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☆ Morning Bid: Investors adopt the brace position as banks topple
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +3 min

That pretty much sums up the reaction in Asian markets to the extraordinary government-engineered takeover of the storied Credit Suisse by UBS, along with a U.S. dollar supply operation by a Fed-led posse of major central banks. Investors seem torn between relief that Credit Suisse was not allowed to collapse or worries that it had to be saved in such a way in the first place. It's not helping that Credit Suisse shareholders are taking a nasty haircut in the deal, though not as painful as AT1 bond holders who seemingly won't get their $17 billion back. That's a break with convention that could threaten the future of the entire $275 billion CoCo market. Likewise, Fed fund futures fell, rose, then fell again as investors dared to divine what all this might mean for interest rates.

☆ U.S. poised to tighten reporting rules on $20 tln private fund sector
▼ + stars: | 2023-03-17 | by ( Douglas Gillison | ) www.reuters.com time to read: +3 min

March 17 (Reuters) - Wall Street's top regulator is set to adopt new rules aimed at bolstering oversight of systemic risk in the burgeoning, multitrillion-dollar world of private equity and hedge-funds. As proposed in January 2022, the rule would require reporting of such events to the SEC within one business day. The agency billed the new rule in part as a means of supporting the Financial Stability Oversight Council, a multi-agency risk-monitoring body also created under Dodd-Frank. The proposal offered "scant evidence" that it would enhance FSOC's monitoring for systemic risk, she said in dissenting remarks against the proposal, adding that it would likely become a tool "for government to micromanage private fund risk management." Reporting by Douglas Gillison; Editing by David GregorioOur Standards: The Thomson Reuters Trust Principles.

JOHANNESBURG, March 17 (Reuters) - Debt restructuring programmes in Ghana and Zambia are going in "diverging directions" due to Zambia's larger exposure to Chinese lenders and its weaker ability to cope with a large amount of debt, investment bank Citi said on Friday. Ghana was likely to get an International Monetary Fund (IMF)board sign-off for a $3 billion rescue loan in the next few weeks, while Zambia's restructuring had stalled, Citi's analysts said in a note to clients. Ghana defaulted on its external debts in December and has since sealed a domestic debt swap and requested a restructuring of its bilateral debts via the G20's Common Framework vehicle. "Our more positive view (on Ghana) is supported by a strong commitment by the IMF and Paris Club to achieve a quick breakthrough," the Citi note said. "Assuming a 12.5% exit yield... suggests an average price uptick of 10 cents" on bond prices, the note said.

☆ What credit ratings have to do with the fallout at Silicon Valley Bank and First Republic — and why they matter so much to banks
▼ + stars: | 2023-03-16 | by ( Huileng Tan | ) www.businessinsider.com time to read: +8 min

As panic shoots across the banking sector, US banks' credit ratings have come under the spotlight, and investors are zooming in on how these institutions are graded. Moody's, S&P Global, and Fitch are three big credit ratings agencies that control about 95% of the credit ratings in the financial markets. In fact, during the global financial crisis, credit ratings agencies had been blasted for giving better ratings to risky mortgage-backed securities and collateralized loans. Fears of the crisis spreading have also hit the credit ratings of First Republic Bank. First Republic Bank is now considering various options —including a sale – Bloomberg reported Wednesday, citing people with knowledge of the matter.

☆ Bad news salvo gives Bank of Japan some cover
▼ + stars: | 2023-03-16 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +3 min

HONG KONG, March 16 (Reuters Breakingviews) - Incoming Bank of Japan (8301.T) Governor Kazuo Ueda can breathe a sigh of relief; things aren’t going very well. Ripples from the collapse of Silicon Valley Bank have shoved down sovereign bond yields, inadvertently driving off an attack by traders who believed global inflation made rate hikes unavoidable. This year, however, spiking energy costs have pushed the core consumer index excluding fresh food over 4%, double the BOJ’s target. Consumer price inflation including energy but excluding fresh food touched 4.2% in January, a 41-year high. Core consumer inflation has now exceeded the Bank of Japan's 2% target for nine straight months.

