Claudius was a Roman emperor from AD 41 to 54.
Claudius notes are Tier 1 instruments that were issued by Credit Suisse back in 2010 and which feature a call date that first comes into effect in December 2015. Except, as bank bond investors have experienced from time to time, the issuers of such securities have an unnerving tendency to sometimes behave unexpectedly. Credit Suisse made some noise when it released earnings last week that it may call the Claudius bonds thanks to something known as a “regulatory par call.” Read more
Just a small thing from Spain’s latest banking legislation, but a telling thing…
On this quiet, Olympics Friday — some bank bail-in reading, courtesy of a judgement by the High Court of England and Wales.
It’s come down surprisingly hard on a small, but very important, weapon in the armoury of bailing-in bank bondholders: exit consents. Read more
It relates to government-guaranteed bank bonds. In plain English — this appears to be tightening banks’ future use of them as collateral but with exceptions for some banks.
From Tuesday’s decision: Read more
Chart from a new OECD report estimating the value of implicit sovereign guarantees for reducing the cost of bank debt…
Why shouldn’t equity and (at least in the short term) Spanish bonds rally?
The average maturity of a euro of liquidity provided by the ECB on December 1 was 46 days. Today [March 5] it is 942 days, an increase of 20 times
– Lorcan Roche Kelly of TrendMacro, on the ‘time quality’ of €1.1tn LTRO funding Read more
Large international banks from Bank of America to Barclays suffered credit rating downgrades from Standard & Poor’s on Tuesday, the FT reports, putting pressure on their funding costs at a time of strain in the financial system. S&P said it reviewed the ratings of 37 of the largest global financial institutions under a new model that gives more weight to the economic and systemwide funding risks of individual countries. Not all banks were downgraded; 20 of the 37, including BNP Paribas, remained stable, and two Chinese banks were upgraded. Seven of eight US banks reviewed had their ratings cut. BofA, which was downgraded from A to A-, said earlier this month that a one-notch ratings cut could force it to post $5.1bn of additional collateral against trades. Other banks are likely to face similar pressure. However, on pure funding costs, Citigroup said less than 1 per cent of its funding would be affected. Although the announcement came after US markets closed, CDS on bank debt was already rising during Tuesday, according to Markit, with BofA rising 21 basis points from Monday’s close to 480bp.
Morgan Stanley is not making recommendations about which European banks to invest in. They are just telling you which ones are even worse than other ones, as they go through the exercise of banks deleveraging assets to the tune of somewhere between €1,500bn and €2,500bn. From the introduction of their report published this Friday:
We make no changes to our most/least preferred today, although we are very conscious the call here is more relative than absolute until we see a “regime change” in the way Europe is handing sovereign crisis, given our concerns of bank deleveraging, stress in bank funding, stress in bank capital and fiscal consolidation being very negative for economies and thereby bank earnings. Read more
Goldman Sachs and JPMorgan Chase issued more than $2bn in new long-term debt on Wednesday, reports the FT, as the banks looked to take advantage of calmer markets and lock in funding from new sources. The offerings on Wednesday – which came a day after Goldman reported only its second loss as a public company – included 50-year bonds from Goldman pitched at retail investors with a $25 price tag and a yield of 6.5 per cent. JPMorgan sold $1.75bn of 10-year notes. Goldman also announced plans to sell its first sukuk bonds – debt compliant with Islamic usury law – via an offering on the Irish Stock Exchange as part of its diversification effort. The planned $2bn Islamic bond programme was approved on Wednesday by the Central Bank of Ireland and represents the first attempt by Goldman to tap the sukuk market. “There’s been a lot of investor demand lately,” said one banker. “When you see that and you’re done with earnings you take advantage of the stable window.”
Commercial insurance payouts for global catastrophes in 2010 = $43bn.
Taxpayer insurance payouts for Irish banking catastrophes from 2008 onwards = $96bn. Read more
‘In the interests of providing public information…’ Ireland’s central bank just released details on outstanding senior and subordinated debt issued by Irish banks. You know, the stuff in the bail-in firing line (notably the bonds in the third column of this chart):