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Europe

The decline of covenants in the European leveraged loan market

Guest contributor – Chris Mansfield (Investment Graduate, M&G)

The sustained demand for high yield bonds and European leveraged loans over the past few years, combined with improving corporate fundamentals, has led to strong performance from both asset classes. The large amount of capital available for issuers of higher yielding assets has placed the bargaining power squarely in the hands of th…

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The euro and the dollar: rates not driving performance. So what is?

Despite US rate hikes in December, March and another last week, the US dollar has depreciated back to pre-election levels.  All of the Trumpflation dollar premium has disappeared.  As the Trump dollar trade appears to have run out of steam, the Euro has however been climbing. Optimism around the Euro area growth comeback grew leading up to the ECB meeting earlier this month, with EUR/USD hittin…

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Eight quick bullet points on the Banco Popular resolution

1. The ECB can act quickly when considering if a bank has reached the point of non-viability (PONV), and enacting a resolution plan.  The speed with which regulators acted clearly took the market by surprise.  At the same time, how the regulator determines a bank to be non-viable is still a grey area (considering the situation around some of the weaker Italian banks).

2. EU stress tests are not…

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Premier League footballers are making currency calls, like rappers and models in 2007. Are they right to avoid GBP?

According to recent reports, leading foreign football players in the English Premier League are looking to get paid in euro rather than sterling. Since the UK referendum result in June last year, sterling has fallen by 12% against the euro, so it is unsurprising to see that some players have questioned the denomination of their salaries. It is not the first time that global stars have asked to …

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The book taking France by storm. Économie du Bien Commun – a review.

During my free time in August I read the book that has taken the French political and economic landscape by storm (no, it’s not  “Capital” by Thomas Piketty). Nobel Prize winning economist, Jean Tirole, has written a book entitled “Économie du Bien Commun” (or “economy for the common good”). The book is written in plain language and attempts to reach a large audience, including readers with ve…

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A look at the Swiss economy a year after the currency peg break

A year ago today the Swiss National Bank (SNB) unexpectedly discontinued its CHF peg against the euro, causing huge moves in the FX markets. On the anniversary of the peg removal I thought it would be interesting to see how the Swiss economy has developed over the past twelve months.

Swiss economy robust, but not immune during 2015

The Swiss economy actually proved to be quite resilient in 2015…

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The ECB may lower rates, but the Swiss shouldn’t follow suit

Expectations are high that European Central Bank (ECB) president Mario Draghi will announce additional easing measures at the next monetary policy meeting on Thursday this week. If the ECB decides to provide further stimulus via extended (or expanded) QE and/or lowers its negative deposit rate further, the Swiss National Bank (SNB) has some thinking to do. I am probably not the only Swiss perso…

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EUR IG non-financial bond issuance in 2015

The Yanks are coming: US firms are rushing to the EUR corporate bond market

Reverse Yankees, i.e., bonds issued by US entities in currencies other than USD, have become an integral part of the global investment grade (IG) corporate bond universe, particularly in the European IG space. For treasurers of US companies the issuance of EUR-denominated Reverse Yankees offers several advantages:

  1. In case a US firm reporting its results in USD has operations within the Eurozon…

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M&G YouGov survey

New M&G YouGov survey: there’s very low support in Europe for sovereign bailouts

Our new survey, carried out with YouGov across several EU member states (the UK, France, Germany, Italy, Spain and Austria), shows that there is a low level of support for future sovereign bailouts in the event of debt crises and economic difficulties.  The following question was asked as part of the M&G YouGov Inflation Expectations Survey – the full survey will be released here in early Octob…

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Greek debt forgiveness: Where there’s a will, there’s a way

The Euro Summit meeting in Brussels that took place a couple of weeks ago seems to have finally provided some temporary closure to the Greek debt crisis. The dreaded Grexit scenario was avoided (at least for the moment) and the Greek government was able to repay its arrears to the IMF and the ECB using the €7.2 billion bridge loan provided by the European Council. Looking ahead, this short term…

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