The US banking sector – an analysis of the prospects for smaller banks

Guest contributor – Jeff Spencer (Financial Institutions Credit Analyst, M&G Credit Analysis team)

Investors could be forgiven for thinking that the US banks are well on their way to recovery, with several big banks having redeemed the government preference shares and bought back the government warrants they received under the Capital Purchase Program (CPP) of the Troubled Asset Relief Program…

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Tonight’s TV, get Rosenberg for free, and low default emerging market loans

There are a couple of interesting things on TV this evening, both on More4.  At 10pm it’s True Stories: The Shock Doctrine, a film based on Naomi Klein’s book which looks at the way far right economists have used disasters around the world to impose extreme free market “solutions” (Milton Friedman and the Chicago School of Economics) on society.  After this at 11.45pm it’s Enron: The Smartest G…

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Deflation is spreading

Back in April, Mike wrote about the US entering deflation for the first time in half a century, noting a number of other countries that were also in deflation (see here). Since then, we’ve seen several more follow – the list now reads Ireland, Thailand, Malaysia, Taiwan, US, Japan, China, Belgium, Portugal, Hong Kong, Spain, Switzerland, Morocco, Canada, Sweden, Cyprus, France, Estonia, Finland…

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Car wash, talkin’ about the car wash yeah

Having recently recovered from my amateur stunt man escapades I thought I’d pen a short note on the recent court sanctioned debt restructuring by IMO Carwash.

Why do investors outside of IMO care ? Well, it’s the first time that the English courts have been asked to rule on the issue of valuation in the case of a company restructuring, and it has implications for senior & junior lenders in both…

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Mervyn loses his Talons

The Minutes from the Bank of England’s Monetary Policy Committee meeting of two weeks ago were released earlier today. They show that the motion to increase the Quantitative Easing program by £50bn was carried with a vote of six to three. Interestingly, Governor Mervyn King was one of the dissenters. Not too long ago one would have assumed that this would have been due to him worrying that infl…

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Chris Hoy meets Scooby Doo meets the Bond Vigilantes

There’s a hidden restaurant, somewhere north of the Bethnal Green Road, called the Rochelle Canteen.  And for some reason it has a figure of eight wooden cycling track in its garden, built by an artist at St Martin’s and looking like a haunted rollercoaster out of Scooby Doo. With the spirit of Team GB’s Beijing 2008 track triumphs still in our hearts, the Bond Vigilantes gave it their best sho…

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What do corporate bond spreads and Usain Bolt have in common?

The rally in corporate bonds this year is reminiscent of Usain Bolt in full flight in the 100m dash at the Beijing Olympics. Historic. Unprecedented. Fast. So just how far have corporate bond spreads rallied?

After blowing out late 2008 and early 2009, corporate bonds spreads have rallied back to levels that were last seen before the Lehman Brothers collapse. And rightly so. Corporate bond spre…

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A video from Chicago & New York: is there any value left in high yield?

Stefan Isaacs and I were in the States last week on a research trip to challenge our views on the high yield market.  With global high yield and leveraged loans up by 30%+ in 2009 so far, we wanted to talk to our colleagues in our Chicago credit team and visit the Wall Street high yield analysts to see whether the rally is likely to continue.

Very briefly, the wall of money into the asset class…

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QE reaction – the Grand Old Duke of York

It seems the Bank of England has been acting as the Grand Old Duke of York – gilt yields had been marched fairly close to the top of the hill a week or two ago, with 10 year gilt yields getting close to 4% (back to levels seen in November) and 30 year gilt yields reaching 4.6% (about the same as in July 2007).  Now they’ve just marched some of the way down again.  10 year gilt yields initially …

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Bank bailout schemes – are they really working?

Guest contributor – Tamara Burnell (Head of Financial Institutions, M&G Credit Analysis team)

The Bank for International Settlements (BIS) has published a study of the ‘impacts’ of the bank rescue programmes used to date – see here for the full publication entitled ‘An assessment of financial sector rescue programmes’. It concludes, not surprisingly, that the schemes have so far failed to gene…

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