Category Archives: Europe

ECB’s Monte Paschi Capital Bar Would Trip Up 10 Other EU Banks

Deutsche Bank AG, UniCredit SpA and eight other European Union banks would fall short of the European Central Bank’s capital demands on Banca Monte dei Paschi di Siena SpA based on stress-test results, highlighting potential objections to the plan.

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IOSCO issues Statement on Non-GAAP Financial Measures to assist issuers in providing clear disclosure for investors

Financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) provide investors, analysts, and other users with a defined basis for conducting financial analysis and comparison among different entities. IOSCO recognises that in addition to GAAP based financial statements, issuers also convey financial information using financial measures other than those that are specified, defined or determined by GAAP, commonly referred to as non-GAAP financial measures or alternative performance measures. Non-GAAP financial measures can be useful to issuers and investors because they can provide additional insight into an issuer’s financial performance, financial condition and/or cash flow. The use of nonGAAP financial measures also can provide issuers with flexibility in communicating useful, entityspecific information. Problems can arise, however, when non-GAAP financial measures are presented inconsistently, defined inadequately, or obscure financial results determined in accordance with GAAP. Furthermore, non-GAAP financial measures typically lack a standardised meaning and, if so, are generally not comparable from one issuer to the next.

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Is EBITDA a Non- IFRS number?

Surprise, surprise! EBITDA does not have to be a ‘non-IFRS’ number This is one of the most surprising takeaways we hear from investors when they read The Essentials— Presentation of Financial Statements, our investor publication that covers key elements of IAS 1 Presentation of Financial Statements, and explains how investors can make the most of the information presented.

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Credit, commodities and currencies

The global economy finds itself at the centre of three major economic developments: disappointing economic growth, especially in emerging economies; large shifts in exchange rates; and a sharp fall in commodity prices. These should not be seen as one-off shocks or headwinds but manifestations of a major realignment of economic and financial forces.


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Signs of global liquidity tightening for emerging markets

Global liquidity conditions may have begun to tighten for emerging market economies (EMEs), according to updated data from the Bank for International Settlements. BIS General Manager Jaime Caruana detailed highlights from the latest global liquidity indicators, a measure of the ease of financing in global financial markets, in a lecture at the London School of Economics’ Systemic Risk Centre.

The stock of US dollar-denominated debt of non-banks outside the United States is an important gauge of global liquidity. That stock stood at $9.8 trillion at the end of September 2015, unchanged from the end of June. US dollar-denominated debt of non-banks in EMEs also held steady in the third quarter of 2015, at $3.3 trillion. Q3 marked the first time since 2009 that the measure, which is linked to the strength or weakness of the dollar, stopped increasing. Read more

IMF WP: Do countries pay an interest rate premium for having defaulted in the past?

We re-assess the view that sovereigns with a history of default are charged only a small and/or short-lived premium on the interest rate warranted by observed fundamentals. Our reassessment uses a metric of such a “default premium” (DP) that is consistent with asymmetric information models and nests previous metrics, and applies it to a much broader dataset relative to earlier studies. We find a sizeable and persistent DP: in 1870-1938, it averaged 250 bps upon market re-entry, tapering to around 150 bps five years out; in 1970- 2011 the respective estimates are about 400 and 200 bps. We also find that: (i) these estimates are robust to many controls including on actual haircuts; (ii) the DP accounts for as much as 60% of the sovereign spread within five years of market re-entry; (iii) the DP rises with market exclusion spells. These findings help reconnect theory and evidence on why sovereign defaults are infrequent and earlier debt settlements are desirable.

Read the full paper here

S&P Webcast : Structured Finance 2016 Global Outlook, Friday, January 8, 2016 Time: 11:00 a.m. EST

Given turbulent market conditions, Standard & Poor’s Ratings Services will hold a webcast on Friday, January 8, 2016 at 11:00 a.m. EST to discuss recent volatility and the expected impact to our Global 2016 Outlook for Structured Finance.  Senior credit analysts will provide perspectives on each of their respective sectors and current expectations for 2016 collateral and issuance performance. Given the number of speakers, below is a list of with the approximate time they are scheduled to speak. Questions may be submitted at any time during the webcast, however in order to get through the material as scheduled, we will answer questions at the end of our prepared remarks.

