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Mention “Basel capital charges” to someone in the securitization business and prepare for a shudder — the industry has had to swallow new rules every year for three years, and costs could still cripple the market. But help could be at hand from another set of Basel rules.
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The inconvenient truth about credit ratings is that they are one of the least bad options for measuring credit risk. Basel’s latest proposal to write the agencies out of regulation will simply introduce new problems.
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If you take a look at the volumes of bank capital sold in 2014 it’s hard not be impressed. Looking at volumes alone, you’d think the year had been an unqualified success. But bank treasurers should learn a few lessons ahead of January.
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Even if you have never sailed a boat through a storm, avoiding a potential one is the obvious choice. But investors in the European bond markets have been sailing into storms they knew were coming all year.
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Industrial and Commercial Bank of China (ICBC) took plenty of plaudits last week, with a unique triple currency additional tier one (AT1) transaction that included a record-breaking offshore renminbi tranche. While some say that the trade was a testament to the depth of the CNH market, that is an argument too far. This was anything but a conventional trade. -
This week the ECB scaled back buying in the primary covered bond market and gave the private sector a chance to set the price.
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FIG dealmaking will return in 2015, but it will be smaller and less exciting than it has been in the past, writes David Rothnie.
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Russian Standard Bank is hoping to take a short cut to Basel III — using a consent solicitation to add write-down language to its old tier two debt. For investors worried about getting caught on the wrong side of the vote, RSB's proposal looks aggressive. But the function of bank capital is to protect the bank, not to simply reward investors without risk.
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Let’s hope FIG issuers learn their lesson from the avalanche of pulled senior unsecured deals over the last two weeks. One failed deal is unfortunate, but four looks careless.
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Martin Taylor, an external member of the Bank of England’s Financial Policy Committee, on Wednesday night delivered a broadside attacking the additional tier one market as it exists today, in a speech to the Oliver Wyman Institute.
