Derivs - Credit

Portugal's central bank vetoed the sale of one of Novo Banco’s non-core business units on Wednesday, arguing it was protecting the rescued lender’s reputation as its own sale progresses.

A landmark ruling this week that Novo Banco has not triggered a credit event will set a precedent for future European government interventions in banks, market participants said, but it could prompt further amendments to the International Swaps and Derivatives Association's (ISDA) credit definitions.

European credit and equity markets improved for a second day on Monday, after the European Central Bank said that it would consider further stimulus at the next meeting in March.

An external review to determine whether a credit event has been triggered on Novo Banco concluded on Monday, with market participants warning ahead of ruling that a disappointing result could undermine the credit default swap market.

European credit and equity markets suffered a sustained battering this week with financial borrowers facing ever greater scrutiny in the wake of poor results and concerns about their ability to meet coupon payments.

European credit markets, led by the banking sector, have seen risk escalate over the past several weeks with the Markit iTraxx Europe Main index seeing its spread widen to the highs of June 2013. One bright spot however, has been the region’s sovereign credit, which has largely steered clear of the contagion that developed in the corporate market.

Financial market regulators finally have something to cheer about, after a host of recent setbacks, as Europe and the US this week took a big step towards aligning their treatment of central counterparties (CCPs). But the move could also heighten competition for clearing banks in Europe.

Nomura has hired James Milligan from HSBC as head of flow credit in global markets for EMEA.

Europe and the US have taken a big step towards cohesion on their treatment of central clearing counterparties (CCPs), with the European Commission and the Commodity Futures Trading Commission unveiling a common approach towards equivalence between the two CCP regimes.

An unprecedented sell-off of additional tier one paper led to turmoil across credit and equity markets this week, but a sharp pricing rebound left the FIG market looking much different on Wednesday.

UniCredit released its fourth quarter results on Tuesday, but these did little to reassure stakeholders, who have already seen the bank’s share price fall this year to its lowest level since 2012. However, while the bank as a whole took a hit, its corporate and investment banking division (CIB) grew year on year.

After the chaotic conditions of Monday, European investment grade corporate bond issuance took a step back from the turbulence emanating from other markets.