The View

  • Ukraine shows the difficulties of reform

    Ukraine shows the difficulties of reform

    Less than a year ago, international investor optimism about Ukraine was high but the journey to western style reform since then has shown just how hard a road it can be to travel.

  • Lack of CLO ratings transparency damages credibility

    Lack of CLO ratings transparency damages credibility

    Rating agency reviews of CLOs are not resulting in mass downgrades in Europe. That has caused some to question what is going on given the damage the coronavirus pandemic and lockdowns must surely have had on certain sectors of the economy that some CLOs are exposed to. Some transparency around ratings metrics would help soothe the angst.

  • Is Monzo at risk of a capital crunch?

    Is Monzo at risk of a capital crunch?

    The auditor for digital bank Monzo warned that a slower than expected recovery could lead it to breach its capital requirements, even though at the end of February it had a much better capital ratio than traditional banks. So what’s going on? GlobalCapital wonders if the risk is more about investors’ appetite to continue funding an unprofitable business than the bank breaching the requirements in the next few months.

  • Social revolvers are the feelgood hit of the summer; more firms should get involved

    Social revolvers are the feelgood hit of the summer; more firms should get involved

    Canny loans bankers have devised a social revolving credit facility structure that links a portion of a borrower’s debt directly to Covid-19 era relief spending. It’s a structure that won’t take the markets by storm on what is likely the eve of global recession but ESG-minded investors should still push hard for the companies they own to consider this new type of funding.

  • Luckin Coffee: a crackdown or a sideshow?

    Luckin Coffee: a crackdown or a sideshow?

    China’s hands-on approach into investigating Luckin Coffee signals that the regulators are serious about cracking down on financial crimes by corporations. But the full extent of their commitment will only be revealed by how they tackle similar problems in the future.

  • Argentina bondholders can expect more political pressure

    Argentina bondholders can expect more political pressure

    In recent weeks, Argentina’s PR agency has been cramming the inboxes of financial journalists as the government goes on the attack in an apparent attempt to guilt-trip dissenting creditors into accepting its restructuring offer.

  • Deposit tiering change less harmful for covered bonds

    Deposit tiering change less harmful for covered bonds

    A prospective improvement in the European Central Bank’s deposit tiering facility mitigating the punitive impact of negative rates should be bad for covered bonds, 95% of which are negative-yielding. However, the unprecedented scale of reserves held on deposit with the central bank implies that many key investors will still be looking for anything that pays more than its deposit rate of minus 0.5%.

  • AT1s are becoming a thorny issue for regulators

    AT1s are becoming a thorny issue for regulators

    When the European Central Bank (ECB) is suggesting the additional tier-one market could cost the euro area up to 0.25% of GDP growth in the next year and a half, it is probably time to start thinking about reforming the asset class.

  • Troika paranoia could hamper European recovery

    Troika paranoia could hamper European recovery

    The European Stability Mechanism stands ready to lend eurozone countries up to 2% of their GDP at negative rates — but in spite of the clear cost savings compared to market funding, countries have yet to take up the offer. It is time to rid ESM lending of its stigma.

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