Saturday, March 27, 2010

HIRE act...

...causing would-be foreign Treasury buyers to opt for swaps.

Wednesday, March 10, 2010

Saturday, March 6, 2010

Argentina debt swap

BUENOS AIRES, March 5 (Reuters) - Argentine sovereign debt prices rose on Friday on growing expectations that the government will launch soon a planned swap of about $20 billion in defaulted bonds, traders said.

Government bonds traded over the counter in Buenos Aires were up 0.9 percent on average in midday trade, led by the dollar-denominated Boden 14 paper ARBODEN14D=RASL, which was trading 1.9 percent higher to an ask price of 29.15.

Argentina's government plans to open a debt swap to mop up bonds leftover from a massive 2002 debt default, allowing it to issue new debt in global credit markets to help ease tight state finances in a preelection year.

"The likelihood that the swap will take place in the next few weeks appears more and more likely," Buenos Aires-based financing group Grupo SBS said in a research note.

Economy Minister Amado Boudou said earlier this week the government would soon wrap up the paperwork needed to launch the operation with the U.S. Securities Exchange Commission, reaffirming his aim to start the swap this month.

Argentine sovereign bonds were slightly outperforming the JPMorgan Emerging Markets Bond Index Plus 11EMJ, with spreads tightening 15 basis points to 749 basis points over U.S. Treasuries prices. Overall emerging-maket spreads narrowed 13 basis points to 272 basis points, according to the indicator. (Reporting by Jorge Otaola; Writing by Helen Popper)

Friday, March 5, 2010

European Commission...

Already firing salvos in the propaganda war by classifying investors as "speculators".

EU weighing up regulation for debt speculators

(AP) – 21 hours ago

BRUSSELS — The European Commission said Wednesday that it will call in market regulators and banks to discuss possible problems with the market for credit default swaps on sovereign debt.

The swaps are a form of insurance against a borrower defaulting on debt — and the market for them has swelled in recent weeks as traders weigh up the risk that Greece might not be able to repay its massive debt.

EU press officer Carmel Dunne said in an e-mailed statement that EU officials were looking at the issue closely and would shortly call a meeting of regulators, supervisors and the industry to discuss it.

"We need to know better who does what, to better understand this market, including interactions with sovereign debt," she said. "We need to decide whether there are inherent problems with the CDS market."

BNP Paribas analyst Hans Redeker said spreads on sovereign bonds and credit default swaps have now collapsed, blaming "hedge funds fearing Europe imposing regulatory measures on CDS spreads."

Thursday, March 4, 2010


Buy sovereign risk in Asia?

March 3 (Bloomberg) -- Franklin Templeton Investments, manager of $187 billion of fixed income assets, is buying South Korean and Malaysian bonds on bets currency gains will boost returns as sovereign risk weighs down developed debt markets.

“Growth will be slow in traditional core fixed income markets, but not necessarily other countries,” said New York- based Rob Waldner, Franklin Templeton’s global bond fund manager. “What we’re looking at is opportunities that avoid those core markets.”

Sovereign bonds from Asian countries where currencies will appreciate as central banks raise interest rates are a buy, Waldner said yesterday in a phone interview from Melbourne, where he was visiting clients. Franklin Templeton is buying notes maturing in two years or less to limit exposure to declines in the prices of debt, he said.

But P&C rejoins...

KUALA LUMPUR: Bankers in the Asia-Pacific region perceive there the banking industry is over-regulated while issues including macroeconomic trends and political interference are among the top three threats to the banking sector over the next 12 to 24 months, according to PricewaterhouseCoopers (PwC).

The issues weighing down bankers are the Basel 2 requirements arising from the financial crisis and close economic ties to the West, according to PwC officials at a media briefing on Thursday, March 4.

The Banking Banana Skins 2010 survey results showed the “relatively volatile” equity markets in the region were susceptible to the movement of funds around the world.

The survey also revealed areas of high concern included commodities, especially in resource-rich countries, the sustainability of the market rally, a high dependence on TECHNOLOGY [] and the risks to the environment.

Areas of less concern for those in the Asia-Pacific region were credit risk, the availability of capital and issues of corporate governance.

Monday, February 22, 2010


...In Asia.

The truth is that the rise in foreign reserves has rested substantially on large commercial borrowings by the government, and the release of the first two installments of a US$ 2.6 billion International Monetary Fund standby loan, which is spread out over two years. The IMF approved the loan last July when the country faced a major foreign exchange crisis and, potentially, a default.

The Sunday newspaper economic columnist warned last weekend: “Most of the (foreign currency) reserves are loans that have to be repaid rather than funds that have been earned through exports. These contingent liabilities have also increased the country’s public debt that is a serious burden on the economy…”

The columnist also noted that another reason for the favourable foreign exchange figures was a rise in remittances sent by workers employed overseas, particularly in the Middle East. He pointed out that while remittances increased 14.2 percent in US dollar terms over the first 11 months of 2009, exports were sharply down in all areas by an overall 14.7 percent. These included a fall of 12.3 percent in agricultural exports, including 10.2 percent for tea, and 15.1 percent for industrial exports.

Textile and garment exports fell by only 5.3 percent, but the sector will be hard hit by the EU’s decision to end its GSP+ trade preferences over war crimes and human rights abuses. Like the US, the EU is using the human rights issue to pressure the Sri Lankan government, and undermine the influence of rivals such as China. But the decision to end GSP+, which will take effect in six months, will have a damaging effect on garment exports and jobs. More than half of the sector’s exports go to Europe.

They doth protest too much...

Germany must not mind the decline of the Euro that much. They can ill-afford another vertical drop in exports to the U.S.