Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).
Learn moreAfter the two sides fired shots across each others’ bows — the Republicans through Politico and Obama via satellite — Fitch released a threatening note this morning:
Fitch Ratings’ expectation is that Congress will raise the debt ceiling and that the risk of a U.S. sovereign default remains extremely low. Nonetheless, and in line with our previous guidance, failure to raise the debt ceiling in a timely manner will prompt a formal review of the U.S. sovereign ratings. … Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreYes, it’s very bad for S&P. Australia’s federal court found that the ratings agency had misled local councils through assigning AAA credit ratings to CPDOs which it had failed to check properly.
But since this could well be a landmark case for credit ratings as causes of financial harm… Read more
The rationale here is pretty rational. From the rating agency’s statement on Tuesday…
The negative outlook on the EU’s long-term ratings reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45% of the EU’s budget revenue. The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro area debt crisis. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreA request for comment by Moody’s — on how to rate asset-backed securities experiencing “rapid country credit deterioration”:
(Click to enlarge) Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreCookie Monster: It a horse! It a cow! It a ball! It a pogo stick! It a rump roast! It a moose!
(Reuters) – The European Central Bank is discussing a medium-term plan to scrap rating rules on euro zone sovereign bonds and instead set their value when used as collateral in lending operations on its own internal assessment, central bank sources said… Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreOK. Before reading on… a reminder of how the sausage gets made in EU legislation. Something voted on by Members of European Parliament, or MEPs, still must go to the Council for approval and, quite often, amendment.
With that caveat, some sausage on sovereign credit rating regulation: Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreAnd it’s all free and open source.
Presenting the Public Sector Credit Framework — a quantitative alternative to sovereign and muni credit ratings produced by the agencies. It’s just launched: Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreWashington, D.C., April 24, 2012 — The Securities and Exchange Commission today announced charges against Egan-Jones Ratings Company (EJR) and its owner and president Sean Egan for material misrepresentations and omissions in the company’s July 2008 application to register as a Nationally Recognized Statistical Rating Organization (NRSRO) for issuers of asset-backed securities (ABS) and government securities. EJR and Egan also are charged with material misrepresentations in other submissions furnished to the SEC and violations of record-keeping and conflict-of-interest provisions governing NRSROs.
Full SEC Order here. The regulator has alleged that Egan-Jones made a material misrepresentation in claiming to have rated government debt and ABS — and that it hadn’t — when making its NRSRO application, and that conflicts of interest were present: Read more
Tuesday, January 24, 9am, Brussels…
Blurb: Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreFrom the European Commission in November:
2. More transparent and more frequent sovereign debt ratings. Read more
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreCongressional investigators are stepping up their inquiry into how closely ratings agencies looked into the European sovereign debt bet that sank MF Global, the WSJ reports, citing people familiar with the matter. Randy Neugebauer, chairman of the House Financial Services subcommittee on oversight and investigations, sent letters to Moody’s chief executive Raymond McDaniel and Standard & Poor’s president Douglas Peterson seeking detailed information about the firms’ procedures for determining MF Global’s creditworthiness, the report says, and both had been asked to testify in a new round of hearings on the firm’s collapse in late January or early February. The letter to Mr McDaniel asks when Moody’s “first became aware of MF Global’s exposure to European sovereign debt” and whether Moody’s had reason “to question whether MF Global was subject to risk associated with such transactions”, it says, and the letter to Mr Peterson asks whether S&P took into consideration MF Global’s January 2011 decision to replace its chief risk officer. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreSome are phlegmatic about a downgrade of France’s AAA credit rating:
La possible perte par la France de son triple A vous inquiète-t-elle? Read more
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreShowing a flair for irony we would not expect from a US-based company, Moody’s has made Europe’s morning complete by downgrading the three big French banks.
