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Premiums may not be at risk of increasing yet but caution should remain the watchword
It will be better for all in the long run if Venezuela can prioritise domestic spending over debt repayments
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
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Predictably, the knives are out for Alistair Darling and the UK government for nationalising Northern Rock. But most of the criticisms are hollow. All along, the government has done pretty much the sensible thing in very difficult circumstances. It is a pity the Virgin deal did not come off, but the government’s plan to nurse Northern Rock back to health itself should not be dismissed out of hand.
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Options for the monoline insurance business are closing fast. Splitting their municipal bond and structured finance functions into separate companies may now be the only viable course of action. But structured finance investors will justifiably hate it — expect a storm of lawsuits.
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A striking feature of the debate over the deepening credit crisis is the absence of one formerly ubiquitous voice: that of the International Monetary Fund. Despite the likely impact of financial turmoil on economic stability in developed and emerging economies alike, the Washington-based multilateral institution has been conspicuously absent from the public debate on the subject.
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For months primary bond investors have lived in fear of the credit default swap market — taking their cue for pricing from CDS prices. But there are signs, in both the US and Europe, that bond investors may be trusting their own judgment again, and buying deals irrespective of what CDS are doing.
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Under intense political pressure, the rating agencies have suggested giving asset backed instruments a different rating scale from unsecured credit. This would not only stigmatise securitisation, but undermine the integrity and benefit of the whole rating system.
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China could become the next subprime. This is the view of a small but growing number of investors and analysts who warn of the perils of blindly trusting in the Chinese economic miracle, even though hard information is very often wanting or unreliable.