☆ About Those ‘Safe’ Silicon Valley Bank Treasurys
▼ + stars: | 2023-03-15 | by ( The Editorial Board | ) www.wsj.com time to read: 1 min

One surprise for investors in the Silicon Valley Bank failure is that it didn’t hold exotic derivatives, structured debt products or other horrors that caused so much financial carnage 15 years ago. SVB held boring Treasurys and highly rated mortgage-backed securities in large quantities. Bad management and negligent oversight from the San Francisco Federal Reserve Bank played a role. But the politicians and regulators who supposedly fixed the financial system after 2008 share responsibility. The banking rules they introduced after 2008 made sovereign bonds such as Treasurys and the mortgage securities of Fannie Mae and Freddie Mac the coin of the realm for bank capital standards.

☆ Prudential says exposure to SVB minimal, sales to China travellers pick up
▼ + stars: | 2023-03-15 | by ( Selena Li | ) www.reuters.com time to read: +3 min

HONG KONG, March 15 (Reuters) - Asia-focused insurer Prudential's (PRU.L) said its exposure to collapsed Silicon Valley Bank (SVB) is minimal, and expects little impact on its "conservative" balance sheet. "Our exposure to SVB is de minimis," Turner said. The insurer's stock price ended 1.18% lower in Hong Kong on Wednesday, while the broader market was up 1.52%. Its London-listed shares fell 4.7% by 9 a.m. GMTAnalysts say they expect a stronger pickup in sales from Chinese mainland visitors to Hong Kong, the insurer's key revenue centre. As China ended its Zero-COVID policy, border restrictions were removed last month allowing mainland visitors to go to Hong Kong and buy insurance again.

☆ Analysis: SVB collapse unleashes Treasury volatility, whiplashing investors
▼ + stars: | 2023-03-14 | by ( Carolina Mandl | ) www.reuters.com time to read: +5 min

[1/2] Customers wait in line outside a branch of the Silicon Valley Bank in Wellesley, Massachusetts, U.S., March 13, 2023. REUTERS/Brian SnyderNEW YORK, March 14 (Reuters) - Extreme volatility is rattling U.S. Treasury markets in the wake of Silicon Valley Bank's (SIVB.O) collapse and investors fear a prolonged bout of gyrations before calm returns to bond markets. The Fed chief's hawkish message helped push yields, which move inversely to prices, to their highest levels in years. As investors piled back into Treasuries, yields plummeted. Over the longer term, sustained rate volatility is unlikely to be good for stocks, said Purves, of Tallbacken Capital.

☆ Big bank selloff rests on tiny kernel of truth
▼ + stars: | 2023-03-10 | by ( Liam Proud | ) www.reuters.com time to read: +3 min

LONDON, March 10 (Reuters Breakingviews) - The travails of Silicon Valley Bank (SIVB.O) are rippling across the global banking system, wiping billions off the market capitalisations of HSBC (HSBA.L), Deutsche Bank (DBKGn.DE) and JPMorgan (JPM.N). It’s nonetheless a useful reminder that rising interest rates bring risks as well as benefits. The trigger for the selloff seems to have been a $1.8 billion equity issue by SVB Financial, which does business as Silicon Valley Bank. Shrinking deposits saw Chief Executive Greg Becker sell down a $21 billion portfolio of Treasury and agency mortgage bonds. As interest rates rise banks are charging more for loans.

☆ Canada has firepower to invest billions in green transition, analysts say
▼ + stars: | 2023-02-24 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

OTTAWA, Feb 24 (Reuters) - Canada has the firepower to invest billions of dollars in the green transition over the coming years to make it more competitive with the United States, analysts said, while also ensuring its public finances stay on a sustainable path. Because nominal growth is forecast to be weak in the 2023/24 fiscal year, the ratio might creep up before heading downward again. Many in industry say Canada must do more to be a key player in the green transition as the IRA is already spurring investment in the United States. Bartlett estimates Canada could spend an additional C$20 billion ($14.9 billion) per year and keep the net debt-to-GDP ratio below 2021/22's 45.5%, which was the lowest in the G7. Promised investments in the green transition will not "be overly inflationary" and they would provide certainty for investors and businesses, Bartlett said.

