ECB supports initiatives to revitalise interbank market
The European Central Bank is backing industry-supported efforts to ease collateral requirements in the interbank market, lessening banks' reliance on central bank funding. "The Chairman noted that the ECB encourages these market initiatives aimed at mobilisation of collateral if these help to revitalise the interbank market and to facilitate refinancing of these assets in the market," according to a published summary of a meeting of the ECB's money market contact group. Reuters
Cypriot rescue drives up gauge of U.S. corporate-credit risk
The Markit CDX North American Investment Grade Index, which measures U.S. corporate-credit risk, has increased after Cyprus agreed with international creditors on a plan to avert default. "These are good headlines, but the underlying tone suggests this is a small example of a bigger problem that still exists," said Timothy Cox of Mizuho Securities USA. Bloomberg
Collateral concerns intensifying in derivatives market
Collateral is in increasing demand in the post-crisis financial world, prompting concern about availability and whether its pursuit will create additional risk. Market participants and experts worldwide are expressing concern about collateral requirements for derivatives. "The scale of the need could be enormous," ISDA Chairman Stephen O'Connor said. The Banker magazine (U.K.)
Investors again turn to synthetic CDOs
Synthetic collateralized debt obligations are returning to popularity as investors look for alternatives to bonds. "That's a valid strategy for this part of the credit cycle: Don't stretch on credit quality, but rather leverage your exposure to better-quality credit," said Ashish Shah of AllianceBernstein. Bloomberg
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|Regulatory and Accounting Issues
Walter seeks compromise on international swaps regulation
Securities and Exchange Commission Chairman Elisse Walter wants domestic regulators to rely on international rules for cross-border swaps when they are equivalent, while preserving U.S. regulators' right to impose their rules when no comparable ones exist. "The domestic regulator would continue to have the ability to apply certain key policy requirements of local law when foreign law does not impose comparable requirements or provide comparable protections," Walter said. Reuters
EU aims to boost market for securitised debt, covered bonds
EU Internal Market Commissioner Michel Barnier is poised to publish draft plans on stimulating the market for securitised debt and covered bonds. The move is intended to bolster investment in businesses. "Europe is confronted by a range of constraints that affect its long-term financing capacity," according to the European Commission. The plans would cover "prudential rules, corporate governance and financial markets." Bloomberg
European transaction tax prompts concerns about collateral
The European Commission's proposal to tax financial transactions could raise €35 billion annually, but market participants are concerned the levy would put a squeeze on collateral. "It could drastically reduce the mobility of collateral and drastically increase transformation costs, making collateral more inefficient from a mobility perspective," said Staffan Ahlner of Bank of New York Mellon. "We don't believe it is the intention of the proposal, but it is one of the unintended consequences." International Financing Review (free content)
2013 IACPM Educational Seminar – May 21
The critical role credit portfolio managers play in business planning, strategic decision-making and hedging techniques are some of the areas to be addressed in this all-day session offered on Tuesday, May 21, the day before our full 2013 Spring Conference begins.
The sessions are taught by senior portfolio managers who are experts in portfolio management and Directors of the IACPM. Join us by registering now as spaces for this all-day session are limited.
Highlights from the agenda:
The IACPM offers group rates for four or more people from one firm provided they register together. For more information about our Educational Seminar and our Annual Spring Conference, please visit our website at www.iacpm.org.
- CPM in a Changing Environment, Som-lok Leung, IACPM
- Business Models for Portfolio Management, Jeffery Weaver, KeyCorp
- Active Credit Portfolio Management Techniques and Toolkit, Sarah Cheriton, Lloyds Bank
- How to Manage a Credit Portfolio: A hands-on simulation exercise, Chia-Ling Hsu of Rutter Associates
- Implementing CPM: From Analytics to Action, Richard Henshall, Westpac
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