Foreigners flock to US corporate debt | Leveraged loans lose favor as US reflation outlook dims | Early signs point to caution in emerging-market corporate debt
April 25, 2017
IACPM SmartBrief
Credit Markets
IACPM survey finds default situation brightens a bit in Q1
Corporate-debt defaults are expected to grow as interest rates rise, but the situation is containable given that rates remain near historic lows, according to an IACPM survey. The 12-month Credit Default Outlook index for the first quarter improved to -31.3 from -56.2 a year before and -37.9 in the fourth quarter. Read the IACPM news release.
Pensions & Investments (free access for SmartBrief readers) (4/21),  Reuters (4/21),  The Wall Street Journal (tiered subscription model) (4/21) 
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Foreigners flock to US corporate debt
Foreigners sharply stepped up their purchases of US corporate debt last year in response to the Federal Reserve's resolve to start boosting interest rates. Now, however, the appetite may slacken as rates elsewhere in the world begin to climb.
CNBC (4/21) 
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Leveraged loans lose favor as US reflation outlook dims
US investors are beginning to shy away from leveraged loan transactions as reflation hopes under the Trump administration fade.
Financial Times (tiered subscription model) (4/21) 
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Early signs point to caution in emerging-market corporate debt
Emerging-market corporate debt has been favored lately as investors widen their search for yield. But some warn that the trend is reaching a caution point.
Barron's (free content) (4/22) 
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Fund managers wary of Chinese bond market
China has worked to open its bond market to foreigners, and international fund managers accept that Chinese onshore debt will become integral in fixed-income portfolios, but they hesitate to commit.
Financial Times (tiered subscription model) (4/20) 
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Securitization issuance in Europe down in Q1
Europe's securitization market saw €36.7 billion in first-quarter issuance, a 36% decline from a year earlier, according to AFME data.
Financial Times (tiered subscription model) (4/20) 
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Regulatory and Accounting Issues
Cash-flow, loan-value issues addressed by IFRS 9 amendment
The International Accounting Standards Board is proposing an amendment to IFRS 9, the financial instruments standard, to deal with concerns relating to pre-payable financial assets. Responding to comments from banks and their representatives, IASB is offering additional guidance that it believes will be helpful in dealing with some cash-flow and loan-value matters. Read the IFRS news release.
CCH (4/24) 
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Dodd-Frank bank resolution, SIFI designation halted by Trump
Trump halts Dodd-Frank Act bank resolutions, SIFI designations
Trump (Mark Wilson/Getty Images)
President Donald Trump has signed executive orders suspending for 180 days provisions of the Dodd-Frank Act that authorize the liquidation of distressed banks and the designation of nonbanks as systemically important financial institutions. Trump has instructed the Treasury Department to review rules governing the procedures.
ThinkAdvisor (free registration) (4/21),  The Washington Post (tiered subscription model) (4/21),  The Hill (4/21),  MLex (subscription required) (4/21) 
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Fed's Powell urges review of post-crisis rules
While core changes enacted after the financial crisis should remain, it is time for regulations to be streamlined to encourage growth and better meet initial intentions, Federal Reserve Governor Jerome Powell said at the Global Finance Forum. Powell particularly called for raising applicability thresholds to ease the burden on small and midsize banks.
ABA Banking Journal online (4/20),  Financial Times (tiered subscription model) (4/20),  The Bond Buyer (subscription required) (4/20),  MarketWatch (4/20) 
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Mnuchin leverages FSOC to rework Volcker rule
US Treasury Secretary Steven Mnuchin is working with the Financial Stability Oversight Council's member agencies to clarify the Volcker rule to give banks' market-making desks more leeway. While he said proprietary trading has no place in a regulated entity, "if you are acting within the context of a customer business, there is clarity that the bank can commit capital," Mnuchin said. (subscription required) (4/20) 
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Authorities need more powers over CCPs, experts say
Authorities responsible for dealing with failing central counterparties haven't been given powerful enough tools to successfully deal with the problem, according to experts speaking at a World Federation of Exchanges event in Frankfurt, Germany. Robert Cox, a senior vice president at the Federal Reserve Bank of Chicago, said that if resolution authorities were given sufficient powers, that alone might eliminate the need for the resolution of CCPs. (subscription required) (4/24) 
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IACPM Annual Spring Conference, May 18-19, Berlin
Experts take center stage at the Annual Spring Conference.

Opening Day Plenary Sessions:

Economic Outlook and Credit Strategy
Jim Reid, Head, Fundamental Strategy, Deutsche Bank,

Geopolitics - Addressing Emerging Risks
Jan Kallmorgen, Founder and Co-Chief Executive Officer, Berlin Global Advisor

The New Regulatory and Geopolitical Environment - Perspectives and Priorities
Michael Kemmer, General Manager, Association of German Banks
Jan Kallmorgen, Founder and Co-Chief Executive Officer, Berlin Global Advisors
Moderated by Véronique Ormezzano, Head of Regulatory Affairs, BNP Paribas

Just two weeks before online registration closes on May 11. The Conference takes place at the Hotel Palace Berlin. Walk-in registrations are welcome provided you arrive with a credit card.

Pre-Meeting Day activities take place on Wednesday, May 17. The IACPM will offer its Educational Seminar with registration opening at 8 a.m. For attendees registered for the Conference, the IACPM is offering Roundtable Discussions which take place from 4:00 to 5:30 pm:

There is no additional charge for those registered for the Spring Conference, but the roundtables do require pre-registration if you'd like to participate. Participation is limited and walk-ins come at the risk of being turned away if a session is full. The agenda for the two day meeting can be viewed at Questions are also being answered by Alison Christensen,, +1-646-289-5430.
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The secret to so many artists living so long is that every painting is a new adventure. So, you see, they're always looking ahead to something new and exciting. The secret is not to look back.
Norman Rockwell,
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The IACPM is an industry association established in 2001 to further the practice of credit exposure management by providing an active forum for its member institutions to exchange ideas on topics of common interest. Learn more at

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