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’Decommissioning Dexia — a collateral story
(Aren’t all the best stories collateral stories nowadays?)
Cast your minds back to December. Borrowing from the ECB Marginal Lending Facility is ballooning past €5bn – and staying there for days on end – despite its penalty rate.
Sovereign downgrades and the eurozone
As S&P decides whether to downgrade Germany and the five other triple-A members of the eurozone, RBS considers who would be hardest hit by the move other than President Sarkozy and his re-election hopes.
Dexia’s collateral-crunching guarantee
It is an irrevocable, unconditional, direct, autonomous and first demand guarantee. The guarantee is joint but not several, and the allocation between the States (respectively 60.5, 36.5 and 3% for Belgium,
Snap news
Breaking pre-market news on Monday,
- Dexia provisionally secures temporary guarantees — statement.
- Tui Travel says happy with Winter trading but bookings have slowed since previous update — statement.
Dexia’s midnight liquidity
Nov 23 (Reuters) – France, Belgium and Luxembourg are discussing how to provide temporary state debt guarantees for failed financial group Dexia… the deal has still to be confirmed, leaving the bank dependent on emergency liquidity assistance of about 30 to 40 billion euros ($40.5 – $54 billion),
Snap news
Breaking pre-market news on Wednesday,
- France, Belgium Luxembourg seek temporary deal on Dexia — report.
- Compass Group launches £500m share buyback; dividend up 10 per cent — statement.
- Playtech launches £100m equity fund raising;
Snap news
Breaking pre-market news on Thursday,
- Dexia confirms Dexia Bank Belgium nationalisation, agrees terms on sale of municipal lending arm — statement.
- Competition Commission provisionally clears BATS/Chi-X Europe merger — statement.
“Voluntary” Greek bond exposure quotes du jour
At a conference in the German capital, [Deutsche Bank chief executive Josef] Ackermann also said the bank’s obligation to hold Greek bonds had cost it 400 million euros this year.
That’s via Reuters. No one’s forcing Deutsche to hold the debt,
Undexia
DJ: DEXIA CEO: BANK TO REMAIN PUBLICLY TRADED
Update — speaking of zombies… Interesting to note that the €90bn 2011 edition of Dexia’s state guarantee bears a term of 10 years. The €150bn 2008 version guaranteed debt with a maximum maturity of three years.
Snap news
Breaking pre-market news on Monday,
- Dexia rescue plan announced; France and Belgium to provide €90bn of guarantees — statement.
- Michael Page says markets have weakened; visibility reduced — statement.
Dexia still bringing stress to a town near you [updated]
Dexia isn’t just a Franco-Belgian basket case; it’s your basket case too. And since there’s been a bit of talk about the link between the bank and the US muni market here’s our quick take.
As the FT’s Nicole Bullock reminds us,
CDS as omens of impending doom: starring Morgan Stanley
Sometimes CDS react violently to sudden events that were unpredictable. Sometimes they react to pure, unadulterated uncertainty and fear. And sometimes, just sometimes, CDS spreads are full of hot air.
Dexia garantie (encore) [updated]
RTRS-FRENCH, BELGIAN GOVTS, WITH CEN BANKS WILL TAKE ALL NECESSARY MEASURES TO SAFEGUARD DEXIA SA ACCOUNT HOLDERS, CREDITORS -FRENCH MIN
RTRS-BELGIUM AND FRANCE WILL GUARANTEE DEXIA’S FINANCING -FINMIN STATEMENT
(Chart via Scott Barber of Reuters)
There is already a patchwork of state guarantees within Dexia’s capital structure but this new statement is an important move.
Dexia en chute encore, encore
What’s French for penny dreadful?
(Centime horrifique? — Ed.)
Related links:
Crisis-hit Dexia running out of time – FT
Dexia en chute encore – FT Alphaville
Snap news
Breaking pre-market news on Tuesday,
- Dexia starts work on bad bank for its non-strategic asset portfolio — statement.
- UBS expects to report modest net profit for third quarter; benefits from Sfr1.5bn of own credit gains — statement.
Dexia en chute encore
Sauver le financement des collectivités, oui, sauver le soldat Dexia, non!
…Or Dexia, getting in trouble, again.
There’s a meeting between the French and Belgian finance ministers on Monday about its future,
Snap news
Breaking pre-market news on Monday,
- Belgian and French finance ministers to discuss ways to shore up Dexia — report.
- Barclays and BofA looking to sell stake in Archstone — report.
- Numis Corporation says H2 revenues up 6 per cent — statement.
Eurocrashing again [updated]
Euro at a four month low against the dollar (chart via Reuters)…
The Eurostoxx 600 banking index tanking…
(Unicredit already suspended after hurtling through trading limits, Credit Agricole down 4 per cent,
Eurocrashing [updated]
Europe’s biggest fallers at pixel time (via Reuters). Notice a trend?
The Italian 10-year bond yield is above 5.5 per cent. Its Spanish peer is closing in on 6 per cent…
Updated — Spanish 10-year through 6 per cent.
Top of the Greek bond exposure pops [updated]
Emphasis on the popping. Worth listening to this as you scroll down the below table, compiled by a clearly nostalgic Laurent Fransolet of Barclays Capital…
None of the exposure is surprising,
Risk remains… off
More of the same on Thursday morning as commentators set nerves on edge by referring to Greece as the eurozone’s Lehman moment.
And so, the euro has taken further punishment, breaking its 100-day moving average for the first time since February.
Oh dear oh Dexia [updated]
Update (1215 UK time): It was an accelerated asset sale, as Les Echos reported below, but quite a nasty one — into fire sale territory — with €3.5bn losses being booked this quarter.
From Dexia’s statement:
Fiscal anxiety crosses the pond
Here is an arresting graphic (click to enlarge):
The Bloomberg chart above shows the 5-year CDS for California, Illinois and New York, bond insurer Dexia added for context.
This chart is being circulated in the wake of a piece in Tuesday’s FT which focused on increased investor concern about rising local government debt in the US:
Dexia faces business break-up
Dexia, the Franco-Belgian bank that received repeated government bailouts, could be forced to sell off its core public-financing division if it fails to convince the European Commission that the business is sustainable,
Burden sharing for bondholders lives!
Remember the hybrid debt, or subordinated bond, attack launched by the European Commission against certain Euro-area banks?
The Commission wanted bank bondholders to share some of the pain of government bailouts,
Good news for banks, IAS 39 edition
Remember the International Accounting Standards Board’s proposed revisions to IAS 39?
The organisation wants to update the accounting standard, which sets out how banks and other companies should value and categorise their financial instruments.
Hybrid debt attack – for real, from Fitch
Woosh. That is the sound of a hybrid debt bomb being dropped on the European market, courtesy of ratings agency Fitch:
FITCH DOWNGRADES LLOYDS, RBS, ING, OTHER EU BANKS’ HYBRIDS ON INCREASED RISK OF COUPON DEFERRAL
Fitch Ratings-London-20 August 2009:
Belgium steps in to shore up KBC
The Belgian government on Thursday offered more state guarantees to troubled bank KBC. The bail-out, which follows earlier assistance for KBC as well as Fortis and Dexia, the rival Belgian lenders, comes after KBC reported a Q1 loss of €3.6bn ($4.9bn),