Title: Structured Finance 2016 Global Outlook

Date: Friday, January 8, 2016

Time: 11:00 a.m. Eastern Standard Time

Duration: 1 hour and 30 minutes

Register for the complimentary Webcast


Joint investor outreach event: Milan—22 October 2015

Joint investor outreach event: Milan—22 October 2015

  • Could the proposals in the Conceptual Framework Exposure Draft make profit or loss (P&L) more useful?
  • What you need to know about IFRS 9 Financial Instruments
The International Accounting Standards Board (IASB), in conjunction with the European Financial Reporting Advisory Group (EFRAG), the European Federation of Financial Analysts Societies (EFFAS) and the Associazione Italiana degli Analisti e Consulenti Finanziari (AIAF), invite investors to participate in a joint outreach event.

We are actively seeking input from investors on the proposed changes to the Conceptual Framework for Financial Reporting. One of the topics we will consider at this event is how to improve the usefulness of the statement of profit or loss (the P&L).

Join us to share your views on how the P&L could better meet your needs:

  • Is the P&L the starting-point for your analysis? If not, what is?
  • Are there items included in the P&L that you eliminate? If so, what are they?
  • Are there items that you need but that you do not find in the P&L?
  • Are there items shown in Other Comprehensive Income (OCI) that you include in your analysis? If you do not use OCI, why not?
  • Should bad news (adverse litigation, for example) be reflected in the P&L earlier than good news that is expected but still uncertain?
  • When assets are measured at fair value through P&L, how do you treat the gains and losses associated with the changes in value during the period?
  • What is the importance of stewardship to your work as an investor?

The discussion will feature a panel of leaders in the investment management industry and the accounting standard-setting community.

It will be followed by an educational session from Fred Nieto, IASB Investor Education Manager, on the new requirements for accounting for financial instruments in IFRS 9. A panel of experts will also report on their first experience and impressions, with an investor focus.

For further details and registration please read the formal invitation here. Please register before October 16

More information about the Conceptual Framework project can be found here.
More information about IFRS 9 Financial Instruments can be foundhere.

IASB Webcast Series : Proposed Conceptual Framework : The elements of financial statements: definitions and recognition

The IASB staff are creating a series of recorded web presentations to help those with an interest in the Conceptual Framework get a better understanding of the proposed changes that are currently being consulted on.

Each presentation provides a detailed walk-through of the different parts of the Exposure Draft, providing further insight into the IASB’s thinking and the rationale behind the proposals. The Exposure Draft proposes a number of enhancements to the existing Conceptual Framework, for example:

  • refining the definitions of the basic building blocks of financial statements—assets, liabilities, equity, income and expenses;
  • a new chapter on measurement that describes appropriate measurement bases (historical cost and current value, including fair value), and the factors to consider when selecting a measurement basis; and
  • confirming that the statement of profit or loss is the primary source of information about a company’s performance, and adding guidance on when income and expenses could be reported outside the statement of profit or loss, in ‘Other Comprehensive Income (OCI)’.

A new presentation will be published every week and can be viewed on demand. Each presentation consists of slides and voice and runs approximately 10–25 minutes.

Below is an overview of the topics that are covered and the dates the presentations will become available. View here or click on link below

Chapter 4 and 5—the elements of financial statements: definitions and recognition Thursday 6 August Watch here



The Absolute Return Letter, June 2015 – Are bond investors crying wolf?

The Absolute Return Letter, June 2015

Are bond investors crying wolf?

Since we last wrote to you there has been quite a dramatic increase in interest rates in most markets and in Germany in particular. In this letter we look into whether this is the beginning of something much bigger.

For those of you with too little time on your hands we conclude that it is NOT. Economic growth will stay low for many years to come, and central banks have no intention of suddenly flooding the bond market with sell orders.

Enjoy the read.

Get this issue now


BIS, ECB and IMF publish the Handbook on Securities Statistics

  • The joint handbook assists the production of internationally comparable securities statistics.
  • It covers the conceptual framework for statistics on debt and equity securities.
  • Set of detailed presentation tables using the concepts and guidelines.

The Bank for International Settlements (BIS), the European Central Bank (ECB) and the International Monetary Fund (IMF) today jointly released the Handbook on Securities Statistics.

