Gallo Cedrone
Forumer storico
Per chi ha in portafoglio molti perpetual c'è da augurarsi allora che non nazionalizzino..... 
Obbligazioni perpetue e subordinate Tutto quello che avreste sempre voluto sapere sulle obbligazioni perpetue... - Cap. 1 (4 lettori)
- Creatore Discussione negusneg
- Data di Inizio
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- Tags
- additional tier 1 bail in basilea 3 coco bonds crd iv genussscheine grandfathering hybrid bond loss absorption lower tier 2 make whole amount matusalem bond obbligazioni irredimibili obbligazioni perpetue obbligazioni subordinate perpetual bond preference shares restricted tier 1 tier 1 upper tier 2
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Imark
Forumer storico
Per chi ha in portafoglio molti perpetual c'è da augurarsi allora che non nazionalizzino.....
Dipende: ricordo che avevi in portafoglio il Bayer, e lì problemi non ce ne dvorebbero essere, nel senso che dovrebbero chiudere in utile anche il 2009 e se non fanno altre acquisizioni...
Sui perpetual bancari dipende da come sono strutturati e dal tipo di decisioni prese: tieni conto che la situazione attuale non ha precedenti significativi, in quanto default bancari consistenti (con relative nazionalizzazioni di salvataggio) si sono verificate solo nel 1980-1981.
Ed all'epoca credo che i perpetuals non esistessero affatto o al più fossero uno strumento di capitalizzazione del tutto marginale...
Cmq sì, diciamo che se non si nazionalizza, si ha certezza di non andare incontro a brutte soprese rispetto al capitale... se si perde una cedola o due non cambia la vita, anche se dà fastidio...
Ultima modifica:
mauro_1946
Nuovo forumer
Mi è arrivato l'accredito delle Generali: al netto della trattenuta del 12.50% (come esattamente previsto credo da i98mark nei post precedenti) 2.400 euro circa! Ai corsi attuali circa il 10% netto. Stavo pensando di comperarne un altro lotto, però voglio seguire l'invito di Negus alla prudenza ed aspetterò l'approvazione del bilancio 2008.... con riserva di invasione dell'Etiopia se la quotazione dovesse riprerndersi
cangiante
Forumer attivo
ti riferisci per caso a questa perpetual?
http://anleihen.onvista.de/snapshot.html?ID_INSTRUMENT=12435621&SEARCH_VALUE=lodi
Imark
Forumer storico
Fitch segnala in sostanza che la grandissima parte di questi strumenti di fonte bancaria, in quanto nella parte bassa dei rating IG, sconta un rischio di discesa a livello HY nel 2009.
Anche qui direi che il crollo delle quotazioni su tali strumenti, generato dalle vendite forzose di investitori che statutariamente non possono detenere simili strumenti, ha ampiamente anticipato l'indicazione delle agenzie.
Fitch Sees Higher Risk of Deferred Interest Payments on Bank Hybrid Capital In 2009
04 Feb 2009 11:51 AM (EST)
Fitch Ratings-London-04 February 2009: Fitch Ratings says that the risk of deferred interest payments on bank hybrid capital instruments (which share characteristics of debt and equity) has increased materially for the banks most under pressure in the current financial crisis, due to significantly lower operating earnings, or losses, combined with high levels of government support, according to a comment published today.
"Central to this matter is the question of the extent to which the government support that has flowed - and will, in Fitch's opinion, continue to flow - in the world's banking systems can be relied upon to extend to existing holders of deeply subordinated bank capital instruments," says Gerry Rawcliffe, Group Credit Officer in Fitch's Financial Institutions group.
Fitch does not believe investors should view such support as continuing endlessly. Absent evidence of a normalising of operating conditions, regulators may well exhibit some bias toward protecting taxpayer funds. This could include looking to put hybrids into deferral.
"In certain cases the investment risks faced by investors in these instruments is sufficiently material for Fitch to view them as not being of investment grade," says Rawcliffe.
Fitch's hybrid capital rating criteria (July 2005) do not assume that government support would be forthcoming for these instruments, and that the key driver of hybrid capital ratings is the stand-alone strength of an institution, as expressed in its Individual Rating. Fitch believes that the current exceptional circumstances merit a conservative application of the existing criteria, especially given the uncertainty and opaqueness surrounding the regulatory considerations in respect of hybrid capital.
In response to the heightened risk of hybrid coupon deferral and, in extreme cases, outright principal loss, Fitch has already taken rating actions that have widened the number of notches between the Issuer Default Rating (IDR) and the rating assigned to the hybrid and preferred instruments for select issuers.
