Monthly Archives:

November 2010

Ireland in need

Ireland is definitely facing a liquidity crisis, and that liquidity crisis could evolve rightly or wrongly into a solvency crisis. It needs help.

Like any such problem, that help involves emergency short term measures (basically cash funding) and long term advice and financing to solve its structural long term problems. In the next few weeks the short term problem is not the Irish state but the…

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How Secure is Secured? The new trend in HY issuance

Guest contributor Vladimir Jovkovic, Credit Analyst

Issuance in the high yield bond market in Europe this year through October has already exceeded the total issuance for the full year in 2009. The novelty since the reopening of the market in 2009 has been the fact that high yield corporates have been looking to refinance senior secured bank loans into senior secured bonds, rather than the more…

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A Bond Vigilantes video from Mumbai, and some competition winners

I was in India earlier this month to have two days of meetings with company CEOs (thanks very much to UBS’s Ranjit Hosangady, an M&G alum, for organising).  The link below takes you to a short video that I filmed there, with some thoughts about India’s potential as a global player.  In short, demographically India is in the sweet spot for double digit GDP growth for decades to come.  But sticky…

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US monetary policy – “drinking poison to quench a thirst” says the Chinese ratings agency

“Drinking poison to quench a thirst” – that’s Dagong Credit, the Chinese credit rating agency’s, view of the Fed’s monetary policy decisions of late. The recent money printing initiatives (QE2) and Dagong’s perception that the US is less intent on repaying its debts were their motivation for downgrading the US from AA to A+ last week – somewhat below the AAA ratings that S&P and Moody’s have fo…

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How Senior Is Senior?

In the early 1930’s Newfoundland – until that point a sovereign state – was struggling to repay its loans. Rather than default and face the wrath of the British gunboats, it was agreed that the country would be controlled directly from London. Fortunately things have moved on and debt now ranks below a nation’s sovereignty in times of default. Banks are not so fortunate; they aren’t protected f…

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Is an ‘A’ rating the new ‘AAA’?!

We’ve written recently about the bond world going ‘topsy turvy’, in that a consequence of QE may be that the higher inflation economies could end up with having lower yielding sovereign bond yields than the lower inflation economies.

Another way that the bond markets are starting to look topsy turvy is in terms of sovereign credit rating versus a country’s perceived risk of default, whereby a n…

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Currency wars

Recently, we have often spoken about QE, and how it could result in the demise of the bond vigilante (topsy turvy), and the birth of the currency vigilante. Well, we are getting very close to the presumed launch of further unconventional monetary policy by the Fed on the 3rd of November. The market is trying to work out if it’s shock and awe or a gradual siege mentality that the Fed will deploy…

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