Sometimes markets are shaken by an event so seismic that everything else seems to fade into the background. Greece’s slide to the brink of bankruptcy was such an event. With the collapse of Lehman still so fresh in the mind, cataclysmic consequences do not seem so far fetched as they once did. Nobody had any illusions as to what the stakes were as the crisis unfolded. But perhaps that was ultimately an advantage, focusing the minds of the politicians and financiers. Although the problem has not been resolved – and there is still a possibility...Read more
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Quantitative easing may have stopped, but arguably the greater challenge – unwinding it without undoing all the good of the original measure – will be a perilous balancing act. Debates rage on over the right timing and strategy for an exit, but no details are likely to be provided until governments have provided clear and satisfactory details regarding how they plan to reduce their debt levels. David Rothnie reports.
Most economies experienced rapidly increasing budget deficits in 2009 due to financial sector support measures and the onset of the global recession. Deficits are expected to continue to grow in 2010 as countries tackle historically high and deteriorating public finances. But what form is this issuance taking, and how are sovereigns ensuring they do not saturate the market and undermine their fundraising efforts in future years? Hardeep Dhillon reports.
The troubles of a relatively small market on the geographical fringes of Europe have threatened to jeopardise the whole grand project, and dragged a number of other countries in similar predicaments to the brink. It has been a bumpy ride for Greece, a classic example of how rapidly problems can escalate when investor fear sets in. Michael Winfield reports.
In the aftermath of Greece’s financial troubles, the spotlight has now turned to the eurozone. Portugal and Spain face similar situations, and observers are questioning the viability of an economic bloc that comprises unequal partners. The answers to those questions are likely to have profound consequences for the future of Europe, reports Han-Nee Tay.
For many years sovereign debt was treated like a risk free asset. The discovery that it was not has shaken the market to its core, and had implications for other forms of debt, where the state was regarded as its guarantor of last resort. Investors in Western debt have had to look to their emerging markets peers to see how business should be conducted – a sign that rationality is returning to the market. Savita Iyer-Ahrestani reports.
The recent divergent spread performance within Europe is the mirror image of the compression that took place in the lead up to the introduction of the common currency. Given the widening of peripheral spreads and the dramatic fall from grace of Greece, the pendulum has now swung full circle: Germany has regained the exalted status it enjoyed in the early 1990s. The performance of European sovereign spreads was widely expected to come under scrutiny this year, although the pace at which the dislocation has occurred has surprised many market...
The Russian Finance Ministry achieved its primary objectives of re-pricing the sovereign curve and establishing benchmarks for future issuance through April’s dual tranche transaction. However, the bonds’ subsequent slump has seen angry investors holding large losses and left a bad taste ahead of upcoming Russian corporate and CIS sovereign supply. John Weavers reports.
Ongoing sovereign debt concerns have thrust Japan into the limelight. But Japan is a special case: it has a unique set of challenges, while some of the problems associated with other sovereigns in its position – massive personal debt levels, for example – do not apply. The situation is seen completely different inside the country to how it is perceived by foreigners. Atanas Dinov reports.