Weekend Credit Headlines

France was cut by one step to AA+ from AAA, Fitch said
today, joining Moody’s Investors Service and Standard & Poor’s
in removing France from the shrinking club of top-rated
governments. The outlook is stable. (Bloomberg)

>> no impact as Moodys and S&P had already cut their ratings in 2012

S&P downgrades Italians banks, expected following sovereign downgrade

>> SGD Unicredit 5.5% 07/2023 callable down 5 cts to 89.00 mid price

The Markit CDX North American Investment Grade Index, a
credit-default swaps benchmark that investors use to hedge
against losses or to speculate on creditworthiness, has dropped
8.6 basis points since July 5 to a mid-price of 78 basis points
….. the lowest since May 30. (Bloomberg)

>> stabilising for credit spreads in the week ahead

German Bunds Rise Most in a Year on ECB as Portugal’s Bonds Drop

>> flight to quality on Eurozone instability

July 12 (Bloomberg) — Sales of corporate bonds in the U.S.
surged to the fastest pace in seven weeks, reaching at least $23
billion as relative yields narrowed.

Junk Bond Sales Surge to 10-Week High as Credit Risk Declines

>> expect to see issuances pick up again

Indonesian Bonds Complete Longest Losing Streak Since April 2008….     Bank Indonesia raised its reference rate by 50 basis points
to 6.50 percent yesterday, the most since December 2005. The
decision was predicted by only three out of 19 economists
surveyed by Bloomberg.

>> EM outflow not over

Foreign investors turn buyers of Indian index futures (Reuters)

>> Some signs of risk returning

July 13 (Bloomberg) — Wells Fargo & Co. and JPMorgan Chase
& Co., the most-profitable U.S. banks, lost $6.5 billion in
combined equity as rising interest rates and falling bond prices
threaten capital levels across the industry.

JPMorgan Profit Rises 31% on Trading, Beats Analysts’ Estimates

Wells Fargo 2Q EPS Beats Estimates

>> AFS losses to threaten equity going ahead despite overall higher bottom line profits leading to Tier 1 issuances going ahead

Summers Said to Show Interest in Fed Chairmanship After Bernanke

>> Taper Bad !


Janet Yellen: 1-to-5
Lawrence Summers: 8-to-1
Timothy Geithner: 10-to-1
Christina Romer: 20-to-1
Larry Meyer: 33-to-1
Roger Ferguson: 50-to-1
Donald Kohn: 66-to-1
Paul Krugman 150-to-1
Kenneth Rogoff: 200-to-1
Nouriel Roubini: 200-to-1
Jeffrey Sachs: 400–to-1
Niall Ferguson: 500-to-1
Nassim Nicholas Taleb: 1000-to-1