Monthly Archives: March 2015

BIS Global liquidity indicators – Feb 2015

The BIS publishes updates on indicators for global liquidity conditions semi-annually, together with the underlying BIS data. This initiative constitutes part of the Bank’s support for G20 activities and follows up on earlier work by the BIS and the Committee on the Global Financial System (CGFS).


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Basel’s Bank Funding Disclosure Proposal: A Good Start, But It Does Not Go Far Enough

Basel’s Bank Funding Disclosure Proposal: A Good Start, But It Does Not Go Far Enough

On Dec. 9, 2014, the Basel Committee on Banking Supervision published a consultative document on its proposed net stable funding ratio (NSFR) disclosure standards, under which banks will disclose the proportion of their long-term assets that are funded by long-term, stable funding. The committee intends to introduce the NSFR as a minimum standard by Jan. 1, 2018. The main purpose of the NSFR is to reduce refinancing risks for banks by requiring them to better match their asset and liability profiles, while allowing banks to perform maturity transformation that serves economic needs. The disclosure standards aim to improve transparency and enhance market discipline. In this article, we provide our analytical opinion of the proposed disclosure standards based on our understanding of the document.

IACPM Chairman Jeffery Weaver examines the credit landscape for 2015

With an eye on what lies ahead for the industry in 2015, SmartBrief conducted an e-mail interview with Jeffery Weaver, Chairman of the International Association of Credit Portfolio Managers. Mr. Weaver is an Executive Vice President and Group Head of CPM at KeyCorp.

The role of Credit Portfolio Managers in the management of credit exposures has evolved since the end of the Great Recession and one of the most significant changes is the expansion of regulation. How has this heightened regulatory scrutiny changed the role of risk management?

The role of credit portfolio management has become more strategic to the firm as the perpetual assessment of emerging risks and their potential impact on the credit portfolio is under taken.


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Trends in Sovereign Credit Risk Assessment

The Asian Institute of Chartered Bankers has just published “A Best Practice Approach to Modeling Sovereign Defaults” in the December 2014 issue of its Banking Insight magazine. Since the article, which I co-authored with my colleagues Suresh Sankaran and Dr. Clement Ooi, was targetted toward the Asia market, it is helpful to emphasize some of the most important points in modeling sovereign default risk from a world-wide perspective. There are three key points in modeling sovereign default risk that we explain in the rest of this article:

  • The credit default swap market is a very problematic source of credit information and, at best, it is reliable only for a short list of reference names.
  • The conflict of interest faced by legacy rating agencies is even more extreme in the sovereign case than it is in the well-documented corporate and structured products markets.
  • Modern statistical modeling techniques are best practice and the only realistic alternative to the credit default swap market and legacy credit ratings.

We outline the reasons for these assertions in the rest of this note. Read more


Howard Marks – Memo on Lessons on oil

Read the full memo here

HOWARD MARKS – Co-Chairman, Oak Tree
Since the formation of Oaktree in 1995, Mr. Marks has been responsible for ensuring the firm’s adherence to its core investment philosophy; communicating closely with clients concerning products and strategies; and contributing his experience to big-picture decisions relating to investments and corporate direction. From 1985 until 1995, Mr. Marks led the groups at The TCW Group, Inc. that were responsible for investments in distressed debt, high yield bonds, and convertible securities. He was also Chief Investment Officer for Domestic Fixed Income at TCW. Previously, Mr. Marks was with Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice President and senior portfolio manager in charge of convertible and high yield securities. Between 1969 and 1978, he was an equity research analyst and, subsequently, Citicorp’s Director of Research. Mr. Marks holds a B.S.Ec. degree cum laude from the Wharton School of the University of Pennsylvania with a major in finance and an M.B.A. in accounting and marketing from the Booth School of Business of the University of Chicago, where he received the George Hay Brown Prize.

