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The rollover risks sovereigns are accepting in exchange for cheaper funding
It's not the juniors in capital markets who need protecting from obsolescence. They stand to benefit most from the deployment of AI
Investors and techniques are ready for development banks to scale up securitization rapidly
Risks in exchange-traded funds holding CLOs are real, but there could be scope to relax the rules
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BP is all but shut out of the bond market. Even if it could issue, the spreads it would have to pay would be unthinkably high. Luckily for BP, the loan market is proving more reliable, showing how far relationships can take you.
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As European governments prepare to publish the results of stress tests for banks, they should consider including a sovereign default in the severe scenario. As the fate of Greek banks has shown, no banking system can realistically survive the collapse in confidence following a sovereign nearing default regardless of capitalisation.
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The UK competition regulator has responded to longstanding criticism by listed companies by formally investigating the fees that banks charge for underwriting equity offerings. However, with deal volumes so low in the equity capital markets, they will be hard pressed to find any fees to investigate.
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Spain has leapt to the top the capital market’s worry list this week, just as the Bank of International Settlements has warned the world of another round of financial chaos. It’s time for some calm, sensible heads to help Spain’s borrowers through these volatile and difficult times. On the basis of his remarks on Monday, BBVA’s chairman Francisco González is not one of them.
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Asian lenders are an increasingly powerful force in Europe’s loan market. The spectacular return of retail demand in the last three months has been partly due to their willingness to fund EMEA’s borrowers. But Asian demand is also fragile, and any further rises in funding costs could see it cut back.
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US politicians are finally set to get their first big mouthful of bank flesh over the next two weeks as the financial regulation bill is finally signed into law. With the bill is a provision that will force US banks to spin-off their derivatives business. But this fails to attack the real cause of the crisis. Swaps trading was not the culprit; lending was. For banks it will be a painful and costly exercise. But more worryingly, derivatives business would become even more concentrated in the hands of a few non-US banks, providing a potential source of increased systemic risk to which everybody, including US shops, would be exposed.