☆ Exclusive: After costly bond issue, Mexico's Pemex banks on high oil prices to pay off debt -sources
▼ + stars: | 2023-02-15 | by ( Ana Isabel Martinez | ) www.reuters.com time to read: +4 min

The high cost of borrowing forced a recalibration in Pemex and renewed determination to avoid the market, two company sources familiar with the matter said. Pemex has said it must pay back some $8 billion of financial debt this year and $8.7 billion next. But both sources said Pemex was banking on high crude oil prices to maintain the investments for this year as well as meet its financial obligations - without issuing more bonds. Financial debt started ballooning years ago when the oil company took on debt to pay its debts. Pemex declined to reveal the total value of debt payments due and Reuters was unable to independently calculate the figure.

☆ Bank of Japan’s new governor starts on back foot
▼ + stars: | 2023-02-14 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +3 min

HONG KONG, Feb 14 (Reuters Breakingviews) - Academic Kazuo Ueda faces a rocky time as the new governor of the Bank of Japan (8301.T). He is stepping down just as his signature yield curve control (YCC) policy is becoming increasingly unsustainable as domestic inflation rises. The Nikkei news service reported that officials had approached Deputy Governor Masayoshi Amamiya and were rebuffed. It seems likely Ueda will have to modify or abandon YCC given how much damage it is doing to the bond market and the BOJ’s balance sheet. Follow @petesweeneypro on TwitterloadingCONTEXT NEWSJapan's government on Feb. 14 named academic Kazuo Ueda as its pick to become the next governor of the country’s central bank.

☆ Japan’s next central bank chief may rue promotion
▼ + stars: | 2023-02-13 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +7 min

In fact, it has spent an average of 1.3 trillion yen per trading day since the band widened: nearly 50 trillion yen in total, per Refinitiv data, and still counting. The central bank already owns over half of Japan’s sovereign bonds and is sure to suffer large losses when their prices fall, which they eventually must. The central bank chief must also work to put the country’s vast stack of inert money back to work. Kuroda effectively put the central bank at the service of former Prime Minister Shinzo Abe’s “Abenomics” stimulus programme. Fumio Kishida, the current leader, is having popularity problems and will want the central bank to support his aggressive agenda, which includes hiking defence spending, promoting innovative startups and redistributing wealth.

☆ Explainer: What is at stake for investors in Nigeria's election?
▼ + stars: | 2023-02-13 | by ( Rachel Savage | ) www.reuters.com time to read: +4 min

Multiple exchange rates, widespread insecurity and low oil production due to massive crude theft are all problems that worry investors. Another focus is soaring fuel subsidy costs that devour government revenues and drive up debt. "No investor's going to want to buy into a market where you can't sell stock and get your money out," he said. Foreign investors held 16% of shares on Nigeria's stock exchange last year, sharply down from 58% in 2014, Nigerian Exchange Group data showed. Many investors, however, were cautiously optimistic that Nigeria would see improvements, whoever wins on Feb. 25.

☆ Analysis: The deep freeze over UK assets is thawing
▼ + stars: | 2023-02-13 | by ( Naomi Rovnick | ) www.reuters.com time to read: +4 min

"This does suggest a possible inflection point in sentiment towards UK assets," said Nick Kissack, a UK portfolio manager at Schroders, which manages roughly $910 billion of client funds. "We saw extreme levels of risk aversion," in September, he added, while "the risk premium for UK assets has come down since." That, in short, is an outlook of higher global interest rates, weak growth and high inflation. Reuters GraphicsHowever, analysts expect the FTSE 100's rise to falter with a stronger global growth outlook combined with waning energy inflation. "The UK is the standout global economy where growth prospects have not improved," said Baylee Wakefield, multi-asset portfolio manager at Aviva Investors, who expects gilts to continue outperforming Treasuries.