Webinar : The good, the bad and the ugly of Indian Real Estate in 2015 – 2022

Upcoming Webinars : The good, the bad and the ugly of Indian Real Estate in 2015 – 2022

Register here

On 25 Mar, 2015 From 1:30 PM – 2:30 PM (UTC +05:30) India Time Zone

25th March 2015, 1:30 PM (IST), 3:00 PM (JKT), 4:00 PM (SGT) onwards


• What will drive the next wave of returns for Real Estate Investors
• Diamonds in the rough – Subsectors which will thrive over the next decade
• Distressed investing – How to spot the winners
• Learning lessons for Indian Real Estate Investors from the last decade

Speaker Details:

Mr. Om Chaudhry
Present: Founder and CEO, FIRE Capital Fund Private Limited

Past: Feedback Ventures


Mr. Chaudhry is the Chief Executive Officer (COO) of FIRE Capital Fund, the real estate centric private equity fund that has created several joint venture companies across the country to deliver a total built up area of nearly 40 million sq.ft. over more 1200 acres. Under his leadership, FIRE Capital has pioneered the concept of SUV (Satellite Urban Village) that aims to provide international quality urban housing while tackling the challenges on the ground thrown by the limited urban infrastructure available in these cities. Through this model, FIRE Capital has focused its attention on Value Housing for the consuming class and has a preference for locating its projects in Tier II cities.


Before starting FIRE Capital, Om was a partner at Feedback Ventures, a leading Indian consultancy group with the largest number of professionals dedicated to new ventures in the infrastructure sector. He has also handled projects across a wide range in the real estate domain – residential, commercial, retail, hospitality, industrial and healthcare – across the spectrum of consulting to operationalization.


Mr. Chaudhry has a B. Tech. degree from the Indian Institute of Technology, Delhi and an M.B.A. from the Indian Institute of Management, Ahmedabad.

Co Speaker : Manoj Dassani

Present: Chief Operating Officer (COO), FIRE Capital Fund Private Limited

Past: DNA Infrastructure Pvt. Ltd, D Group International, Feedback Ventures among others


Mr. Dassani has over 22 years of experience as a consultant, entrepreneur and business leader in various industries, prominently construction and infrastructure. He was the CEO at DNA Infrastructure Pvt. Ltd, a company engaged in execution of EPC contracts related to water supply and road projects.


He was also the owner/director at D. Group International Pvt. Ltd, a Government recognized export house for home furnishing and garments. He also worked as senior manager at Feedback Ventures & Collaboration Services Pvt. Ltd – a management consulting firm focused on implementation of projects, primarily real estate and infrastructure


Mr. Dassani has a B. Com (Hons) from Shri. Ram College and an MBA from IIM-Ahmedabad.

Market Volatility, Downgrades in EM and Greece’s Default risk – Video

  Market Volatility Favors Speculative-Grade Bonds In February

Corporate bond returns in 2015 have thus far seen pronounced swings between safe and speculative-grade debt from one month to another, with speculative-grade bonds faring better in February. In this CreditMatters TV segment, Standard & Poor’s Senior Director Nick Kraemer summarizes the experiences of various corporate bonds last month.

  Potential Downgrades Greatly Outnumber Potential Upgrades In Emerging Markets

As the economic landscape in emerging markets evolves, we looked at some of the region’s rating stress indicators and their recent performance. In this CreditMatters TV segment, Associate Director Gregg Moskowitz explains the key trends.

  Greece’s Uncertain Future Weighs On Increased Corporate Default Risk

This month, we added five Greece-based entities to the weakest links list. Four ‘CCC+’-rated banks and one ‘B-‘ rated utility sector company were placed on CreditWatch negative as the European Central Bank decided to lift the waiver on the eligibility of Greek government bonds in euro-system operations

Mckinsey : Debt and (not much) deleveraging

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points (Exhibit 1). That poses new risks to financial stability and may undermine global economic growth.

Stress Testing: The Use and Abuse of “Intuitive Signs” on Credit Model Coefficients

In the past week, I have spoken with many regulators and bankers on the proper role of intuition in the econometric estimation of credit models for the Federal Reserve’s Comprehensive Capital Analysis and Review 2015. In our review ofbest practices for stress testing , value at risk, and credit value at risk on October 20, 2014, there was no role for “intuition,” just for science. The same is true for our November 13, 2014 update of model validation procedures for CCAR 2015

Why? In quotes from Kathryn Schultz, Nobel Prize Winner Daniel Kahneman, and Professors King and Soneji below, we explain that the very DNA of human beings leads us to be overconfident in our own intellectual powers. Rather than relying on modern econometric methods, most humans would rather guess an answer and would normally be supremely confident in its accuracy.


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Bond Market Stress Test: 25 Financial Institutions Have Lower Credit Spreads than the Best “Too Big to Fail” Bank

The Federal Reserve will announce the results of the “DFAST” stress tests on March 5. On March 13, 2014, we pointed out the many reasons why the Federal Reserve-mandated stress testing process will be a less accurate measure of financial institutions’ risk than the market’s price on those institutions’ promise to pay a dollar in the future. The market place considers all scenarios, not just three as in the Fed’s CCAR stress tests. The market place invests cold hard cash to price various financial institutions’ promises to pay.