Given that the deferral decision process potentially involves both regulatory and political considerations, and the possibility that the situation regarding bank hybrid capital could change very quickly, Fitch expects to maintain downgraded hybrid capital instruments on Rating Watch Negative. For instruments with low investment grade ratings, the Rating Watch Negative indicates that a move into sub-investment grade is a real possibility.
Fitch regards a deferral on a hybrid instrument as non-performance from a ratings perspective. Deferral will lead to the assignment of instrument ratings consistent with non-performing obligations, typically in the low 'B' to 'CCC'-'C' range. Loss expectations will be derived from a combination of the expected duration of the coupon deferral and the cumulative versus non-cumulative nature of the instrument.
Anche qui direi che il crollo delle quotazioni su tali strumenti, generato dalle vendite forzose di investitori che statutariamente non possono detenere simili strumenti, ha ampiamente anticipato l'indicazione delle agenzie.
Fitch Sees Higher Risk of Deferred Interest Payments on Bank Hybrid Capital In 2009
04 Feb 2009 11:51 AM (EST)
Fitch Ratings-London-04 February 2009: Fitch Ratings says that the risk of deferred interest payments on bank hybrid capital instruments (which share characteristics of debt and equity) has increased materially for the banks most under pressure in the current financial crisis, due to significantly lower operating earnings, or losses, combined with high levels of government support, according to a comment published today.
"Central to this matter is the question of the extent to which the government support that has flowed - and will, in Fitch's opinion, continue to flow - in the world's banking systems can be relied upon to extend to existing holders of deeply subordinated bank capital instruments," says Gerry Rawcliffe, Group Credit Officer in Fitch's Financial Institutions group.
Fitch does not believe investors should view such support as continuing endlessly. Absent evidence of a normalising of operating conditions, regulators may well exhibit some bias toward protecting taxpayer funds. This could include looking to put hybrids into deferral.
"In certain cases the investment risks faced by investors in these instruments is sufficiently material for Fitch to view them as not being of investment grade," says Rawcliffe.
Fitch's hybrid capital rating criteria (July 2005) do not assume that government support would be forthcoming for these instruments, and that the key driver of hybrid capital ratings is the stand-alone strength of an institution, as expressed in its Individual Rating. Fitch believes that the current exceptional circumstances merit a conservative application of the existing criteria, especially given the uncertainty and opaqueness surrounding the regulatory considerations in respect of hybrid capital.
In response to the heightened risk of hybrid coupon deferral and, in extreme cases, outright principal loss, Fitch has already taken rating actions that have widened the number of notches between the Issuer Default Rating (IDR) and the rating assigned to the hybrid and preferred instruments for select issuers.
Given that the deferral decision process potentially involves both regulatory and political considerations, and the possibility that the situation regarding bank hybrid capital could change very quickly, Fitch expects to maintain downgraded hybrid capital instruments on Rating Watch Negative. For instruments with low investment grade ratings, the Rating Watch Negative indicates that a move into sub-investment grade is a real possibility.
Fitch regards a deferral on a hybrid instrument as non-performance from a ratings perspective. Deferral will lead to the assignment of instrument ratings consistent with non-performing obligations, typically in the low 'B' to 'CCC'-'C' range. Loss expectations will be derived from a combination of the expected duration of the coupon deferral and the cumulative versus non-cumulative nature of the instrument.
cangiante
Forumer attivo
copio ed incollo dal prospetto informativo
After June 30, 2015, the Trust Preferred Securities will have a floating
rate of cash distributions equal to 5.25 per cent. per annum above the Euro Interbank Offered Rate for three-month euro
deposits on the liquidation preference as described in this Offering Circular.
suppongo pertanto che questa perpetual abbia buone probabilità di essere richiamata nel 2015
troppidebiti
Forumer storico
complimenti al neg per l' elenco ad inizio pagina.
Se per cortesia potresti aggiungere alla dicitura call esercitata di cosa in realtà si tratta euribor + spread o libor + spread
Se per cortesia potresti aggiungere alla dicitura call esercitata di cosa in realtà si tratta euribor + spread o libor + spread
Gallo Cedrone
Forumer storico
Si Mark, infatti mi riferivo ai perpetuals bancari!
Bayer è ancora in portafoglio e anch'io credo che non avrà grossi problemi a pagare la prossima cedola.