☆ Global investors losing appetite for Chinese government bonds
▼ + stars: | 2023-02-10 | by ( Summer Zhen | ) www.reuters.com time to read: +4 min

Signs of a peak in developed market rates are another reason why China's bonds, yielding roughly 3% on 10-year investments, are less appealing, given the potential greater capital gains elsewhere. "If investors are saying that I want to trade the China recovery, the answer is not Chinese government bonds (CGBs). "China bonds served as a very good type of diversifier, in particular over the past 3 years," said Pang. But as global rates hit a peak, it made sense to plough limited cash into better yielding markets, he said. ($1 = 6.7969 Chinese yuan renminbi)Reporting by Summer Zhen Additional reporting by Rae Wee in Singapore Editing by Vidya Ranganathan and Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

Feb 7 (Reuters) - Emerging market bond and equity funds received heavy inflows in January after a dry patch last year, aided by China's reopening and softening inflation pressures worldwide. According to Refinitiv Lipper data, which covers over 33,700 emerging market (EM) funds, EM equity funds received $13.2 billion, and EM bond funds obtained $11.36 billion in January. Fund flows: EM equities and bondsIn 2022, EM bond funds faced a combined net outflow of $26.26 billion. In January, the iShares Core MSCI Emerging Markets ETF and iShares JPMorgan USD Emerging Markets Bond ETF received $3.2 billion and $2.4 billion, respectively, while iShares MSCI Emerging Markets ETF and BlackRock Emerging Markets Fund; Inst obtained over $1 billion each. Initial euphoria over China's reopening has fizzled out and EM assets have seen slight declines in February.

☆ Bond strategists take axe to U.S. Treasury yield forecasts
▼ + stars: | 2023-01-27 | by ( Hari Kishan | ) www.reuters.com time to read: +3 min

Bond strategists at JPMorgan noted recently that the U.S. Treasury market is already priced for a recession and not just for the heightened risks of one. Already off their peaks from late last year and early 2023, major benchmark government bond yields have eased 20-40 basis points since, and more than 50 basis points on the particularly rate-sensitive U.S. two-year Treasury yield. That is about 30 basis points lower on the one-year horizon than a poll published in December. This would extend one of the longest periods on record where two-year yields have been higher than 10-year ones, a yield curve inversion. The poll expected German bund yields to rise from their current 2.25% to around 2.4% in three and six months.

☆ India's first green bond issue pulls local bidders, foreigners aloof - traders
▼ + stars: | 2023-01-25 | by ( Dharamraj Lalit Dhutia | ) www.reuters.com time to read: +2 min

MUMBAI, Jan 25 (Reuters) - India's first sovereign green bond issue was mostly subscribed by local banks and insurance companies, with limited interest from foreign investors, market participants said. New Delhi raised 80 billion rupees ($981.31 million) via green bonds on Wednesday. The five-year 7.38% 2027 bond yield was at 7.15%, while the benchmark 7.26% 2032 bond yield was at 7.35% during the time of bidding. Local banks and mutual funds do not have a specific mandate to invest in green bonds and treat these at par with other sovereign bonds. Ahead of Wednesday's auction, the government had met foreign investors to gauge the demand, Reuters had reported.

The government plans to raise 160 billion rupees through green bonds for the current fiscal ending March 31, with the first tranche of 80 billion rupees scheduled for auction on Wednesday. "The expectation of a green premium is in line with 'greenium' that issuers have got globally," said one of the two sources. "Green bonds should command a premium because of the mandates to invest in these securities. The RBI will auction 40 billion rupees each of five-year and 10-year green bonds. "It will be advisable to appoint an external auditor with an oversight by CAG (Comptroller and Auditor General) for utilisation of green bond proceeds."

