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’Why here? Why now? Why this particular eurozone peripheral?
It’s a question FT Alphaville has been pondering for some time.
Why do markets suddenly seem to ‘wake up’ to the problems of one particular country or market, while ignoring similar and even worse issues in other areas? It is,
Feedback loops to give you (credit) nightmares
It’s a changed, changed world.
The introduction of bail-ins and burdensharing means capital markets will never be the same.
Intuitively, making creditors share some of the pain of public bailouts make some sense,
Default as a state of normalcy
As one senior banker has pointed out to FT Alphaville, it’s very rare for a country to simply grow its way out of excessive debt. Far more common, historically, is a restructuring or straight-out default.
Cembalest changes his mind on the subprime crisis
Here’s something you might have missed during last week’s (UK) holiday.
Michael Cembalest has made a retraction. JPMorgan’s private banking chief investment officer (and reportedly the only JPM-er who refused to do business with Ponzi-schemer Bernard Madoff,
Some intra-eurosystem inequality
The heart of Europe’s single currency union lies not in some grandiose parliamentary hall in Brussels, but in a little-known payment system platform with the unimpressive title of, “Target2″.
Just think of two eurozone banks.
Student loans: debt, defaults and delinquents
The Everest for-profit education network says of a decision to attend one of its colleges: “It’s a decision that deserves respect.”
Perhaps — but it’s definitely risky.
According to new provisional data from the US Department of Education assembled by the Chronicle of Higher Education,
US default risk is 0.05 per cent, Moody’s says
Once upon a time, credit default swaps on US sovereign debt hovered around 2 basis points. They’ve since gone up to a record 100bps and are now at about 40bps:
So the credit market’s pricing in higher default risk,
David Rosenberg’s cartoon-ish 2011
David Rosenberg’s gone all cartoony.
The Gluskin Sheff analyst seems to have given up on on words and is instead using charts — and Loony Tunes — to illustrate his (very salient) points.
The introductory text:
Merkel’s nine-point plan
Ahead of that all-important Thursday meeting of eurozone finance ministers in Brussels — German chancellor Angela Merkel has been outlining her nine-point plan for “Wirtschaftsregierung” (literally economy-government) in Europe.
Votes for notes
Here’s a novel solution to the problem of excessive public debt: democracy.
Presenting the idea of vote-sharing bonds, via Hans Gerbach of the ETH in Zurich.
And here’s how it might work.
A government wants to increase expenditure to fund new measures.
BarCap predicts Europe’s distressed debt destiny
Whither all those rubbish European bank assets?
There are plenty of soured loans lingering in the system, on top of a €500bn-outstanding leveraged loan market still being shaken out.
Barclays Capital believes both these things could be the foundation for new European distressed debt market. And it starts around now.
BarCap vs HUD on Hamp
We do enjoy a good calling-out here on FT Alphaville, and on Wednesday, a pair of credit strategists at BarCap provided a neat example of the genre.
In a report headlined “Misleading Reporting of Mod Performance in the June HAMP Scorecard”,
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.
CMBStress
That is some jump in the CMBS delinquency rate:
That’s from credit rating agency Realpoint Research, who estimate that the delinquent unpaid balance for CMBS increased by $9.87bn to a one-year high of $28.65bn in June.
Devil’s in the details for defaults
An interesting report is out from Standard & Poor’s on Friday, entitled “The Devil is in the Details: Understanding the Variation in Corporate Default Rates and Rating Transitions.” Now doesn’t that sound exciting?
(Ahem)
The thrust of the piece is that while it’s obvious global corporate default rates increase overall in times of crisis,
Annals of totally unsurprising defaults, RH Donnelly edition
RH Donnelley publishes telephone directories, which is possibly the only form of print media more distressed than newspapers (and this even despite the relative absence of echo-chamber commentary on the matter of its steady and inevitable demise).
Gambling on Monte Carlo simulations
A mathematical model developed by physicists working on the atomic bomb in the 1940s and named after a gambling hub, is probably a fitting one for the US government to adopt in its banking stress tests.
On ambulance chasing and bottom picking
A curious little indicator as to whereabouts we are in the credit cycle this:
Bankruptcy-related M&A.
(Or in other words, shotgun mergers and acquisitions being made where one – or both – merging parties would otherwise go bankrupt.)
Note in the graph below,
What’s driving mortgage defaults? Not just negative equity
Homeowners in the US are defaulting on their mortgages at record rates, and commentators are increasingly casting the blame on “negative equity”.
The term applies to those borrowers whose loans are now worth more than the value of their homes,