Ritornando ai perpetuals bancari ormai ho perso ogni speranza su DEPFA
e mi sto concentrando sui seguenti titoli presenti nel mio portafoglio già citati in un mio precedente post :BCA POP.DI VR-NO 6,756%VAR.RATE EMISS.21.06.2007 EUR
ISIN XS0304963373 : QUOTA CIRCA A 30,00;
DEUT.POSTBK FUNDING TRUST III 7%VR EM. 07.06.05-PERPETUAL EU
ISIN DE000A0D24Z1 : QUOTA CIRCA 40,00;
Posto che non rappresenta sicuramente un problema perdere uno o due anni di cedole, vorrei fare qualcosa prima che che le loro quotazioni finiscano a ZERO o giù di li. VEDI DEPFA !!!
Sto cercando quindi di decifrare le loro OC per capire se sia il caso di vendere (ammesso che scambino...) e di posizionarsi su titoli meno rischiosi ma con quotazioni simili cercando di salvare almeno la parte residua del capitale.
Impresa non facile ...
vi terrò informati 
negusneg
New Member
Citigroup Leads Hybrid Bond Drop on Bailout Concern (Update2)
By Caroline Salas and Neil Unmack
Feb. 3 (Bloomberg) -- Bond investors’ bets on bank nationalizations are hindering already reduced lending by the world’s biggest financial institutions.
The market for securities with characteristics of both debt and equity that Citigroup Inc., Bank of America Corp. and other financial companies used to bolster their capital is in freefall on concern governments will stop banks that took public cash from paying interest. The hybrids, which typically count as regulatory capital to cushion against losses, fell 11 percent last month in the U.S., more than they did in all of 2008, according to Merrill Lynch & Co. index data. Citigroup and Bank of America bonds lost as much as 34 percent of their value.
“The danger is the government’s going to take over everything and not pay anything,” said Gregory Habeeb, who manages $7.5 billion in fixed-income securities at Calvert Asset Management Co. in Bethesda, Maryland. “It could happen.”
The U.S.’s $700 billion Troubled Asset Relief Program, 350 billion pounds ($499 billion) of U.K. debt guarantees and asset purchases and financial-industry bailouts around the world are weighing on banks’ capital securities, making it more difficult for them to resume lending. Investors are selling their holdings of hybrid securities, including Tier 1 bonds, banks’ lowest- ranked debt.
Treasury spokeswoman Jenni Engebretsen referred to comments that Secretary Timothy Geithner made on Jan. 28. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he told reporters before a meeting with officials charged with providing TARP oversight.
Government’s Goals
“Government’s objectives for its support for the banking sector are financial stability, protecting taxpayers and protecting customers,” said a U.K. Treasury spokesman, who declined to comment further and wouldn’t be identified, citing department policy.
Only $694 million of preferred securities were sold in the U.S. since September, when the government closed the market by seizing Fannie Mae and Freddie Mac. That compares with about $44 billion in the first three quarters of last year, according to data compiled by Bloomberg.
Higher Yields
Insurance companies, hedge funds and other investors bought more than $73 billion of hybrids in 2008, taking advantage of yields that were generous for issuers they considered too big to fail, according to Bloomberg and Societe Generale SA data. The bonds were offered at yields of as much as two percentage points more than senior unsecured debt.
Less than a year ago, analysts at Merrill Lynch and Lehman Brothers Holdings Inc. predicted that banks and other financial institutions would sell more than $125 billion of the debt to replenish capital after writedowns and losses that now exceed $1 trillion, according to Bloomberg data.
“If they still have difficulty accessing this market it’s not a good sign for the credit markets in general,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. “It’s difficult to conceive of capital markets having returned to normal without the ability of banks to issue.”
Hybrid notes, whose interest can in some cases be deferred without penalty at the borrower’s discretion, have plunged around the world since the U.S. took control of Fannie and Freddie, the largest mortgage-finance companies.
Bank of America
Citigroup’s $1.4 billion of 6.95 percent preferred shares lost 34 percent in January, the worst performing securities in the Merrill Lynch preferred and hybrid index.
Charlotte, North Carolina-based Bank of America’s $4 billion of 8.125 percent perpetual hybrid bonds have tumbled to 48 cents on the dollar from 73 cents at year-end, according to Bloomberg data. The securities were issued in April at 100 cents on the dollar. Bank of America posted its first loss since 1991 in the fourth quarter.
