Sovereign CDS – Hellenic Republic CDS
Reports came out on Friday that Greece was now negotiating directly with creditors regarding some form of restructuring. We believe that this increases the risk of a Credit Event occurring, but ultimately it will still have to be a Failure to Pay Credit Event because any agreement with the bondholders would still be considered “voluntary” […]
From The Mess Of Headlines Today
The only logical conclusion is that we are further away from a solution or agreement in Europe than we have been in a long time. The “Grand Plan” has failed and this time, it is not a matter of creating “bigger and better” versions of prior plans, they need to do something new. Germany in […]
(BFW) Greece Wants 25% NPV of New Bonds, Banks Want High 40s
The good news is that the head of the IIF probably had his 15 minutes of fame and it can go back to being a cushy lobbying group rather than pretending it has real influence over the banks. The bad news is generally bad though. This goes back to being a very piecemeal and bank […]
The Bull Case For JEF
JEF’s year-end is November 30th. They aren’t scheduled to provide year-end results until Dec 20th, but I wouldn’t be surprised if they announced at least preliminary numbers much sooner than that. First, I think they will be able to show a much much lower leverage position than the market expects. As of August 31 (last […]
(NS5) Irish Times: Euro zone ‘may drop private sector role in bailouts’
We should not be rallying on this news. This to me is bad. Of the 3 big proposals of the “Grand Plan” that the EU was in some control of, all 3 have failed to materialize. The banks basically rejected capital infusions because they didn’t want to dilute shareholders (which I think will turn out […]
With MF And JEF Hogging All The Financial Institution Airtime
With MF and JEF hogging all the financial institution airtime, MS (and BAC and Citi) are deteriorating and heading back to end of September levels (which may be too high). In September, the slide in MS was blamed by many on CDS. I am not sure that one leads the other, they are co-incident, but in any case they […]
EFSF, We Hardly Knew You…
EFSF is supposedly going to have trouble getting even 2:1 leverage! Yes, that should have been obvious to everyone. We have tried to explain why none of the leverage ideas would work. We even took the step of trying to make it work and showing how many problems there were. Leveraged EFSF has always been […]
Whose Debt Am I?
First the EFSF had trouble raising money. Then EIB spreads widened. Then EXPT got crushed. And now Germany struggled to raise money. Is there a realization that all the quasi-sovereign debt and supranational debt is actually someone’s debt? Is relying on implicit or explicit guarantees as a way to raise money indirectly over? Guarantees do […]
Time to sell HYG, JNK, and LQD
These ETF’s have performed well and are attracting assets at a good pace. That is all good news, and think these are still a great way to time the market, and I remain convinced that as the ETF’s evolve they can replace some of the much maligned (but incredibly liquid) CDX Indices. In the meantime, […]
Asset Swaps are adding to the Problem
Asset Swaps are adding to the Problem “Asset Swaps” make it more difficult for banks to sell Banks will often buy a fixed rate bond and enter into an interest rate swap to “effectively” turn it into a floating rate asset. It should come as no surprise that banks that rely the most on rolling […]
