RSS feedCommercial paper
’China’s crouching commercial paper, hidden loan targets
As western commercial paper continues to wither, the eastern stuff is on the up.
Bloomberg wrote on Friday about surging commercial paper sales in China — as companies tap the short-term paper instead of getting loans from banks:
A slow, speedy death for BofA’s conduits
Bye, bye Bank of America commercial paper conduits. We knew you well.
From Asset-Backed Alert:
Bank of America is officially out of the business of running commercial-paper conduits.
The Charlotte bank paid off all of its outstanding conduit paper within the last week or two,
Winding down at the BoE
What’s this? Some good news from the Bank of England?
Out this Monday — a slew of announcements related to the Old Lady’s support programmes for British credit. They include (drumroll please) the following:
Money market funds meet moral hazard
Cast your minds back to August 2007, when money market funds were experiencing their first major crisis. It was far less sexy than what was to follow in September 2008 — when Reserve Primary notoriously broke the buck and sent money markets into panic — but it was one of the earlier manifestations of the credit crunch.
The (near) cash! The (near) cash!
A lack of market opportunities, the increasingly desperate search for yield.
Short-selling info firm, DataExplorers, reports on Tuesday that the amount of commercial paper (CP) and certificates of deposit (CDs) — otherwise known as ‘near cash’ instruments — held by custodians has tripled over the past six months:
Mi casa es su casa – Spanish clearing and collateral
Has LCH.Clearnet single-handedly saved the Spanish financial system?
Early this month, and as the FT Trading Room reported, the Anglo-French clearing house announced a new service for Spanish government bonds and repos.
Moody’s on ‘breaking the buck’ – and 208 near misses
Some 13 months and seven days ago, we were struck with a certain catastrophe.
Reserve Primary Fund — a money market mutual worth about $64.8bn in September 2008 — broke the buck. In other words, its net asset value fell below $1 a share — something which was never supposed to happen.
How Dodd-Frank travels – all the way to Canadian ABCP
DBRS’s Andrew Fitzpatrick has a wonderfully understated way of putting things:
. . . it would be something between ironic and sad if the best-laid plans of the Montréal Accord, a difficult but ultimately successful private-sector restructuring in response to the financial crisis,
Citi’s super senior subprime SEC slip
One of these is a draft version of a third-quarter pre-earnings announcement Citigroup considered making in the credit-crunched October of 2007, in reference to its subprime exposure. The other is what actually went out.
Monday funding fears
So much for any interbank market relief after the stress tests.
The below just out from the European Banking Federation:
That’s about a one-year high for the Euro Interbank Offered Rate.
The slow upward grind of money market rates is a bit of an issue for some European banks.
Sigma-tised – death of a SIV
The saga of Sigma Finance — God’s gift to structured finance writers, with its shadow banking connotations, Gordian Knot connection and ‘event’ associations — is lurching to its end.
On Monday, liquidators of the erstwhile $27bn SIV issued their final statement.
Dollar signs and European bank stress
Whatever happened to the dollar funding crisis?
If you’ll remember — central banks restarted dollar swap lines in May, after fears of banks’ exposure to bad sovereign debt dried up liquidity in the market.
Canadian ABCP saga lives on
Here’s something you don’t see every day; a possible ratings upgrade for Asset-Backed Commercial Paper (ABCP), the short-term borrowings upon which SIVs, conduits and the like, once thrived.
And not just any ABCP either,
Calming down on bank credit risk
Three-month dollar Libor fell just a bit on Friday, breaking with its unsettling rise over recent days, a trend which may have been related to fears over US financial reform and European sovereign exposure.
Cosmic European commercial paper
There’s been much focus on surging Libor of late, but there’s another (sky-high) money market indicator to focus on.
The rate for 30-day European Commercial Paper (ECP) has surged in recent days, jumping 14 basis points this week to 48bps.
PT ≠ MV?
Oh dear. Fed tightening talk abounds and yet there’s still no evidence that all that extra liquidity has got into the system.
Note the latest M-1 multiplier data from the Federal Reserve, which continues to show a deterioration in the velocity of money (H/T Themis Trading’s Joe Saluzzi):
Short dollar leverage?
This is a chart of the inverted trade-weighted US dollar index versus foreign financial commercial paper outstanding.
While the USD is plummeting then, FFCP is surging — suggesting foreign banks may be tapping the market to borrow cheap dollars.
Sympathy for the money market funds
What’s this? Obama’s economic adviser and former Fed chairman Paul Volcker wants to regulate money market funds like banks.
Via Bloomberg:
Aug. 25 (Bloomberg) — Paul Volcker, the former Federal Reserve chairman who is an adviser to President Barack Obama,
CIT saved, but troubles still brewing in the CP market
David Rosenberg of GluskinSheff draws attention to the continuing contraction of the US commercial paper market, one of the main portals of funding for medium-sized enterprises in the country. In his latest report he writes (our emphasis):
Commercial paper market shrinkage
Federal Reserve data released on Thursday shows no improvement in the commercial paper market.
In fact,the size of the outstanding market has shrunk to a record low:
Of course, a lot of this is down to alternative facilities,
Consumer data raise recession fears in US
Evidence that the US is in recession grew on Thursday as data showed that a sharp cutback in consumer spending in the third quarter resulted in the economy shrinking at an annualised rate of 0.3 per cent,
AIG raises funds from new Fed facility
AIG has raised funds from a new Fed lending facility to repay part of a $123bn Fed loan that is keeping the stricken US insurer alive, in a move that could deepen the political backlash over its use of taxpayers’ money.
GE tests Fed’s CP facility with $5bn loan
General Electric tested the Fed’s latest effort to restore liquidity to the US credit markets, borrowing less than $5bn from the US government yesterday through a new short-term loan facility. The Fed
GE plans to use Fed facility next week
Reuters reports General Electric plans to use the Fed’s new short-term funding facility when it’s launched on Monday. The US conglomerate and its finance arm, General Electric Capital Corp, have registered as users of the facility,
Fed offers $540bn to prop up money funds
The US Federal Reserve said it would finance up to $540bn in purchases of short-term debt from money market mutual funds to shore up a key pillar of the US financial system. Under the scheme the US central bank will lend money to five special purpose vehicles,
Big Macs for all
But more for some.
Recall on Monday that Pimco, the world’s biggest bond manager, attempted to explain the shortfall in lending (interbank and commercial paper) thusly:
Imagine yourself at the drive-thru ordering a Big Mac.
The VERY special liquidity scheme
Forget the BoE’s SLS. Consider HMT’s VSLS:
Specifically the Government will make available to eligible institutions for an interim period as agreed and on appropriate commercial terms, a Government guarantee of new short and medium term debt issuance to assist in refinancing maturing,
McFear
Imagine yourself at the drive-thru ordering a Big Mac. At one window you order and pay, at the other – 20 feet ahead – you pick up your lunch. What if you thought that after paying at the first window,
Bailout: The new frontier?
Just two days after the Tarp finally came into being, is the bailout already moving into its next stage? Namely, companies and states?
Bloomberg has this story today:
Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S.