The U.S. Treasury agreed in January to provide $20 billion in additional capital and $118 billion in asset guarantees to Bank of America to help absorb losses at Merrill Lynch. New York- based Merrill agreed to be purchased by Bank of America as Lehman Brothers filed for bankruptcy.
Scott Silvestri, a spokesman for Bank of America, declined to comment. Danielle Romero-Apsilos, a spokeswoman for Citigroup in New York, declined to comment.
London-based Lloyds Banking Group Plc’s 6.35 percent notes callable in 2013 are quoted at 42 cents on the euro, less than Hannover, Germany-based travel company TUI AG’s hybrid 8.625 percent bonds, which are at 50 cents, according to Bloomberg data. TUI’s debt is graded CCC+ by Standard & Poor’s, 11 steps lower than Lloyds’s bonds.
Hybrid notes still haven’t fallen as much as bank shares this year, with the MSCI World Financials Index of stocks declining 20 percent, according to data compiled by Bloomberg.
‘Insolvent’ Banking System
U.S. financial losses may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, who in January 2007 predicted the economy was headed for a “hard landing,” told a conference in Dubai on Jan. 20. President Barack Obama will have to use as much as $1 trillion of public funds to bolster the capitalization of the industry, he estimates.
Government capital injections are failing to restore investor confidence in subordinated bank securities, which support the capital on banks’ balance sheets so they can lend.
The average price for issues in Merrill Lynch’s preferred stock and hybrid securities index decreased 8 cents on the dollar last month to 64 cents.
“Subordinated bank debt is really, really suffering,” said Phil Roantree, a portfolio manager who helps oversee $14 billion at New Star Asset Management in London. “Something is seriously wrong. Regulators need to restore confidence.”
Rating Cuts
S&P slashed the ratings on $5.49 billion of collateralized debt obligations that hold hybrid bonds last month because of the risk banks will defer payments. The New York-based ratings firm also cut rankings on hybrids issued by Commerzbank AG, Dexia SA, Dresdner Bank AG, Eurohypo AG and Northern Rock Plc to below investment grade after they received government bailouts.
Moody’s Investors Service is reviewing its hybrid rating methodology and is talking with regulators and market participants about how to incorporate nationalization concern into its assessments, said Barbara Havlicek, senior vice president and chairwoman of the rating company’s new-instruments committee.
Aflac Inc., the largest seller of supplemental insurance, lost about half of its market value this year as S&P cut its rating one level to A-, citing investments in subordinated bank debt, including hybrids. The Columbus, Georgia-based insurer yesterday reported $262 million of losses from its investments and said today the maximum writedown on its riskiest hybrid securities is about $400 million.
Allstate Downgrade
Allstate Corp., the biggest publicly traded U.S. home and auto insurer, was downgraded by Moody’s last week to A3 from A2 because of “significant investment losses.” The Northbrook, Illinois-based insurer owns more than $1 billion of hybrids, Judith Greffin, the head of Allstate Investments LLC, said on a conference call last week.
“How can anybody have any confidence in that market?” said Marilyn Cohen, president of Envision Capital Management Inc. in Los Angeles, which oversees $175 million in fixed-income assets. “Especially now that we have had a de facto nationalization of some of the banks. All the government has to do is say ‘You can’t do it anymore.’ It’s been perilous.”
Hybrid bonds pay a relatively high yield for investors still willing to bet against nationalization, said Calvert’s Habeeb, describing the notes as “very cheap.”
“They’re not all going to stop paying, and maybe none of them do,” Habeeb said. “I’m not saying” nationalization that wipes out the securities “can’t happen, but now you’re getting compensated for the risk,” he said. Habeeb declined to say whether he’s been buying the debt.
Fannie, Freddie
When former U.S. Treasury Secretary Henry Paulson took control on Sept. 7 of Washington-based Fannie and McLean, Virginia-based Freddie, he scrapped dividends on their preferred stock and put $200 billion of new securities owned by the government ahead in the capital structure of the companies.
Deutsche Bank AG, Germany’s biggest bank, roiled the hybrid bond market when it declined in December to exercise an option to redeem 1 billion euros ($1.3 billion) of 3.875 percent securities due 2014.
The U.K. government’s attempt to bail out Royal Bank of Scotland Group Plc last month by switching its holdings in the bank to ordinary shares from preference shares backfired when S&P on Jan. 19 cut the lender’s hybrid debt by three steps, to BB, below investment grade.
‘Totally Closed’
“The bank capital market is totally closed to them now, they can’t raise money,” said Roantree. “While the government owned RBS’s preference shares, bond investors assumed they would always get a coupon because their securities ranked equally with the government. They removed that certainty.”