In the stress testing process, those who prepare the stress tests are often in a conflict of interest position, since it normally serves them best financially if the CCAR results are prepared on the sunny side of the street. In this note, we update our results from January 27, 2015 with the bond market assessments of financial services firms whose bonds were traded in the U.S. corporate bond market on Monday, March 2. Many of the firms whose bonds are traded are not subject to the stress testing process, so a bond market analysis gives us a broader and more comprehensive risk assessment. We use 5,383 trades on the bonds of 127 different legal entities in the financial services industry with underlying principal of $1.8 billion to rank those firms by riskiness. We rank the institutions by credit spread, by spread to the U.S. Dollar Cost of Funds Index, and by “best value,” which we define as the ratio of credit spread to matched maturity default probability.

Conclusion:  25 financial institutions led by Berkshire Hathaway Finance Corporation (BRK.A) (BRK.B) have a better spread to the U.S. Dollar Cost of Funds Index TM than the best of the four “too big to fail” financial institutions in the United States, which we define as the grouping including Bank of America Corporation (BAC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC).

Click Here To Read More.

S&P Mumbai Seminar : India Inc : Through the lens of Global Financial Markets, Thursday 26th March 10am IST



March 26, 2015


10.00 a.m. – 1: 00 p.m.(followed by lunch)


Taj Mahal Palace
Crystal Central Room


Please join us for a seminar where Standard & Poor’s ratings analysts and industry experts will share their views on major credit trends and outlook for India Inc..

Register now as seats are limited.

Key topics:

  • India macroeconomics from a global perspective
  • Key risks and growth drivers of Indian corporates and banks in an Asian context
  • Financing needs of corporate India and banking
  • Panel Discussion – India Inc.: Through The Lens Of Global Financial Markets


  • Pawan Agrawal, Chief Analytical Officer, CRISIL Ratings
  • Geeta Chugh, Senior Director and Analytical Manager, Asia-Pacific Financial Services Ratings, Standard & Poor’s Ratings Services
  • Guy Deslondes, Managing Director, General Manager, Asia-Pacific Corporate Ratings, Standard & Poor’s Ratings Services
  • Dharmakirti Joshi, Chief Economist, CRISIL
  • Mehul Sukkawala, Director, Asia-Pacific Corporate Ratings, Standard & Poor’s Ratings Services


  • Sidharath Kapur, Chief Financial Officer (Airports), GMR Group
  • Michael Seewald, Managing Director and Analytical Manager, Asia-Pacific Corporate Ratings, Standard & Poor’s Ratings Services
  • Jujhar Singh, Managing Director, Capital Markets & Co-Global Head, High Yield Product Group, Standard Chartered Bank


  • Ritesh Maheshwari, Managing Director and Lead Analytical Manager, Asia-Pacific Financial Services Ratings, Standard & Poor’s Ratings Services

About Standard & Poor’s:
Standard & Poor’s Ratings Services, part of McGraw Hill Financial (NYSE: MHFI), is the world’s leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 25 countries, and more than 150 years’ experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.

Based in India, CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. It is majority-owned by Standard & Poor’s, a part of McGraw Hill Financial and the world’s foremost provider of credit ratings.


Webinar: Basel III Mechanics are Finalized – Now What About our Strategy? Thursday, March 19,11am EDT

Event status: Register now
Date and time: Thursday, March 19, 2015 11:00 am
Eastern Daylight Time (New York, GMT-04:00)
Treasury Strategies 2015 Virtual Coffee Break Web Series
Panelist(s) Info:
Jim Poteet – Principal, Scott Musial – Principal
Duration: 30 minutes
Complying with the rules is a requirement, but we also have to think about the implications for our deposit strategies. This discussion features commentary on how deposit strategies are evolving for banks of all sizes, and how to develop a winning position before the Basel III implementation deadline in 2016.

Webcast on High Yield and Leveraged Finance: Drivers and Credit Dynamics of the European Markets Wednesday 18th March 2015 at 11:00 EDT

High Yield and Leveraged Finance: Drivers and Credit Dynamics of the European Markets
Fitch Ratings is holding a webcast on the current supply, demand and credit dynamics of the European high yield (HY) and leveraged finance markets on 18 March at 15:00 GMT / 11:00 EDT.


