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Germany Special Report 2012
The eurozone crisis has proved to be a sprawling saga that matches anything staged at Bayreuth. Germany, our chief protagonist, rests on the laurels of continuing growth led by robust exports. But the demons of political instability lie lurking in the wings and threaten to blight the feast.
Germany remains the centre of stability in the eye of the eurozone storm – but it has challenges of its own. This special report looks at critical developments, including the problems faced by auto manufacturers as they deal with increased competition, energy utilities coping with the switch from nuclear to green power sources and renewable firms’ subsidy cuts.
To see the full IFR Germany Special Report, click here.
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IFR's Daily Digest of views on news and other stuff
Japan DCM professionals juggling myriad issuance ideas
To Tokyo, where I moderated a yen debt capital markets roundtable after the market close on Tuesday. I’m also giving out the awards at the annual DealWatch awards dinner on Thursday. DealWatch is IFR’s Japanese-language capital markets affiliate and the event always draws a good crowd of senior capital markets professionals and their clients. It’s a great opportunity to catch up with the market in a short space of time.
Only the ECB can make it a bank run
A spreading bank run could hasten Greece’s exit from the euro zone but it certainly doesn’t have to end that way.
JP Morgan trading loss an upset for big US bank credits
JP Morgan’s disclosure last week of a US$2bn trading loss has undermined years of effort by US money center banks to claw their way back to being the respected low-beta sector they were before the 2008 crisis.
BONDS: Kexim delivers largest Korean Samurai
Export-Import Bank of Korea has set a record for Korean bond sales in Japan with a ¥100bn (US$1.25bn) three-part Samurai, offering a sign that Japanese investors are growing more interested in overseas risk.
Long road ahead to unwind JP Morgan trade
JP Morgan is faced with a long and bumpy road ahead to unwind a series of trades placed by its Chief Investment Office, which have resulted in mark-to-market losses of US$2bn at the firm.
JP Morgan investment unit played by different high-risk rules
The JP Morgan Chase unit that lost more than US$2 billion through a failed hedging strategy had looser risk controls than the rest of the bank, according to people familiar with the situation.
EQUITIES: Facebook expands IPO to US$16bn
Facebook has again increased the size of its IPO, this time by adding another 83.8m shares, or 25%, to the number of shares it plans to offer and therefore expanding the potential size of the offering to more than $16bn.
ANALYSIS: Euro twilight zone beckons for Greece
(Reuters) - Speculation about an endgame in Greece’s protracted crisis has flooded markets with euro exit scenarios this week, but investors reckon there’s still every chance that uncertainty will simply drag on for months.
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IFR Comment: Grexit worse than Lehman's?
To say that the price action has become a little ugly would be an understatement, but this is exactly what you get when you are faced with an unpredictable and unknown outcome of a Grexit. To make comparisons of a Grexit scenario with the fallout from the Lehmans bankruptcy seems appropriate, but unlike 2008–09 there are two important differences 1) we have less of an ability to utilise fiscal and monetary firepower and, 2) China/EM countries are slowing down and unable to compensate.
Alternate views on austerity come face to face in Berlin
“I looked the man in the eye. I was able to get a sense of his soul.” That was what George W Bush had to say about Vladimir Putin when they met for the first time in Ljubljana in 2001.
IFR Comment: BoE's door wide open for QE
The key message from the BoE Quarterly Inflation Report is that they are looking at the bigger picture and this means the door to further QE is a lot more open than markets had thought. In particular the fact that the BoE still sees inflation below 2% in two to three years’ time point to the bias being towards more QE and not higher rates.
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Police clear "Blockupy" protesters from ECB
(Reuters) - German police began peacefully removing anti-capitalist protesters from outside the European Central Bank’s headquarters on Wednesday at the start of a planned four-day long “Blockupy” demonstration.
P&M: US corporate credit risk expected to improve in 2012 — Moody's
Credit risk for US companies is expected to improve from the second half, based on a baseline stress test scenario that assumes US economic fundamentals will remain solid despite weak job numbers and continued higher oil prices, according to Moody’s Analytics.
EQUITIES: Facebook IPO approaching a frenzied climax
Underwriters have responded to frenzied demand for this week’s Facebook IPO by increasing the pricing range by 14% at the mid-point and upping potential proceeds to US$12.8bn.
JP Morgan, TBTF and ZIRP
JP Morgan Chase’s loss is perhaps the inevitable result of the interaction of two policies: too big to fail and zero interest rates.
Top Stories from this week's IFR Magazine
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Upfront: More than the number
The long-term impact from Jamie Dimon’s humiliating conference call with analysts last week will not be a financial one – at least not in the short term.
VaR model masked JPM US$2bn loss
The implementation of a new Value-at-Risk model looks to have masked a US$2bn mark-to-market loss that built up in JP Morgan’s chief investment office over the past few months.
Rallying cry for pooled eurobonds
Pushing ahead with pooled eurozone bonds is the only way to bring the crisis gripping the single currency union to a close, senior bankers have warned, claiming that a failure to amalgamate government debt will result in a heftier bill for keeping the eurozone afloat in the long run.
Santander Mexico IPO: lessons learnt
Learning from mistakes made during the spin-offs of other Latin American units, Spain’s Banco Santander is changing tack and asking bankers how best to combine primary and secondary shares sales when it eventually moves to list its Mexican operation, sources who have received the RFP said.
Greece pays out on yen bond
Greece honoured coupon payments on a bond last week for the first time since completing its €199bn debt swap on April 25, lifting the hopes of those holding outstanding foreign-law bonds that they may yet be repaid in full.
Glencore raises US$1.5bn for Viterra buy
Glencore International is raising a new US$1.5bn bridge loan to pay for its acquisition of Canadian grain trading company Viterra. The loan will provide liquidity to back the acquisition, which was given the green light from Canada’s Competition Bureau on May 4.
High-yield: down but not out
Whether the blame lies with nervous investors, poorly managed deals or simply bad timing, Europe’s high-yield market has suffered a significant setback that risks locking out all but the top-tier issuers in the next few weeks.
Thompson Creek makes uneconomic discovery
Thompson Creek Metals plugged part of a funding hole in its capex budget last week. The perceived funding shortfall weighed on the execution of a two-part, US$420m capital raising and arguably jeopardises the company’s access to capital in the future.
IPO bankers respond to Bankia bailout
ECM bankers said they had a “clear conscience” after Spanish caja Bankia was part-nationalised, just ten months after floating in Madrid.
AIG puts the weekend to work
AIG and the US Treasury used the May 4 weekend to close and price the latest in a series of deals designed to free the insurance company from government control.
3CIF in disarray ahead of rating cut
Prices for Caisse Centrale du Credit Immobilier de France’s senior bonds plunged last week, after it was forced to suspend several of its covered bonds from trading. The bank had failed to file accounts by an April 30 deadline and that prompted speculation that its business model was threatened by an impending multi-notch downgrade.
Investors balk at US IPO deluge
The US IPO market is fraying at the edges after a good start to the year, with last week’s full calendar of deals running up against high levels of discrimination and price-sensitivity from investors.
Sub-prime auto ABS shrugs off crisis years
The sub-prime auto ABS primary market is making a spirited comeback, helped by a rising conviction among investors that the asset class is a solid yield play in current markets.
HKEx leads Asian M&A charge
Asian loan bankers are hoping to be saved from a stubbornly lacklustre year by a spurt in M&A transactions – and associated loan deals.
Sino-Forest default unlikely model for CDS
China’s first-ever corporate CDS auction took place on Wednesday, but investors say they do not expect many more to come down the pipeline any time soon.
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