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◆ US RMBS sales in Europe: immigration or vacation? ◆ UBS AT1 makes nonsense of claims of investor fears ◆ The EU's last hurrah in the SSA market
◆ IG investors comfort eat sweet spreads ◆ What can FIG issuers do now? ◆ US HEI securitizations: mainstream or flash in pan?
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Traditional hybrid capital buyers may make way for equity income funds to become the core investor base for the new capital instruments being devised for UK building societies, market participants said on Monday. -
In November, Lloyds Banking Group ushered in a new era for bank capital when it exchanged a raft of tier one and upper tier two hybrid capital securities for a new instrument, called enhanced capital notes by Lloyds but known to the market as contingent capital. Contingent capital is now seen by regulators as a vital tool for ensuring that capital helps keep banks as going concerns in a crisis, while banks also hope the instrument will be an efficient form of capital as restrictions on the use of hybrid instruments increase. The £7bn exchange was part of a record-breaking capital raising, including a £13.5bn rights issue, which allowed Lloyds to pass the Financial Services Authority’s stress tests, free itself from the government’s expensive and operationally burdensome Asset Protection Scheme and hopefully to put the financial crisis behind it once and for all. In an interview with EuroWeek, Thomas Murphy, head of the structured transactions group at Lloyds Banking Group, explains how the idea for contingent capital came into being and the hurdles that had to be overcome in its implementation.
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UBI Banca said this week that it will not call its Eu155m hybrid tier one issue which has a first call date of March 10 2010. The last day for UBI to give investors’ notice of the call to investors was Monday.
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Moody’s will decline to rate some types of contingent capital securities while those that it does rate will likely be non-investment grade regardless of the bank’s financial strength, the agency said on Thursday.
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Standard & Poor’s will not give equity credit to new hybrid capital securities issued by financial institutions until the Basel Committee finalises its proposals on how to treat hybrids, the rating agency said on Tuesday.
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The end of the government guarantee scheme will come earlier than expected for Dexia Group with it set to recover its full funding autonomy by the end of June.