The Edinburgh-based bank’s 1.3 billion euros of 7.092 percent undated subordinated Tier 1 notes slumped 21.9 cents to 9 cents on the euro on Jan. 20.
Envision’s Cohen said she “unfortunately” bought preferreds issued by banks, many of which she’s sold since September. She still owns securities sold by JPMorgan Chase & Co. which she said should be “fine,” and some issued by Bank of America, which are “questionable,” she said.
“Those hybrids and preferreds are going to be the dinosaurs of the market,” Cohen said. “They’re not coming back for a long time. Everybody got bruised and battered.”
To contact the reporters on this story: Caroline Salas in New York at [email protected]; Neil Unmack in London [email protected]
Last Updated: February 3, 2009 10:50 EST
By Caroline Salas and Neil Unmack
Feb. 3 (Bloomberg) -- Bond investors’ bets on bank nationalizations are hindering already reduced lending by the world’s biggest financial institutions.
The market for securities with characteristics of both debt and equity that Citigroup Inc., Bank of America Corp. and other financial companies used to bolster their capital is in freefall on concern governments will stop banks that took public cash from paying interest. The hybrids, which typically count as regulatory capital to cushion against losses, fell 11 percent last month in the U.S., more than they did in all of 2008, according to Merrill Lynch & Co. index data. Citigroup and Bank of America bonds lost as much as 34 percent of their value.
“The danger is the government’s going to take over everything and not pay anything,” said Gregory Habeeb, who manages $7.5 billion in fixed-income securities at Calvert Asset Management Co. in Bethesda, Maryland. “It could happen.”
The U.S.’s $700 billion Troubled Asset Relief Program, 350 billion pounds ($499 billion) of U.K. debt guarantees and asset purchases and financial-industry bailouts around the world are weighing on banks’ capital securities, making it more difficult for them to resume lending. Investors are selling their holdings of hybrid securities, including Tier 1 bonds, banks’ lowest- ranked debt.
Treasury spokeswoman Jenni Engebretsen referred to comments that Secretary Timothy Geithner made on Jan. 28. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he told reporters before a meeting with officials charged with providing TARP oversight.
Government’s Goals
“Government’s objectives for its support for the banking sector are financial stability, protecting taxpayers and protecting customers,” said a U.K. Treasury spokesman, who declined to comment further and wouldn’t be identified, citing department policy.
Only $694 million of preferred securities were sold in the U.S. since September, when the government closed the market by seizing Fannie Mae and Freddie Mac. That compares with about $44 billion in the first three quarters of last year, according to data compiled by Bloomberg.
Higher Yields
Insurance companies, hedge funds and other investors bought more than $73 billion of hybrids in 2008, taking advantage of yields that were generous for issuers they considered too big to fail, according to Bloomberg and Societe Generale SA data. The bonds were offered at yields of as much as two percentage points more than senior unsecured debt.
Less than a year ago, analysts at Merrill Lynch and Lehman Brothers Holdings Inc. predicted that banks and other financial institutions would sell more than $125 billion of the debt to replenish capital after writedowns and losses that now exceed $1 trillion, according to Bloomberg data.
“If they still have difficulty accessing this market it’s not a good sign for the credit markets in general,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. “It’s difficult to conceive of capital markets having returned to normal without the ability of banks to issue.”
Hybrid notes, whose interest can in some cases be deferred without penalty at the borrower’s discretion, have plunged around the world since the U.S. took control of Fannie and Freddie, the largest mortgage-finance companies.
Bank of America
Citigroup’s $1.4 billion of 6.95 percent preferred shares lost 34 percent in January, the worst performing securities in the Merrill Lynch preferred and hybrid index.
Charlotte, North Carolina-based Bank of America’s $4 billion of 8.125 percent perpetual hybrid bonds have tumbled to 48 cents on the dollar from 73 cents at year-end, according to Bloomberg data. The securities were issued in April at 100 cents on the dollar. Bank of America posted its first loss since 1991 in the fourth quarter.
The U.S. Treasury agreed in January to provide $20 billion in additional capital and $118 billion in asset guarantees to Bank of America to help absorb losses at Merrill Lynch. New York- based Merrill agreed to be purchased by Bank of America as Lehman Brothers filed for bankruptcy.
Scott Silvestri, a spokesman for Bank of America, declined to comment. Danielle Romero-Apsilos, a spokeswoman for Citigroup in New York, declined to comment.
