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Euroblog was delighted to catch up with so many in the market at EuroWeek's bond awards dinner this week. It’s always informative to observe such a group interacting en masse, but this year (and we’re not sure if the different venue was to blame) we couldn’t help wondering if it was a full moon. Bankers across the SSA sector were observed to be behaving rather oddly — or rather their clothes were.
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Securitisation was blamed for causing the financial crisis that was triggered in 2007. But the technique must now be recognised for its potential to resuscitate fragile banks.
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The effects of JP Morgan’s shock $2bn loss in its Chief Investment Office are likely to be felt far beyond the bank. At the very least, it has shattered an already fragile trust in the industry. It may also be the nail in the coffin for traditional measures of risk.
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Euroblog’s readers will need no reminding that these are testing times for the investment banking industry. If regulators aren’t making profit generation more difficult, then economic conditions and, er, Whales are doing a pretty good job of it.
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Puttables have long been seen as the note of choice for struggling banks or market newcomers. But Rabobank’s exceptional structured puttable last week shows the format can be useful even for credits that are deemed to be super safe.
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If Spain steps in to recapitalise its banks, it needs to be done the right way. Contingent capital securities have been OK in the past — but they may not be the best way forward now.
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With most of Europe — come to mention it, most the world — opting for couch versus desk last Tuesday, the week was ideally set up for relaxed lunches. Working so close to Adam Smith’s birthplace rather precludes London-based bankers taking a day off to celebrate a day for the workers.
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Mortgage funding is being squeezed by a pincer movement of covered bond encumbrance and overzealous ABS regulation. But what about whole loan sales? They offer a viable alternative to covered bonds and securitisation — and one that looks increasingly attractive. -
First the periphery, now the core. The euro crisis is well and truly back. But now is the not the time to panic. Senior bankers should be out there calming things down, focusing on their clients and attempting to establish some much needed middle ground between despair and relief.
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Long gone are the days when Cédulas and Pfandbriefe traded within a few basis points of each other and no one could conceive of a covered bond default. Today that prospect is only as remote as a sovereign default. So spare a thought for investors who have no way of hedging their risk.