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreTwo US regulators are proposing big banks stop relying on credit ratings to evaluate the risk of their assets, says the WSJ. The proposal from the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency relates to directives in the Dodd-Frank act. While the proposal only replaces the use of credit ratings in a set of rules for a number of large banks, the newspaper says regulators will likely use a similar framework in forthcoming rules that will apply to all banks, including smaller ones. Read more
Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.
Learn moreAn Asian-led rally is already running out of steam as an air of caution descends on markets, with attention once again squarely focused on sovereign debt worries, reports the FT. The FTSE Eurofirst was down 0.7 per cent in early trading Tuesday morning, ignoring a 1.6 per cent rally in the FTSE Asia-Pacific index overnight. The focus remains on Europe after Moody’s said it was considering a downgrade of the subordinated debt of 87 European banks – primarily in Spain, Italy, Austria and France. Furthermore, talk that France’s sovereign debt rating could be put on “negative” outlook by Standard & Poor’s is also hurting sentiment. But a move overnight by Fitch, the ratings agency, to put the US triple-A credit rating on “negative” watch has reminded traders that the eurozone is not the only part of the world where governments are heavily indebted and facing low growth. In Europe, eurozone finance ministers are scheduled to meet in order to agree details on an expanded European Financial Stability Fund (EFSF). This comes amid renewed pressure from US President Barack Obama for leaders in Europe to prevent a breakup of the currency, reports Bloomberg. Poland’s Foreign Minister Radoslaw Sikorski also made an passionate plea for Germany to take more leadership in resolving the crisis, Reuters reports. Read more
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreRatings agencies delivering disturbing news that we already kinda knew, part 328:
London, 29 November 2011 — Moody’s Investors Service has today placed on review for downgrade all subordinated, junior subordinated and Tier 3 debt ratings of banks in those European countries where the subordinated debt still incorporates some ratings uplift from Moody’s assumptions of government support, with the potential complete removal of government support in these ratings. The review will affect 87 banks in 15 countries in Europe with average potential downgrades of subordinated debt by two notches and junior subordinated debt and Tier 3 debt by one notch. The greatest number of ratings to be reviewed are in Spain, Italy, Austria and France. Read more
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreNo doubt it’s just a coincidence that S&P published new recession scenarios for the eurozone on the same day Brussels began talking about banning sovereign ratings on countries undergoing bail-outs…
However, critically for the EFSF, France would suffer a downgrade no matter what in a double-dip recession, the ratings agency says. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreIt’s not often you see the world’s third-largest issuer of sovereign debt downgraded by no fewer than three notches overnight.
Nor is it very often that you see ratings agencies cut Italy and Spain, and put Belgium on warning, also over a single night. Read more
FT Alphaville broke the news on Monday night that Deven Sharma is to step down as president of S&P, following a review of McGraw-Hill’s strategic operations and only three weeks after its historic downgrade of the US sovereign credit rating.
We spoke with people familiar with the thinking of the company on Tuesday and asked them what this meant for the future of the rating agency and the rest of the McGraw-Hill empire, which is coming under increasing pressure to boost shareholder value from activist fund investors. Read more
Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.
Learn moreThe Justice Department is investigating whether credit rating agency Standard & Poor’s improperly rated dozens of mortgage securities in the years leading up to the financial crisis, the New York Times reports. According to the paper’s sources, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S&P business managers. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S&P’s longstanding claim that its analysts act independently from business concerns, the paper says. As yet, it is unclear if the investigation will involve the other two ratings agencies, Moody’s and Fitch, or only S&P. The agencies’ business practices and models have been highly criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits. Read more
Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.
