Emerging market answers could help ease sovereign woes

Securitisation structures pioneered in emerging market economies could be used to ease debt burdens in peripheral Europe — but the common payment system in the eurozone could cause complications.

  • 30 Sep 2011
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Mike Nawas, managing partner at Bishopsfield Capital Partners, which published research this week suggesting the idea, said: "These aren’t quick fixes for the Greek sovereign now, they are strategies to deleverage and put the economy on a more sustainable footing.

"Redenomination combined with devaluation is an issue right now, there’s no doubt about that — it’s a traditional remedy for countries that need a debt restructuring. The medium term projects would have to start from the premise that this wouldn’t happen."

The research proposes three main avenues to monetise Greek state assets — sale and leaseback, structured sovereign bonds backed by lease receivables, and structured sovereign bonds backed by rental and disposal flows.

The research suggests using the EFSF to provide temporary credit enhancement, a wrap, or collateral guarantees. Nawas said this would allow investors to take a view on a potentially improving economic story.

"Macro is more important than rating, for something like this," he said. "Investors would be doing credit work on the merits of the macro story. Especially if one wants the EFSF guarantee to be time-limited, investors would have to take a view on the improvement of the sovereign rating over time."

Bishopsfield also discussed techniques to delink any transaction from the sovereign rating. "Various structural methods can get round the sovereign problem," said Amir Khan, a partner at the firm. "Offshore cash accounts, future flow securitisations — these all work in the world of EM securitisation, to avoid repatriation and sovereign risk."

However, Andreas Wilgen, senior director at Fitch Ratings, is more sceptical about the practicalities of the ideas. "DPR [diversified payment rights] in Greece is a very interesting question, and we’ve been wondering about it, but our current view is that it’s unlikely to be possible," he said.

"Most payments in eurozone countries go through the ECB’s Target system, which means the central bank credits the account when it receives payment."

This means the ECB acts as the designated depository bank, and would have to sign an acknowledgment agreement to pay money through offshore accounts, allowing the payments to be protected from sovereign risk.

"We don’t think that the ECB will be willing to sign such an acknowledgement agreement," said Wilgen.

  • 30 Sep 2011

Bookrunners of Global Covered Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 2,397.96 9 4.23%
2 SG Corporate & Investment Banking 2,188.22 8 3.86%
3 LBBW 1,773.99 6 3.13%
4 UBS 1,773.35 6 3.13%
5 BNP Paribas 1,771.98 5 3.12%

Bookrunners of Global FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 Jan 2017
1 Citi 8,638.50 15 11.13%
2 Barclays 7,212.69 10 9.29%
3 Goldman Sachs 6,158.31 19 7.93%
4 Credit Suisse 5,544.13 9 7.14%
5 Credit Agricole CIB 4,837.98 10 6.23%

Bookrunners of Dollar Denominated FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 10 Jan 2017
1 Citi 7,161.15 5 19.51%
2 Barclays 5,414.82 3 14.75%
3 Credit Suisse 4,540.95 3 12.37%
4 Goldman Sachs 2,308.61 5 6.29%
5 Credit Agricole CIB 2,294.43 1 6.25%

Bookrunners of Euro Denominated Covered Bond Above €500m

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 SG Corporate & Investment Banking 2,188.22 8 11.15%
2 LBBW 1,773.99 6 9.04%
3 BNP Paribas 1,422.29 4 7.25%
4 HSBC 1,372.05 4 6.99%
5 UBS 1,350.40 4 6.88%

Global FIG Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 Morgan Stanley 365.83 497 7.62%
2 JPMorgan 332.66 618 6.92%
3 Bank of America Merrill Lynch 299.89 590 6.24%
4 Goldman Sachs 276.71 375 5.76%
5 Citi 264.54 592 5.51%

Bookrunners of European Subordinated FIG

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 811.76 5 11.41%
2 Citi 712.63 4 10.01%
3 BNP Paribas 602.64 3 8.47%
4 Credit Agricole CIB 546.86 3 7.68%
5 JPMorgan 436.73 3 6.14%