Turkey’s self-inflicted problems have had ramifications well beyond its borders and led to comparisons with previous emerging market crises. Mexico in 1994; south-east Asia in 1997; Russia in 1998; Argentina in 2001: all have been invoked as precursors to Turkey’s seemingly inevitable descent into debt distress and recession....
Emerging markets: CDS stalwarts Emerging market sovereigns are regarded as stalwarts of the CDS market. Liquidity is dependable – participants can usually trade in large size with relatively low transaction costs and little price impact. Those that offer doom-laden predictions about the single name product clearly pay little heed to emerging market names....
The news wires are full of headlines around Trump, trade wars and Brexit. A mercantilist USA and a UK government clinging on by its fingertips are not conducive to positive market sentiment. Yet spreads appear unaffected by the political chaos; spreads have tightened, rather than widened. The Markit iTraxx Europe is trading at 65bps, a
It’s not uncommon for a firm to have an association with an adjective. The description is often derogatory; for example, acquisitive companies are often said to be rapacious. For Glencore, the commonly used adjective is “secretive”. This is no doubt due to the deliberately low profile of its CEO, Ivan Glasenberg, as well as its
Credit Events often make the headlines in the CDS market, for good or ill. But the ISDA Determinations Committee also make other decisions, most often on Succession Events. These are typically straightforward determinations resulting from corporate actions such as mergers and acquisitions. In short, they are part and parcel of a CDS market that in
In the political sphere, Europe and North America appear to be going on separate ways since the election of Donald Trump, as was evident in the recent G7 talks. In the credit world, however, they are closely correlated, reflecting the global scope of corporates on both sides of the Atlantic....
Italy ISDA basis – redenomination risk The spread volatility seen in recent days brings back memories of the 2010-2012 eurozone debt crisis. Whether they are fond recollections or not – many investors are no doubt scarred by the experience – in such febrile times observers from all asset classes reach for the CDS toolbox to
Has contagion returned to the eurozone? Bismarck said politics was the art of the possible. Holders of sovereign bonds issued by eurozone peripherals will be hoping this aphorism applies to Italy’s incoming government. A populist coalition formed of the anti-establishment Five Star Movement and the right-wing League, which looks set to form a government, seemed
iTraxx Europe – options can influence volumes Fundamental factors rightly garner the most attention when investors try to ascertain why markets move. Even if one regards markets as perfectly efficient and favour index tracking, it would be foolhardy to completely ignore real world influences when managing money. But the credit markets, in particular, warrant analysis
Risky assets are often beholden to perceptions of geopolitical risk, though in recent times it has been a minor factor. Perhaps that is about to change. The conflict in Syria has taken a terrible twist that threatens to draw the major western powers into a conflict with Russia, with concomitant negative effects on credit markets.