☆ Argentina to buy back $1 bln in foreign debt in signal to markets
▼ + stars: | 2023-01-18 | by ( ) www.reuters.com time to read: +1 min

BUENOS AIRES, Jan 18 (Reuters) - Argentina will buy back foreign bonds equivalent to over $1 billion to improve the South American country's debt profile, economy minister Sergio Massa said on Wednesday, looking to send a positive signal to markets despite low reserves levels. The unusual move, which Massa said could help boost the country's access to capital markets, comes as Argentina battles to replenish foreign currency reserves, rein in rampant inflation and prop up a weakening local peso currency. "Undoubtedly over the next few months, by inviting the private sector to accompany the Argentine state in this job of improving its (debt) profile, we will carry out other measures like the one we are taking today," he added. Argentina's sovereign bonds languish in distressed territory despite major restructurings in recent years with private creditors and the International Monetary Fund (IMF), with which it struck a $44 billion deal last year to push back repayments. Reporting by Walter Bianchi and Jorgelina do Rosario; Writing by Adam Jourdan; Editing by Chizu NomiyamaOur Standards: The Thomson Reuters Trust Principles.

Japan's 10-year bond yield, trading at 0.4%, fell on Wednesday but is not far off its highest levels since 2015. Total holdings of foreign bonds by Japanese institutional investors, excluding Japan's $1 trillion reserve portfolio, reached $3 trillion at their peak. GOING HOMEThe implications of higher inflation and a possible end to ultra-low rates are not lost on Japanese investors. Still, anticipating a shift, Japanese investors sold a net 2.1 trillion yen ($15.94 billion) of foreign bonds in December, marking a fourth straight month of selling. According to Nomura, Japanese investors have been far more active buyers of global and overseas equities than domestic stocks in the last decade.

☆ Explainer: What is happening in Japan's bond market?
▼ + stars: | 2023-01-16 | by ( Junko Fujita | ) www.reuters.com time to read: +4 min

TOKYO, Jan 16 (Reuters) - Market forces have pushed Japanese government bond yields above policy targets. Here is what is happening and what it means:WHAT IS JAPAN'S BOND MARKET? To stimulate lending, growth and inflation, the Bank of Japan has pinned short-term interest rates at -0.1% and 10-year yields around zero since 2016. That swap yield may indicate where the 10-year bond could be if the BOJ left the market alone. "Unless the BOJ reduces its presence in the market and changes its stance that it is controlling the yield level, market liquidity won't improve."

☆ Analysis: Investors snap up record $39 bln emerging market sovereign bond splurge
▼ + stars: | 2023-01-13 | by ( Jorgelina Do Rosario | ) www.reuters.com time to read: +5 min

The scale of borrowing dwarfs the previous record of $26 billion raised in the same period in 2018, data from Morgan Stanley shows. ROARING STARTWhile emerging bond markets are off to a roaring start, that might not translate into a bumper year overall. That is well above last year's multi-year low of $95 billion, but well short of 2020's record $233 billion. "The blessing for 2023 is that we haven't got a huge spike in Eurobonds maturities for the frontier," said Gregory Smith, emerging markets fund manager at M&G Investments, referring to what are perceived as the riskiest of emerging markets. "Kenya and Angola will need to tap the market, while South Africa is staying away completely this year," she said.

☆ Bond yields to climb 'for the wrong reasons' next year — and it will affect stocks, strategist says
▼ + stars: | 2022-12-23 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

watch nowLONDON — Government bond yields are likely to rise in 2023 "for the wrong reasons," according to Peter Toogood, chief investment officer at Embark Group, as central banks step up efforts to reduce their balance sheets. Bond yields move inversely to prices. I still think bond yields will shift higher for the wrong reasons ... Meanwhile, U.K. government bond yields jumped so aggressively that the Bank of England was forced to intervene to ensure the country's financial stability and prevent a widespread collapse of British final salary pension funds. "You notice bond yields, are they collapsing when the market falls 2-3%?

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