EUR23bn of HY bonds and EUR10bn of leveraged loans have been issued by non-financial corporates in the first two months of 2015 with both bond and loan markets open to a broad range of issuers. Fitch anticipates issuance of EUR75bn to EUR90bn in European HY, EUR 75bn in Leveraged Loans with CL0 2.0 issuance to reach EUR15bn or more in 2015. European QE is expected to further exacerbate the excess demand chasing scarce assets resulting in increasingly more aggressively structured deals which may reveal fragilities reminiscent of 2007.

Fitch rates or monitors 480 HY and leveraged finance issuers in Europe and rates 44 European CLO 2.0.

The webcast will be chaired by Anjali Sharma, EMEA Head of Business and Relationship Management for Fitch’s Corporate group, who will be joined by Ed Eyerman, EMEA Head of Leveraged Finance, Matthias Neugebauer, EMEA Head of Structured Credit and Michael Larsson, Director in Fitch’s Credit Market Research team.

Key discussion points will include: 

– How is the market today? What are the key drivers and differentiators compared to prior years?

– The CLO capital pool : growth drivers, supply and credit constraints

– Future source of deals: M&A, asset disposals, secondary buyouts, dividend recap

– Credit trends : leverage, covenants, documentation

– Loans versus bonds – are the credit risks different?

– The return of 2007-style deals? Is the market close to the edge? What could push it over?

Related research: 

Imbalances to Test European High Yield in 2015, 10 February 2015

Global CLO Market Trends Quarterly, 6 February 2015

European Leveraged Loan Chart Book, 17 December 2014

European High-Yield Insight, 18 November 2014

This will be followed by a question and answer session. Questions can also be emailed in advance to: 

Webcast details:

Date: 18 March 2015

Time: 15:00 GMT / 11:00 EDT


All participants must register for the webcast using the above URL.

A replay of the webcast will also be available at:, under Fitch Events > Past Events.

VIDEO: Deutsche’s co-CEO outlines key 2015 risks

Deutsche Bank’s global co-­chief executive Jürgen Fitschen said the greatest risk to Asian economies in 2015 is a potential interest rate hike in the US, which may result in disruptive capital flows back into the world’s biggest economy.

View the video here :,video-deutsches-co-ceo-outlines-key-2015-risks.aspx

Credit Supply and the Housing Boom

The housing boom that preceded the Great Recession was due to an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices and household debt, the stability of debt relative to house values, and the fall in mortgage rates. These facts are difficult to reconcile with the popular view that attributes the housing boom to looser borrowing constraints associated with lower collateral requirements. In fact, a slackening of collateral constraints at the peak of the lending cycle triggers a fall in home prices in our framework, providing a novel perspective on the possible origins of the bust.  Read more

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Webinar : Bond Investing: a flexible approach with an investment solution, Mar 11 2015 5:30 pm IST

Due to increasing interaction across the fixed income market sub universities Mirabaud’s Global Strategic Bond Fund aims to provide a value driven best ideas portfolio using a concentrated and top down thematic approach.

With a robust investment process and active allocation our experienced top quartile managers aim to achieve superior returns with strict attention to capital preservation. Whilst index aware we are not index led and actively manage duration and credit exposure across all business cycles.

Attend now

Webcast : Event Shortfall – Investment Risk Realised Hide details, Monday, 9 March at 14:30 UTC

Investors make portfolio allocation decisions for a wide array of reasons. For example, a pension plan may choose to implement a strategic asset allocation change as a result of an asset-liability study. Whatever the reason for the change in investment allocation, delay in implementation will invariably impact returns. Empirical evidence from State Street’s transition team shows that the delay between client investment decision and selection of a transition manager can run into several months and in extreme cases over a year. Current calculations of investment risk will tend to consider investment exposure relative to a benchmark once the portfolio restructuring is complete. Event Shortfall considers that investment risk starts at the point of decision. Measuring risk in this way implies that asset owners are running unrewarded and un-mandated risks for considerable periods of time and are often paying explicit fund management fees for the delivery.

Our webinar explains the background to Event Shortfall, considers some of the practical implications of measuring and managing these risks, and reflects on the viewpoint of industry figures.

Lessons Learned From 20 Years Of Rating Global Project Finance Debt – S&P

It has often been said that those who fail to learn from history are doomed to repeat it. The global project finance sector can perhaps be included among those who have learned from experience. The sector learned some hard lessons in its pioneering days, such as how to counter market exposure risk–the biggest cause of default–and how to strengthen a project’s structure to provide the necessary… More