Author profile

Stefan Isaacs

Years in the bond markets: 18

Specialist subjects: European credit and high yield corporate bonds

Likes: Football, music, summer, classic cars & travelling

Heroes: Scotland's finest export - Bill Shankly

Lessons from Argentina

The past couple of days have seen Greek debt take a bit of a battering.  Spreads on Greek government bonds are the widest they have been since the inception of the Euro, and Greek 5yr CDS is wider by 100bps+ versus the beginning of the week. This seems to have been driven initially by nervousness around the anticipated bailout, with rumours that the Greeks are trying to renegotiate the deal tha…

Read the article

Are Sovereign CDS Evil?

Following on from Jim’s Sovereign CDS Q&A blog (see here) I came across this chart at zerohedge.com.  Whilst I can’t vouch for its accuracy, the chart shows that the actual net amount of outstanding sovereign CDS contracts, relative to outstanding government debts, are actually very small. That would seem to add weight to Jim’s argument that the  pressures faced by governments are borne ‘of fis…

Read the article

LBOs and IPOs: have European equity investors woken up?

Back in January at our Annual Investment Forum I focussed on the changing face of the European Leveraged Finance markets – those companies financed with significant levels of debt. My belief is that the current, somewhat forced reinvention, will ultimately result  in an increasingly deep and liquid European High Yield market (EHY), more akin to that of the USHY market.

This change, which is alr…

Read the article

The Ultimate Carry Trade ?

Last week’s BWIC list (bids wanted in competition) from the Bank of England gave further evidence, if it was needed, that the demand for Sterling corporate bonds remains very strong. The table below, kindly provided by HSBC, shows the bonds that were sold and that most traded through where the market was pricing them last Friday.

The BOE took the opportunity to sell a selection of the corporate…

Read the article

High Yield Déjà Vu? Not Quite Yet

It’s been quite a year to date for leveraged finance. Improving economic data, increased risk appetite and a supply/demand imbalance has driven valuations starkly higher. At the time of writing, the Merrill Lynch European High Yield Index is up a whopping 75%, the average bid for leveraged loans in Europe has risen by around 50% from its lows earlier in the year, and the high yield new issue ma…

Read the article

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…

Read the article

Stirrings in the European high yield primary market

We’ve talked about new issuance a few times recently on this blog (see Matthew’s blog from December here and my more recent comment about the record issuance in Q1 here). But the focus has been firmly on issuance in the investment grade market, until now.

The European public high yield primary market was essentially closed for 18 months, with no new issues at all from August 2007 until January …

Read the article

New issuance hits record levels

We commented in November that growing levels of new issuance suggested that there were cracks in the ice in credit markets.  This trend has rapidly accelerated.  In the first quarter of this year, there was over €115bn of new issuance from corporates, almost twice as big as the previous record from 2001 and only slightly less than the €133bn figure for the whole of 2008.

Why has there been so m…

Read the article

Horrific European economic data released

Spain is already in deflation, and this morning it released some horrible unemployment numbers.  Spanish unemployment soared to 17.4% in Q1, from 13.9% in Q4.  This is the first time unemployment has risen above 17% since 1998, and is further evidence of the alarming deterioration in the European economy. 

Also this morning it was announced that UK GDP was -1.9% in Q1, taking the year on year …

Read the article

What is the European Central Bank waiting for?

The ECB cut rates from 1.5% to 1.25% last week, taking the main rate to the lowest level since the ECB took control of monetary policy in 1999.  Markets had been expecting a rate cut to 1%, and rightly so.

Everything seems to be deteriorating in Europe, almost without exception.  The euro is close to the strongest it has ever been versus a basket of foreign currencies, and this is killing expor…

Read the article