Neil's Feed
Jul 13, 2011
via Breakingviews

Italy can save itself to save euro zone

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

LONDON — The growing Italian crisis leaves the euro zone out of options. The country is both too big to fail and too big to bail. But Italy can deal with its own crisis.

Jun 8, 2011

Feature: What’s Greek for default?

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

By Neil Unmack and George Hay

LONDON (Reuters Breakingviews) – When is a country in default? In Greece’s case, the answer depends on who you ask. Euro zone politicians want holders of the country’s bonds to help contribute to another bailout. However, they also want to avoid the wider market fallout that a default would bring. Getting accountants, rating agencies, derivative traders and the European Central Bank to agree will be hard. But not all opinions have equal weight.

Apr 7, 2011
via Breakingviews

Portugal’s road to bailout will be rocky

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

LONDON — It took a while, but Portugal finally got it. The country’s caretaker prime minister this week admitted he had no other choice than to formally request a bailout by the euro zone and International Monetary Fund. The country’s banks and global financial markets had sent unmistakable messages in recent days. The banks had warned they couldn’t buy Portuguese debt any longer, and urged the government to seek a financial lifeline. And on Wednesday markets demanded near-6 percent yields to lend to Portugal for one year — above the rates the country would be charged if it borrowed from the euro zone’s bailout facility over seven years. The real question now is what kind of conditions its partners can force on Portugal in exchange for help — and whether they can be confident the plan will muster a broad enough political support to bind the government that will come out of the June elections.

Mar 4, 2011

Not only Credit Suisse can do the CoCo

By Neil Unmack

LONDON, March 4 (Reuters Breakingviews) – Bank of Cyprus is
planning to sell contingent convertible bonds: a sign the
securities aren’t just for big, strong banks. But the latest
variety comes with a twist: the bonds can be converted into
shares in good times as well as bad. They could be a model for
other lenders.

Full view will be published shortly.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Get Breakingviews alerts directly to your inbox three times
a day. To sign up click here:
here

Jan 6, 2011
via Breakingviews

European property needs more bank wannabes

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

LONDON — Europe’s property market needs more bank wannabes. Axa has set up funds to invest 2.5 billion euros in real estate debt. The move suggests insurers could help ease the refinancing burden left by Europe’s shrinking banks. Many of these loans will still be deemed too risky. But the French group may point the way for others.

Dec 20, 2010
via Breakingviews

ECB’s Irish doubts highlights broader uncertainty

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

LONDON — Bank bondholders aren’t the only ones fretting about what the Irish bailout means for them. Even the European Central Bank is unsure of its status and has posted its concerns on its website. If the ECB doesn’t know the score, what hope is there for private creditors?

Sep 16, 2010
via Breakingviews

Europe risks corporate derivatives loophole

Europe’s corporate treasurers can pop open the champagne. After much lobbying, they have won an exemption from new European Commission rules forcing over-the-counter derivative trades to be centrally cleared. But the decision could create a loophole that allows companies to take on big positions and pose a systemic threat.

The G20 group of leading nations last year agreed that all derivative trades should, where possible, be moved onto clearing houses. The thinking was that central clearing spreads risk, reducing the chance that the failure of a single large counterparty can drag down the financial system.

Jul 29, 2010
via Breakingviews

Big is beautiful in hedge fund land, for now

More than ever, sovereign wealth funds and institutions are entrusting their money disproportionately to the largest hedge funds. They may find out bigger isn’t always better.

The size fetish has meant that the share of industry assets held by firms with more than $1 billion under management has risen gradually from about 75 percent in 2006 to about 82 percent at the start of this year, according to Hedge Fund Intelligence. And the trend seems to be accelerating. In the second quarter, 92 percent of net inflows went to managers with more than $5 billion under management, Hedge Fund Research reckons.

May 24, 2010
via Breakingviews

Libor jitters come at bad time

Fears that European banks will be crippled by their sovereign exposure are increasing their borrowing costs. The situation isn’t critical; central banks will act to prevent a report of the post-Lehman crisis. But higher rates won’t help the still fragile recovery gain strength.

It sounds eerily like 2008, when the fear factors were toxic mortgages and the collapse of Lehman Brothers. A collapse in liquidity made the funding market for banks almost dysfunctional. Debts were rolled over at ever higher costs and shorter maturities.

Mar 8, 2010
via Breakingviews

Rabobank takes lead in bank capital revolution

(Refiles on October 19, 2010 to add disclaimer for author’s personal investment. Neil Unmack owned Lloyds CoCos when he wrote this article.)

Ever since the financial crisis struck, regulators have argued for an overhaul of bank capital. Contingent capital, which can absorb losses while the bank remains in business, sounds like the solution. But until last week it had only been used by a few distressed lenders.