The inching towards a downgrade of the monoline insurers continues. As most reader likely know, the so-called monolines provide credit enhancement to various credit products, historically very low risk ones (state and municipal bonds) and in recent years have ventured into more speculative territory. As we’ve noted before, the rating agencies are faced with a […]
Read more...Just as some companies seem to be recidivists as far as getting into financial trouble is concerned (Citi, First Boston before it was finally absorbed by Credit Suisse), so to are some investors. Orange County’s latest escapade apparently isn’t as serious at the one visited upon them by former treasurer Robert Citron, namely, $1.6 billion […]
Read more...According to Bloomberg, there was a banking confessional of sorts in Parliament: Citigroup Inc., the biggest U.S. bank by assets, lost more money than it made from financial instruments based on U.S. subprime mortgages, a senior company executive said in a meeting at the British Parliament. William Mills, chief executive officer of Citigroup’s markets and […]
Read more...This story on the sentiment among traders appeared on Bloomberg this afternoon. It appears the Fed’s bout of hawkishness was awfully short lived, since the latest move is in reaction to Kohn’s and Bernanke’s latest statements, plus the rising in dollar Libor, which is now 65 basis points over the Fed funds rate. The 50% […]
Read more...This downgrade by Fitch of the junior debt on the Citi SIV Senda affects only $867 million of debt. But what makes this announcement noteworthy is it is yet more bad news about Citi, and it again illustrates how rapidly newer financial instruments, which have either high embedded leverage or high explicit leverage (SIVs rated […]
Read more...As much as I would like to leave the matter of Hank Paulson and his dubious subprime rescue plan alone, the latest developments demand comment, first my own, followed by a roundup of other views. One tidbit later on to induce you to read the entire and admittedly long post: successful implementation of the program […]
Read more...Hoisted from comments by a helpful anonymous reader was a revealing post yesterday at FT Alphaville that we somehow missed. It’s a important addition to the discussion over the stress in the US housing and mortgage-backed securities markets. CreditSights, an award-winning provider of credit research, disputes the commonly held view that the sharp falloff in […]
Read more...The US isn’t the only country facing a nasty inflation/deflation policy dilemma. The Financial Times gives us further detail on the worrisome conditions in the UK money markets, and a story in the Telegraph describes how the UK’s Shadow Monetary Policy Committee is troubled by the unprecedented drop in loans outstanding from August to the […]
Read more...This story, reported in the Economic Times of India (hat tip Elaine Meinel Supkis), that Indian banks are unable to draw on their dollar denominated lines of credit, isn’t as dramatic as the news that major banks are asking UK clients not to borrow. However, it serves to illustrate the disruptive effects the credit crunch […]
Read more...The credit market mess is affecting the finances of an increasing number of government bodies. A weekend story in the New York Times described how small towns in Norway had taken steep losses on complex US debt instruments (why were they even taking the currency risk?). Today, Bloomberg reports that the further SIV downgrades are […]
Read more...Wolfgang Munchau of the Financial Times provides an excellent and from what I can tell, overlooked argument against central banks’ eagerness to cut interest rates to shore up wobbly financial markets. His point is simple, and I am annoyed that I didn’t think of it. The reason that monetary authorities are so quick to lower […]
Read more...Bloomberg carries a story today, “Treasuries, Oil May Foreshadow Bear Market After Yields Tumble,” that warns that the Treasury rally, driven by a flight to quality, may not simply be short-lived but a precursor to a nasty reversal, particularly on the longer end of the market. It suggests that those that see the recent decline […]
Read more...It was bad enough when trading in the super-safe covered bond market was effectively halted a few weeks ago. Yes, covered bonds are technically mortgage related, but they are subject to very stringent rules as to the quality of collateral, plus investors can make claims on other assets on the issuers’ balance sheets. As the […]
Read more...Many commentators on the bailout of E*Trade by hedge fund Citadel focused on either the terms of the deal (costly to E*Trade) or the fact that Citadel, like some other risk-minded investors, are starting to pick and choose among distressed mortgage assets, a sign they believe that the bottom is nigh. But a Reuters story, […]
Read more...If you had any doubts that the credit contraction was having real-world consequences (beyond, say, the ease of getting a mortgage in the US), consider this DowJones Newswire story (hat tip Michael Panzner). Banks are not only not willing to lend to each other, but because liquidity is scarce, they are trying to dissuade UK […]
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