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’Is(da) derivatives industry misunderstood?
The International Swaps and Derivatives Association has been rather busy lately. In case you haven’t noticed, they’ve been on the public relations offensive, taking notes and calling out what they see as bad reporting,
Your deterrent is my bluff
Two revealing quotes on the EFSF insuring sovereign debt…
The first, via the WSJ:
“It is a system we already know functions well and could encourage foreign investors to come back to the euro zone,
Origins of the EFSF monoline plan
Or, Allianz talking out of its… ah, never mind.
The German insurer has recently taken to touting a proposal for the EFSF to insure sovereign debt.
Interestingly, the nub of the EFSF bond insurance plan was put forth at least nine months ago by a small European consultancy called Redefine.
EFSF – A very European monoline
What the world needs, what Europe needs, is clearly another monoline.
On Tuesday, the WSJ broke the news that a proposal by Allianz for the EFSF to act as a bond insurer was gaining traction. This would enable the firepower of the bailout fund to go from €440bn to something in the region of €3,000bn.
The International Monoline Fund
Odd story in the Guardian on Friday:
Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance. The fund warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece’s rescue…
An unusual letter from the Fed, an unwinding of hedges
That’s a sudden spike in trade volume right around Tuesday of this week. As a reminder, this index tracks CDS on 125 investment-grade names, including the monoline MBIA.
We bring it up because Creditflux reported earlier this week that MBIA CDS rallied (i.e.
Toxic Pub Co. meets toxic bond insurer
You won’t find Ambac mentioned in Punch Tavern’s most recent annual report.
But it’s there. Hovering — waiting — in the background.
The zombie US bond insurer began guaranteeing some of the British (toxic) pub co.’s formidable securitisation programmes back in 2003.
Ambac in critical condition
Ambac to the … umm … Earth’s core:
Shares in the troubled bond insurer dropped 40 per cent on Monday after the firm said it had decided not to make a scheduled interest rate payment due this November 1st.
Basel takes aim at the negative basis
Basel is busy bolting stable doors.
Indeed, one of the big drivers behind new Basel III counterparty risk capital requirements is the infamous negative basis trade.
UBS banking analysts had a good example of the trade last week:
The FSA’s finance fix (Part III): dampening profits
Continued from Part II.
A valuation-based approach may be the FSA’s preferred option for fixing banks’ trading books and fortifying them against future risk, but it’s difficult, to say the least. The very thing the FSA is trying to remedy — inconsistent valuations — seem endemic in the financial system:
Pyxified, Merrill’s subprime sink
Have you ever heard of Merrill Lynch’s Pyxis CDO/SPV/Insert Structured Finance Acronym?
It’s confusing a lot of people this week, after the NYT’s Louise Story exhumed the deal, which she says was a way for the bank to shift its subprime exposure off-books.
Ambaaaac! Trouble in mezzanine tranches of CDOs, that is
Here’s a structured finance blast from the past; some trouble in mezzanine tranches of ABS CDOs.
Last week the ailing (in fact, almost dead) bond insurer Ambac announced it would commute its remaining $16.4bn of of exposure to Collateralised Debt Obligations of Asset-Backed Securities.
[Abacus] ACA’s rather disastrous CDO forays
In addition to being your run-of-the-mill (disastrous) monoline insurer and at the heart of the SEC complaint against Goldman Sachs’ alleged fraud — ACA was something else: a very unsuccessful CDO manager.
Bond insurer blow-up fallout, Las Vegas Monorail edition
Some excellent reporting from Bloomberg on the side effects of Ambac’s part-seizure by its regulator – and for once, for the story has nothing to do with credit default swaps.
Here’s Bloomberg:
March 29 (Bloomberg) — Holders of bonds sold by the Las Vegas Monorail Co.
Ambac’s regulator moves in, CDS likely triggered
Ambac’s shares tumbled more than 20 per cent in mid-morning trade in New York on Thursday, after its regulator moved to take over some of the bond insurer’s more troubled assets – some $35bn worth.
Regulators in Wisconsin,
The unenviable, uncertain future of the bond insurance industry
One of the most common criticisms of the financial media unleashed during the Not So Great Depression was “you didn’t warn us about [insert little known company, acronym, structured product or dubious form of home loan,
Goldman’s collateral damage
Cast your mind back to that SigTarp report, published last month.
Readers will recall there’s been a persistent stink over whether the efforts of the Federal Reserve and the US Treasury to prop up AIG had the effect of bailing out Goldman Sachs — its largest trading partner.
Ambac attack!
On Wednesday bond insurer Ambac stunned investors with what looked like good news.
Ambac Assurance Corp., the main operating branch of the Ambac Financial Group, had been expected by many to reveal a breach of its minimum capital requirement when the company published its third-quarter 8-K this week.
Ambac warns of bankruptcy risk
The train wreck that is the bond insurance industry always provides interesting headlines. MBIA, once the sector’s leading light, on Monday reported a $728m loss for the third quarter of 2009. Ambac, its long-time rival,
Taking out the trash at RBS
The UK taxpayer is now the proud owner of £19.8bn worth of monoline exposure.
And £39.1bn worth of commercial real estate.
RBS’s just-released third-quarter results have a bit more detail on just what is going into the Asset Protection Scheme – the UK government’s plan to insure state-owned banks against credit losses.
S&P junks MBIA
Late on Monday, S&P downgraded MBIA, once the strongest of the bond insurers, by two notches to BB+. That’s right — into ‘non investment grade’ territory.
As RBS’ credit analysts pointed out in a note on Tuesday,
ING, enhanced but not necessarily improved
Netherlands-based ING has followed in the footsteps of US and UK counterparts and returned to profitability in the second quarter, posting a net profit of €71m on Wednesday, down from €1.92bn a year earlier.
Ambac clings to life (updated)
RBS analyst Tom Jenkins described Ambac as being “on life support” in a note on Tuesday; FT Alphaville tends to agree.
The bond insurer (remember those?) said on Monday that it expected to report that its statutory losses on credit derivatives (read: