Comments on: Preparing for bank downgrades http://blogs.reuters.com/felix-salmon/2010/05/24/preparing-for-bank-downgrades/ A slice of lime in the soda Thu, 23 May 2013 23:51:59 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/05/24/preparing-for-bank-downgrades/comment-page-1/#comment-15139 Danny_Black Tue, 25 May 2010 00:00:05 +0000 http://blogs.reuters.com/felix-salmon/?p=3973#comment-15139 The mistake here is to assume that downgrades have a linear affect. As Patricio stated there is probably a number of step-up clauses in their debt covenants and it will have serious knock-on effects in the money and repo markets in terms of their ability to raise ANY capital in those markets. Yet another one of those unintended consequences and what happens when you pass poorly thought out regulation on the back of populist rhetoric. The mistake here is to assume that downgrades have a linear affect. As Patricio stated there is probably a number of step-up clauses in their debt covenants and it will have serious knock-on effects in the money and repo markets in terms of their ability to raise ANY capital in those markets.

Yet another one of those unintended consequences and what happens when you pass poorly thought out regulation on the back of populist rhetoric.

]]> By: JohnBarrdear http://blogs.reuters.com/felix-salmon/2010/05/24/preparing-for-bank-downgrades/comment-page-1/#comment-15125 JohnBarrdear Mon, 24 May 2010 16:09:39 +0000 http://blogs.reuters.com/felix-salmon/?p=3973#comment-15125 Felix, you may be interested in this piece over at the FT's Alphaville, quoting a vague Moody's report and a note from Barclay's Capital on the repo implications of a downgrade: http://ftalphaville.ft.com/blog/2010/05/21/239976/of-reform-us-bank-ratings-and-repo/ Felix, you may be interested in this piece over at the FT’s Alphaville, quoting a vague Moody’s report and a note from Barclay’s Capital on the repo implications of a downgrade: http://ftalphaville.ft.com/blog/2010/05/ 21/239976/of-reform-us-bank-ratings-and- repo/

]]> By: RHS http://blogs.reuters.com/felix-salmon/2010/05/24/preparing-for-bank-downgrades/comment-page-1/#comment-15124 RHS Mon, 24 May 2010 15:27:41 +0000 http://blogs.reuters.com/felix-salmon/?p=3973#comment-15124 This is interesting Felix. I am going to send a note to myself to remember it. This is interesting Felix. I am going to send a note to myself to remember it.

]]> By: patricio http://blogs.reuters.com/felix-salmon/2010/05/24/preparing-for-bank-downgrades/comment-page-1/#comment-15122 patricio Mon, 24 May 2010 14:24:05 +0000 http://blogs.reuters.com/felix-salmon/?p=3973#comment-15122 Don't forget ratings based collateralisation and termination triggers - the proximate cause of AIG's downfall. Don’t forget ratings based collateralisation and termination triggers – the proximate cause of AIG’s downfall.

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