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’A Kazakh bank falls from grace
RTRS-KAZAKH BANK BTA IN OFFICIAL DEFAULT ON $2 BLN 2018 BOND AS JAN.3 COUPON FUNDS NOT RECEIVED-CREDITORS CITE EUROCLEAR
January 17 marked the end of the grace period for BTA’s missed coupon payment. Creditors wanted this coupon paid before opening talks.
Honey, I shrunk the seniors
We missed this earlier — these are Societe Generale credit strategists’ 2012 forecasts for supply of bank and corporate bonds issued in euros.
Spot the odd (shrunken) one out?
Five years ago,
Albert Edwards: Hold on for a hard landing in China
What are chances of a soft landing for the Chinese economy? Pretty slim if you ask über bear Albert Edwards.
The Société Générale strategist reckons “blind faith” in the competence of the Chinese authorities to guide the economy to a soft landing is misguided.
Spreads and the Citi
Clearly, gaining $1.9bn in revenue from your own credit spreads blowing out must be the trophy asset for the A/W ’11 US bank earnings season…
Citigroup’s Q3 results, out on Monday (total revenue $20.8bn):
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
DVA under the influence at JPMorgan Chase
It’s a good job no one is sad enough to make drinking games* out of US bank financial results (it’s way too early in the morning, anyway)…
Because if you’d taken a swig every time JPMorgan Chase mentioned “DVA”
The supply! The supply!
Maiden Lane’s no lady. She continues to harass Wall Street.
The Federal Reserve has been selling off the portfolio of dodgy Mortgage-Backed Securities (MBS) it acquired as part of its bail-out of AIG.
Morgan Stanley wants you to pay more attention to seniors
Seniors have had a hard time of it lately.
They’ve been usurped by a trendier generation, buffeted by changing times. Now Morgan Stanley analysts want you to consider this frail group. They want you to …
QEased credit – but maybe not for long
It’s money money everywhere and not that much to buy.
Citigroup credit strategist Matt King has a nice note out on Wednesday attempting to delve into the ‘cash on the sidelines’ notion — or the idea that there’s a wall of money just waiting to be invested.
Michael Pettis on China’s useless banks
The Banque Générale Privée was to France, as Chinese banks are to _____.
It’s not a tough analogy, that. Though the idea of comparing an 18th century French bank to modern-day Chinese financials is rather original.
For the millionth time, naked CDS is not the problem
CDS liquidity –> lower yields –> lower cost of sovereign funding. Without protection, many are less likely to buy in the first place, pushing up borrowing costs.
We’ve said it before.
The man who sells the UK’s national debt said it again last week:
Credit Suisse on alert for credit cycle turn
2011 has so far been kind for credit markets. Could that be about to change?
William Porter, head of European credit at Credit Suisse (and of ‘eurozone as a giant CDO’ fame) muses on the subject in the bank’s latest European credit flash.
Europe’s FICC woes
The reporting season for Europe’s investment banks starts this week and expectations are not high…
From Monday’s FT:
European investment banks are expected to reveal sliding revenues from one of their core businesses when Deutsche Bank kicks off the earnings season this week,
China-Japan analogy du jour
Quite a lot of the Chinese economy, as we know, is terribly addicted to easy credit.
The question, though, is who’s actually going to be made to suffer tightening first? And who can pull the proverbial political strings to get by?
Enter…
Sovereign debt burden-sharing, and free-riding
Collective action clauses in eurozone sovereign debt.
What if they don’t work?
The spectre of CACs has been haunting investors in euro government bonds, ever since the EU proposed revising its current mechanisms for bailing out sovereigns.
Risk on, risk off, risk on, risk off
A rather unusual chart from RBC Capital Markets:
And it comes with this commentary — a warning signal for all those enthused by the asset-pumping prospects of QE2. From RBC’s senior credit strategist Simon Ballard:
Credit distortion de crise
It’s been (relatively) good to be a bank creditor. But for how long?
As the FT’s Gillian Tett notes in her Friday column, one of the doubts still lingering — even with the passage of the US financial reform bill — is how to avoid taxpayers funding future bail-outs.
The invisible (BaFin) ban
While it has helped to trash stock markets and launch screaming terror over further political risk in the past couple of days, just how, exactly, is the German ban on naked CDS coming along?
Err…
Barclays Capital’s European Credit Alpha note on Friday provided more evidence that the ban has made an impact everywhere but on naked positions in sovereign CDS.
CDS report: It’s getting worse…
Markit iTraxx SovX WE at 168bp, a record wide
Greece at 875bp (+50), Portugal 450bp (+20), Ireland 285bp (+41), Italy 235bp (+50)
Spain at 290bp (+60) despite successful bond auction
Banks suffering,
WSJ vs Bloomberg on credit investors’ risk appetites
Both Bloomberg and the Wall Street Journal ran interesting — if ostensibly contradictory — pieces on the bond market on Monday.
First the news wire on the appetite for step-up bonds:
Bond Buyers Demand Record Downgrade Protection:
More good news on corporate default rates
We wondered whether corporate defaults had peaked towards the end of last year after Moody’s reported the first decrease in the speculative-grade default rate since January 2008, down from 12.9 per cent in November to 12.5 per cent in December.
Speculative default rates decrease, Moody’s says
Here’s something to boost Monday’s junk bond-craze.
Moody’s reports that the speculative-grade default rate has decreased for the first time since January 2008. Here’s the relevant bit from the ratings agency’s December default report.
The UK has a ‘disturbing parallel’ with Japan, says Posen
The good news — quantitative easing will not cause inflation.
The bad news — we need to reform the whole banking system before QE can be withdrawn.
So says Adam Posen, the newly-recruited Bank of England monetary policy member and “Lost Decade”-specialist,
Six months of the sweet spot, DB says
Some thought the ‘sweet spot’ of the global economic recovery wouldn’t last till the end of the year.
But not Deutsche Bank.
In a note out on Friday, the bank’s fixed income team says that sweet spot could persist for another six or nine months:
Sell bonds, buy stocks, says Credit Suisse
Much has been written about how shrinking corporate bond yields might fuel an M&A boom, but the performance gap between credit and equities persists, despite the lengthening queue of analysts warning that credit markets have run far enough in the short term.
`There’s no free lunch in credit anymore’
So say Deutsche Bank credit analysts Jim Reid and Nick Burns.
They’re looking into credit markets in a note out on Wednesday, and specifically whether the markets have normalised since the start of the credit crisis and the collapse of Lehman Brothers one year ago.
Back to ‘normal’…
European corporate and household credit standards — courtesy of UBS and sourced from the ECB lenders survey:
Tarp exposes US to $23,700bn risk, watchdog says
Neil Barofsky, special inspector-general for the troubled asset relief programme, said that the various US schemes to shore up banks and restart lending exposed federal agencies to a risk of $23,700bn – a vast estimate that was immediately dismissed by the Treasury,
Is Goldman Sachs a giant credit portfolio?
Jim Bianco has a fascinating post at The Big Picture, asking what is Goldman Sachs?
His answer: one big credit portfolio.
And he has some convincing charts, including this one, showing the commercial bank’s (née investment) stock price against the option-adjusted spread of an investment grade CDS index.
Not your average crisis in corporate credit
From Goldman Sachs.
