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Yesterday, bonds issued by Walt Disney set new records for corporate debt, with the lowest-ever coupons achieved for five-, ten- and 30-year bonds. Disney’s ten-year tranche, with a coupon of 2.75%, boasted a yield roughly the same as French sovereign bonds.

As investors seek safe havens amid market turmoil, yields on US Treasuries have plunged, giving intrepid corporate borrowers in America an opportunity to pitch for low-cost, long-term funding. Coca-Cola and AT&T also issued bonds this week at record-low yields for the companies.

As Treasuries, gold, the Swiss franc and other perceived low-risk assets attract investors, this got us thinking about the creditworthiness of the world’s strongest corporate borrowers vis-à-vis beleaguered sovereigns. At the close of trading yesterday, there were 25 companies with narrower credit default swap spreads than the top-ranked sovereign, Norway. In the minds of CDS traders, Norway is roughly as creditworthy as Walt Disney  (is Mickey’s Magic Kingdom now considered a safe haven?). The map below shows the approximate corporate equivalents to a selection of European sovereigns, according to the CDS market.

As ever, the IMF’s latest Global Financial Stability Report is worth a look, not least because the organisation’s chart makers seem to be getting a lot more creative. Some of the infographics in the report’s latest edition verge on the psychedelic.

More importantly, however, the IMF issues a stern rebuke to financial regulators for “incomplete policy actions and inadequate reforms”. The global banking system remains vulnerable to shocks, as some lenders remain “caught in a maelstrom of interlinked pressures”, the IMF warns.

Euro area banks are singled out as particularly vulnerable. Thinly capitalised and more reliant on wholesale funding than many of their counterparts elsewhere, some of the currency union’s banks—particularly those in the bloc’s troubled periphery—are now shut out from most funding markets. This is reflected in the interest rates that the most desperate banks are offering on deposits, seeking to reduce their reliance on official support by luring funds from wary savers.

The rate hikes by Greek, Portuguese and Irish banks in recent months have been significant, dampening these institutions’ profitability and prolonging an already protracted recovery process. Another interesting conclusion to draw from the chart—adapted from the one that appears in the IMF’s report—is that banks in Italy seem relatively more desperate for deposits than banks in Spain.

The latest biannual data on euro banknote counterfeiting was recently released by the European Central Bank. In the second half of 2010, the number of counterfeit notes fell by around 6% from the first half of the year. Phoney notes remain exceedingly rare; they now comprise 0.003% of the outstanding euro bankotes in circulation.

As far as denominations go, clandestine printers produced more €50 notes in the second half than €20 notes, a reversal from the previous six months. Together, these denominations make up more than 80% of counterfeit bills. Interestingly, counterfeiters have been shying away from the €200 bill in recent years, with the stock of fake notes on a steep decline. At the same time, the number of forged €500 bills withdrawn in the second half of last year more than doubled from the first half. Fortune favours the bold?

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

Reeling from the financial crisis and facing potential funding shortfalls, western banks turned to sovereign wealth funds (SWFs) for support during the credit crunch. In 2007 and 2008, these funds, mainly from Asia and the Middle East, pumped some US$70bn into the ailing institutions.

SEND HELP: Spain's prime minister meets China's vice premier on January 5th 2011

On state visits around Europe this month, Li Keqiang, China’s deputy prime minister, made headlines by suggesting that China stood ready to support the debt of the euro area’s troubled peripheral members. This, along with other sovereign investors’ recent history of dabbling in distressed assets, suggests that SWFs may play a role in alleviating the euro area’s current woes.

With more than US$4trn in assets, according to the SWF Institute, the funds’ collective might would be more than sufficient to cover the existing support facilities for Greece and the joint EU-IMF facility for other euro area economies in need (already tapped by Ireland). But how realistic is this?

Read more at Financial Services Briefing: “Sovereign crisis, sovereign solution” (January 12th)

Oh, for the halcyon days when the uproar over state aid in the EU focused on fisheries and railways. A new report from the European Commission updates the figures on aid provided by countries to their domestic industries, and in a related action the commission announced the extension of its “crisis framework” on aid to address “ongoing market failures”.

Support to the financial sector (“crisis measures” in the chart below) has dwarfed other forms of aid over the past two years. In 2009, financial firms were propped up by €1.1trn in guarantees and recapitalisations (€350bn of which counts as state aid), which makes €200m in aid to fisheries seem rather quaint by comparison.

Buyouts are getting bigger. Or so the latest data from Europe would suggest. The average value of private equity deals in the third quarter was nearly double the previous quarter, according to statistics compiled by the Centre for Management Buy-out Research. The total value of deals in the first nine months of this year, at €30.5bn, is already well above the €18.2bn recorded in the whole of last year. Still, this latest resurgence doesn’t bring the industry back to anywhere near the heady volumes, values and multiples seen during the mid-2000s boom.

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

The highest-profile microfinance initiatives are in emerging markets. In Europe, it follows that the poorer countries in the continent’s east would be the most amenable to the small-scale loans, insurance and savings that are core to the microfinance business model.

However, there is plenty of scope for microfinance in the richer parts of western Europe. In 2009, more than 84,000 microloans—defined as a loan of less than €37,000—were extended by respondents to a survey published in June, adding up to nearly €830m.

Read more at Financial Services Briefing: “Think small” (October 20th)

The data is noisy and, at times, somewhat contradictory. Yesterday, banks’ use of the European Central Bank’s 0.25% deposit facility fell to its lowest level of the year, with “only” €28.5bn parked at the central bank. This can be seen as a sign of renewed confidence among euro zone financial firms, particularly when it comes to interbank lending—banks may be deciding to lend more to one another, instead of stashing cash at the ECB.

However, on the same day, use of the ECB’s 1.75% marginal lending facility hit a two-week high. The previous high, in late September, proved to be a one-off spike. Sustained borrowing at the current level—last seen during the spring, when fears of a sovereign debt crisis reached a crescendo—would suggest that it is still difficult for some European banks to attract private funds. This warrants watching.

A new survey of investment fund distributors shows the enduring appeal of equities among European retail investors. According to Greenwich Associates, some 47% of retail assets are invested in equities in Europe. By contrast, institutional investors on the continent allocated only around 20% of assets to equities. This difference is particularly stark in Germany, where retail investors devote 66% of their portfolios to shares, versus an average allocation of only 7% among institutional investors in the country.

Roughly two-thirds of the fund distributors polled by Greenwich say that retail clients will boost allocations to emerging-markets equities over the next year. Other asset classes poised for growth, survey respondents say, are a host of alternative investments, including hedge funds and vehicles focused on commodities and infrastructure.

The European repo market has recovered to levels not seen since before the financial crisis, according to the International Capital Market Association. At just under €7bn, the value of outstanding repurchase agreements between European banks at mid-year pipped its June 2007 peak.

But the underlying details, released by the ICMA last week, show that it is not business as usual. Take the collateral pledged by borrowers in return for short-term loans. European government debt fell as a share of total collateral over the past year, and not just the Greek, Spanish and Portuguese debt that have generated the most hysterical headlines. British government bonds were much more reluctantly pledged as collateral and even German debt fell modestly as a share of the total.

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