Neil's Feed
Mar 26, 2012
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Europe needs to ease on firewall obsession

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

How big should Europe’s firewall be? Some analysts reckon the euro zone needs as much as two trillion euros, enough to bail out Italy, Spain, and some others if need be. By comparison, the size of the planned 500 billion euros of the European Stabilisation Mechanism (ESM), the euro zone’s permanent bailout mechanism, looks paltry. Unless it includes the unused funds of the European Financial Stability Facility (EFSF), the temporary structure put in place in the wake of the Greek fiasco.

Mar 13, 2012

Austro-Greek blow-up is eyesore for CDS market

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Neil Unmack

LONDON, March 13 (Reuters Breakingviews) – It seems not
everyone was ready for a Greek default. Although most investors
have been braced for a hit for well over a year, Austrian lender
KA Finanz announced on March 9 that it will write down up to 1
billion euros of Greek exposure, partly because of losses on
credit default swaps. The loss is largely due to accounting. But
it’s a setback for those hoping an orderly payout would show
credit derivatives in a good light.

Mar 9, 2012
via Breakingviews

Euro zone first default gives few reasons to cheer

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It could have been worse: that’s the best thing to be said about the Greek debt swap. The euro zone’s first restructuring will not be chaotic. But it has done away with the pretence that a euro zone sovereign’s signature is golden. And Greece will still struggle with a heavy debt load.

Mar 8, 2012
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Greek debt threat won’t trigger Armageddon

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Athens is threatening not to pay holdouts in its debt swap, dispelling any pretence that the restructuring will be “voluntary”. The sabre-rattling is spooking markets, but an outbreak of minor chaos should help bring stragglers on board. A disorderly default still looks remote.

Mar 6, 2012
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Apax finds French twist on bankruptcy tourism

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Restructuring specialists have a lot to thank the UK for. The country’s creditor-friendly legal framework has drawn companies from across Europe to restructure in London. European Union law states that companies should use the insolvency regime relevant to their centre of main interest, or “comi” for short. But the concept is elastic; a Greek mobile telecoms company, Wind Hellas, was able to restructure in London by relocating one of its companies from Luxembourg to the UK.

Mar 2, 2012
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Weidmann’s ECB agitation more dangerous than Weber

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is the Bundesbank worried about the potential break-up of the euro zone? That’s certainly how a leaked letter from Jens Weidmann, the Buba’s boss, to Mario Draghi, the European Central Bank President, reads. Weidmann is worried that collateral which the ECB is accepting from banks in return for its massive liquidity injections isn’t sufficiently good – and that strong national central banks, such as his, could be on the hook for losses.

Mar 2, 2012
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Euro zone crisis over – for now

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The euro zone has gone from crisis to catharsis in three months. Markets used to panic over what would happen when Italian yields topped 7 percent. After breaching that level in November last year, Italian 10-year yields have fallen below 5 percent. Spanish yields, which never quite got to 7 percent, have also sunk below that symbolically round number.

Feb 29, 2012
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Markets might yawn at second ECB cheap-money fix

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The ECB’s second three-year liquidity facility should attract enough takers to avoid a spookily-low outcome. But those expecting a massive splurge will likely be disappointed. And the prospect of further long-dated funds looks remote, for now.

Feb 17, 2012
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ECB Greek loss dodge heralds end of bond buying

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The European Central Bank will avoid losses on Greek bonds through a legal manoeuvre. Such special treatment will not please the private bondholders who are being asked to take losses on their Greek debt. It might also bring the ECB’s bond-buying programme to an end.

Feb 16, 2012
via Breakingviews

High yield U.S. tourists sail into European storm

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By Neil Unmack and Agnes Crane

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The European Central Bank’s cheap money and the siren call of high yields are luring global investors into the European junk bond market. High-yield bond issuance is up nearly 70 percent so far this year over the same period of 2011, according to Thomson Reuters data. It may seem odd given the uncertain future for the euro zone, but the ECB’s move to flood the banking system with three-year loans has given investors confidence that a financial meltdown can be averted. The Federal Reserve’s commitment to near-free funds is encouraging U.S. investors to look to European debt for juicer returns. Some 63 percent of high yield bonds sold by European companies in January were issued in dollars, according to Morgan Stanley.