Learn moreStandard & Poor’s president told a US House of Representatives panel that the country is unlikely to default on its debt obligations but its credit rating could still be lowered if it doesn’t come up with an adequate plan to address spending and its soaring budget deficit, the NYT reports. Deven Sharma said news coverage had “misquoted” a July 14 S&P report as saying that at least $4,000bn in spending cuts would need to be achieved over 10 years to maintain the country’s triple-A rating. He said the figure was “within the threshold” of what S&P thinks is necessary, but declined to specify an amount; saying that “some of the plans” being considered would be adequate. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreThe Obama administration is increasingly concerned that it can only win a deal to raise the debt ceiling at the expense of losing the United States’ AAA rating, Politico reports. S&P reiterated on Wednesday its view that a short-term deficit reduction deal is negative for the rating, Reuters says, compounding its July 14 move to put the US on negative credit watch. In contrast, Moody’s and S&P have affirmed AAA ratings for corporate issuers including ExxonMobil and Microsoft even as they have turned negative on the sovereign credit, reports the FT. Growing calls for the Fed to buy Treasuries in the event of a downgrade sell-off are meanwhile likely to fall on deaf ears, the Washington Post reports. Read more
Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).
Learn moreThen…
“We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.” Read more
Citigroup published a note on Thursday lauding the asset-backed securities (ABS) market for “continuing to exercise leadership in capital market solutions.”
One for Private Eye but please bear with us as Citi goes on to discuss the fascinating and appropriately named Fuel (Ford Upgrade Exchange Linked) notes issued by Ford Motor Credit. Read more
When it comes to what may or may not happen should the US be downgraded, it’s all about the collateral.
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreNot actually a hack — a URL script trick.
Senior European officials lashed out at Moody’s on Wednesday, questioning the timing of the debt rating agency’s downgrade of Portuguese bonds this week and threatening new regulatory action against all three major rating agencies, reports the FT. The high-profile criticism follows long-simmering European complaints about Moody’s and its two competitors, Standard & Poor’s and Fitch, centring on whether they have improperly attempted to influence policy-making in the ongoing debt crisis. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreWhat with the ECB on Greece, and Moody’s on Portugal, it’s been a week to remember the ancient adage (ahem) that “ratings don’t kill sovereigns, ratings users do.”
Predictably, the European Commission didn’t care on Wednesday: Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreAlternative title: The European Central Bank — true maestros of ratings shopping, as bad now as the Fed in the crisis.
There’s a further element to the central bank’s sudden rediscovery of its ability to pick the single best rating produced by agencies for the valuation of collateral, thus allowing it to accept Greek bonds if one rating agency at least keeps the country out of default during a rollover. It’s this idea that some agencies would keep Greece in selective default for only a bit anyway. Read more
Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)
Learn moreRatings don’t kill sovereigns – ratings users do.
There’s an aphorism we’d like observers to remember, as we digest S&P’s warning that the French banks’ Greek debt rollover plan is a sovereign default. Of course S&P will now be attacked for being just one unaccountable rating agency holding the eurozone to ransom, it should appreciate the solidarity of the euro, we should regulate for a good, honest, wholly European challenger, tout suite!, and so on. Read more
| Market | Last price | Today's change |
52 week high |
|
|---|---|---|---|---|
| FTSE 100 Index: FSI As of May 23 2013 16:35 |
6,697 | -143.48 | -2.1% | 6,876 |
| FTSEurofirst 300 Index: FSI As of May 23 2013 17:15 |
1,230 | -26.34 | -2.1% | 1,258 |
| S&P 500 INDEX: WCB As of May 22 2013 05:00 |
1,655 | -13.81 | -0.8% | 1,687 |
| Euro/US Dollar FX Spot Rate As of May 23 2013 21:19 |
1.29 | +0.01 | +0.6% | 1.37 |
| ICE Brent Crude Oil Front Month: IEU As of May 23 2013 21:49 |
102.63 | +0.03 | +0.0% | 119.17 |
| COMEX GOLD 1 FUTURES CHAIN Front Mon: CMX As of May 23 2013 18:35 |
1,392 | +24.40 | +1.8% | 1,795 |
© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
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2Japan's mini crash: Blame China, not just Ben
3Spain's awful unemployment
4The Nikkei: a market abducted by retail
5S&P 2,100, by Goldman Sachs
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