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January 15, 2013
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  Credit Markets 
  • Moody's reports drop in default rate for high-yield debt
    Moody's Investors Service says the global default rate for high-yield bonds reached 2.6% in the fourth quarter, declining 0.6 percentage point from Q3. The rate was lower than the historical average of 4.8% dating to 1983. Moody's says the rate likely will hit 3.3% in Europe and 3% in the U.S. this year. Bloomberg (1/9) LinkedInFacebookTwitterEmail this Story
  • Probable decrease in Chinese bank loans highlights risk
    Chinese bank loans might have decreased to the lowest percentage of financing since 2002, according to industry estimates. That decrease indicates a flight to shadow-banking products, which promise higher returns but face less regulation. According to the International Monetary Fund, this shift poses "challenges to financial stability". Bloomberg (1/9) LinkedInFacebookTwitterEmail this Story
  • Bond sale indicates European high-yield revival
    Luxembourg's Ardagh Group is raising $1.45 billion from the sale of high-yield notes to fund its acquisition of the U.S. glass-bottle unit of Cie. de Saint-Gobain. It is the biggest high-yield bond by a European issuer in two years. Bank of America Merrill Lynch's Euro High-Yield Constrained Index shows that yields on European high-yield bonds have fallen from 12% a year ago, to 5.27%. Bloomberg (1/14) LinkedInFacebookTwitterEmail this Story
  Regulatory and Accounting Issues 
  • Banks are told not to leverage LCR's delayed introduction
    National regulators are telling banks they cannot shrink buffers already put in place to comply with Basel III's liquidity-coverage ratio simply because implementation has been changed to a staggered timeline. "It's still possible the liquidity requirements ... are in fact providing an incentive for banks to either deleverage or expand their lending by less than they would have otherwise done," Bank of England Governor Mervyn King said. (subscription required) (1/9) LinkedInFacebookTwitterEmail this Story
  • ECB stiffens collateral rules
    The European Central Bank is responding to issues in France and Spain by ramping up control of how collateral from private lenders is accepted by national central banks. "We take these incidents very, very seriously," ECB President Mario Draghi said. "We've decided to create a data-quality compliance network and an ECB unit that are responsible for, first monitoring the data quality, by performing regular checks and reports and prompting improvements in national-central-bank processes and procedures, internal controls as well." Bloomberg (1/10) LinkedInFacebookTwitterEmail this Story
  • BoE targets capital rules for derivatives and bonds
    The Financial Policy Committee of the Bank of England is seeking authority to change the amount of capital that banks must hold against derivatives, bonds and real estate assets. "Such an approach might help to tackle threats to stability before they spread, particularly by leaning against exuberance in specific subsectors," according to the committee. Bloomberg Businessweek (1/14) LinkedInFacebookTwitterEmail this Story
  • U.S., international bank standards in conflict over ratings
    Efforts to bring U.S. banks into compliance with international standards have run into an obstacle over the use of ratings agencies to evaluate assets. The use of ratings firms is mandatory under rules of the Basel Committee but prohibited in the U.S. under the Dodd-Frank Act. Reuters (1/11) LinkedInFacebookTwitterEmail this Story
  • Other News
You will do foolish things, but do them with enthusiasm."
--Sidonie-Gabrielle Colette,
French novelist and performer

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