quite possibly.
From Reuters on Tuesday:
German
And the financials all went down on Massachusetts
(Excuse the Bee Gees song reference, couldn’t help ourselves.)
As we have already noted, Wells Fargo and US Bancorp on Friday lost what could turn out to be a highly critical case regarding the general legality of bank foreclosures in the United States.
Profit & loss ‘reversal’ at RBS
It’s October 2008.
We’re in the depths of the financial crisis.
And one almighty debate about mark-to-market accounting.
Under an amendment to IAS39, the International Accounting Standards Body quickly grants banks a temporary reprieve from fair value forces.
Balance sheet optimisation BOOM
All hail Standard Chartered’s new synthetic Collateralised Loan Obligation:
2 December 2010, Singapore – Standard Chartered Bank has completed its sixth Collateralised Loan Obligation (CLO), START VI CLO,
Goldman Sachs junk CDO trouble – again
Goldman Sachs must be getting tired of this.
The bank duly revealed it’s the subject of a(nother) class action lawsuit involving one of its Collateralised Debt Obligations (CDOs) in the 10-Q it filed on Tuesday — only to set-off another wave of reports — even though the court filing is old.
Collateralised contagion
Interactive graphics at their best, this.
Network scientist Valedis Krebs has created a visualisation of ownership in Collateralized Debt Obligations (CDOs) — all that securitised cross-ownership.
To make it,
A CDO-esque gold investment
Hinde Capital, the London-based gold hedge fund — with an objective to outperform gold — have put out a note about what they feel are the CDO-esque qualities of the GLD gold exchange traded fund.
And yes,
Goldman’s CMBS switch
Goldman Sachs — pioneers in whacky securitisation structures — have a new one:
Aug. 3 (Bloomberg) — Goldman Sachs Group Inc. is offering to give investors in the highest-rated portions of a bond sale backed by commercial mortgages control in the event the loans go bad as bankers attempt to revive the market.
Phantom European securitisation del día
Is Bloomberg trying to tell us something about the ICO’s new €23bn CLO?
July 26 (Bloomberg) — Instituto de Credito Oficial, a Spanish government agency that lends to businesses, plans to issue 14.8 billion euros ($19.22 billion) of bonds backed by company loans .