The importance of securities markets in intermediating financial flows, both domestically and internationally, underscores the need for relevant, coherent and internationally comparable statistics. This need was recognised by the G20 Data Gaps Initiative, launched in the aftermath of the 2007-08 global financial crisis with the support of the G20 finance ministers and central bank governors and the IMF’s International Monetary and Financial Committee.

Download handbook

CalPERS gives its managers ESG ultimatum

In what promises to be a transformational moment for ESG integration and investment manager accountability, CalPERS will require all of its managers to identify and articulate ESG in their investment processes.

CalPERS staff led by Anne Simpson, senior portfolio manager and director of global governance, presented the ESG manager expectations, and draft sustainable investment guidelines, to the investment committee this week.


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Did you know : CCRA curriculum covers ESG principles from Equator Principle Association :


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.

Oslo Stock Exchange announces 1st green bond list on a stock exchange! AND a public second opinion on green credentials is required to make the cut. (Launch due in 2015)

Oslo Stock Exchange announces 1st green bond list on a stock exchange! AND a public second opinion on green credentials is required to make the cut. (Launch due in 2015)

By Beate Sonerud, Climate Bonds Policy Analyst

Oslo Stock Exchange (OSE) announced last week that they will become the first stock exchange in the world to set up a separate list for green bonds. Two separate green bond lists will be set up in late January 2015: One for those listed at OSE, and one for green bonds listed on Nordic ABM. The announcement was made at a very well attended green bonds seminar in Oslo held by Norsif, the Norwegian Sustainable Investment and Finance Association.

It’s great to see a stock exchange taking a more active role in the green bonds market. Similar to criteria for inclusion in an index, the requirements of stock exchanges for listing on the exchange, or as in this case, for making a list within the exchange, can help drive standards in a market because issuers want to have their bond listed on the exchange or included in the list. The benefit to issuers of inclusion is higher level exposure; making it easier for green investors to discover the bond as an investment opportunity. OSE has taken a leadership role in the green bonds market by setting requirements for their green bond list above existing market standards. OSE’s green bond list requires issuers to have second opinions on the green credentials of the bond issuance and, importantly, that this opinion is made public. According to OSE’s Communications manager, Geir Harald Aase, the exchange decided to set such requirements because “it is crucial that investors have transparency. Investors should have equal access to information to analyse the investment”.

The emphasis on second opinions and their disclosure is what makes this development really interesting. In the broader green bonds market, getting a second opinion is a voluntary decision for the issuer. The current market guidelines, such as the Green Bond Principles, only recommend second opinions – it is not a must. Not all decide to get a second opinion: Indeed, our data shows that 42% of the green bonds issued in 2014 do not have a second opinion (data on all the green bonds issued including if they have second opinions is now freely available on our website). Hopefully OSE’s green bond list will encourage new and potential issuers to get a second opinion and publish it. Great news for investors in Nordic green bonds!

Now, to clarify: OSE’s green bond list is not a new green bond index: It is simply a list of the green bonds listed on OSE that comply with certain criteria – it does not track the financial performance of the included bonds. Evolving the list into a green bond index is however something that OSE has said they will consider in the future. That would be exciting – a green bond index where investors would know all the bonds had second opinions. That would make it even easier for investors to identify investments with robust green credentials that also provide the desired returns.

OSE’s green bond lists add to the list of Scandinavian “firsts” in the green bond market: Sweden’s SEB was the underwriter of the first green bond with a second opinion back in 2007/2008, and Gothenburg was the first to issue a Green City bond in September 2013. Now Norway is increasingly joining the game after the first Norwegian green corporate bond was issued in September. Well done, Oslo Stock Exchange!

(Also, look out for our upcoming blog on the third Norwegian corporate green bond after is closes this week – it will be listed on Oslo Stock Exchange)

Mckinsey: QE and ultra-low interest rates: Distributional effects and risks

There is widespread consensus that the conventional and unconventional monetary policies that world’s major central banks implemented in response to the global financial crisis prevented a deeper recession and higher unemployment than there otherwise would have been. These measures, along with a lack of demand for credit as a result of the recession, contributed to a decline in real and nominal interest rates to ultra-low levels that have been sustained over the past five years.

View full report at