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Issuer's £280m deal was cleverly marketed
With equity returns under strain, managers would do well to slow the pace of CLO issuance
Issuance has kept going by giving investors just what they want
John Healey resigned because the money was not there for defence. It may not be there for anything
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Bear Stearns employees have seen the 80 year old bank they dedicated themselves to building up, and of which they owned a big share, destroyed by a few unsubstantiated rumours. In a time of fear, rumours become facts. What Bear’s death shows is the rapacious danger of financial markets — no sense of either mercy, solidarity or collective responsibility will restrain players from talk that can kill.
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Bankers in the western European syndicated loan market complain that borrowers have not grasped how hard it is for them to offer tight pricing since the credit crisis. But it is the borrowers’ job to push for the best terms they can get. Communicating the new pricing is the banks’ job — the trouble is, they have forgotten how to say ‘no’.
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Financial crises lead to emerging market sell-offs. This time, the sell-off has been muted, as plenty of investors know the emerging markets are not to blame for the present problems. But instead of hesitating, investors should take advantage of the credit crisis to move boldly into emerging markets. Their share of the world economy is only going to grow.
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The launch in October 2006 of LevX — Europe’s first index of leveraged loans — was controversial. Many hailed it as a bold move that could stimulate trading; others picked holes in it. Some of the criticisms were right, and now Markit and the banks are rolling out a new, improved version. Unfortunately, with loan trading going through a famine, it may be a while before the new index’s worth can be properly tested.
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Just when you thought it was safe to go back in the water, the fear is back. Banks are terrified that something nasty is lurking out there — they are demanding more yield when lending to each other and even getting paranoid about collateral that was previously seen as riskless. Central banks are once again having to pump money into the banking system. The horrors of 2007 are far from over.
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Middle Eastern banks are an important source of demand for the big international loans to borrowers in their home region. With Western banks in crisis, there were hopes the Gulf banks would fill the gap. But loan arrangers are finding them reluctant to stump up cash — because they believe the dollar has further to fall.