London-based Lloyds Banking Group Plc’s 6.35 percent notes callable in 2013 are quoted at 42 cents on the euro, less than Hannover, Germany-based travel company TUI AG’s hybrid 8.625 percent bonds, which are at 50 cents, according to Bloomberg data. TUI’s debt is graded CCC+ by Standard & Poor’s, 11 steps lower than Lloyds’s bonds.
Hybrid notes still haven’t fallen as much as bank shares this year, with the MSCI World Financials Index of stocks declining 20 percent, according to data compiled by Bloomberg.
‘Insolvent’ Banking System
U.S. financial losses may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, who in January 2007 predicted the economy was headed for a “hard landing,” told a conference in Dubai on Jan. 20. President Barack Obama will have to use as much as $1 trillion of public funds to bolster the capitalization of the industry, he estimates.
Government capital injections are failing to restore investor confidence in subordinated bank securities, which support the capital on banks’ balance sheets so they can lend.
The average price for issues in Merrill Lynch’s preferred stock and hybrid securities index decreased 8 cents on the dollar last month to 64 cents.
“Subordinated bank debt is really, really suffering,” said Phil Roantree, a portfolio manager who helps oversee $14 billion at New Star Asset Management in London. “Something is seriously wrong. Regulators need to restore confidence.”
Rating Cuts
S&P slashed the ratings on $5.49 billion of collateralized debt obligations that hold hybrid bonds last month because of the risk banks will defer payments. The New York-based ratings firm also cut rankings on hybrids issued by Commerzbank AG, Dexia SA, Dresdner Bank AG, Eurohypo AG and Northern Rock Plc to below investment grade after they received government bailouts.
Moody’s Investors Service is reviewing its hybrid rating methodology and is talking with regulators and market participants about how to incorporate nationalization concern into its assessments, said Barbara Havlicek, senior vice president and chairwoman of the rating company’s new-instruments committee.
Aflac Inc., the largest seller of supplemental insurance, lost about half of its market value this year as S&P cut its rating one level to A-, citing investments in subordinated bank debt, including hybrids. The Columbus, Georgia-based insurer yesterday reported $262 million of losses from its investments and said today the maximum writedown on its riskiest hybrid securities is about $400 million.
Allstate Downgrade
Allstate Corp., the biggest publicly traded U.S. home and auto insurer, was downgraded by Moody’s last week to A3 from A2 because of “significant investment losses.” The Northbrook, Illinois-based insurer owns more than $1 billion of hybrids, Judith Greffin, the head of Allstate Investments LLC, said on a conference call last week.
“How can anybody have any confidence in that market?” said Marilyn Cohen, president of Envision Capital Management Inc. in Los Angeles, which oversees $175 million in fixed-income assets. “Especially now that we have had a de facto nationalization of some of the banks. All the government has to do is say ‘You can’t do it anymore.’ It’s been perilous.”
Hybrid bonds pay a relatively high yield for investors still willing to bet against nationalization, said Calvert’s Habeeb, describing the notes as “very cheap.”
“They’re not all going to stop paying, and maybe none of them do,” Habeeb said. “I’m not saying” nationalization that wipes out the securities “can’t happen, but now you’re getting compensated for the risk,” he said. Habeeb declined to say whether he’s been buying the debt.
Fannie, Freddie
When former U.S. Treasury Secretary Henry Paulson took control on Sept. 7 of Washington-based Fannie and McLean, Virginia-based Freddie, he scrapped dividends on their preferred stock and put $200 billion of new securities owned by the government ahead in the capital structure of the companies.
Deutsche Bank AG, Germany’s biggest bank, roiled the hybrid bond market when it declined in December to exercise an option to redeem 1 billion euros ($1.3 billion) of 3.875 percent securities due 2014.
The U.K. government’s attempt to bail out Royal Bank of Scotland Group Plc last month by switching its holdings in the bank to ordinary shares from preference shares backfired when S&P on Jan. 19 cut the lender’s hybrid debt by three steps, to BB, below investment grade.
‘Totally Closed’
“The bank capital market is totally closed to them now, they can’t raise money,” said Roantree. “While the government owned RBS’s preference shares, bond investors assumed they would always get a coupon because their securities ranked equally with the government. They removed that certainty.”
The Edinburgh-based bank’s 1.3 billion euros of 7.092 percent undated subordinated Tier 1 notes slumped 21.9 cents to 9 cents on the euro on Jan. 20.
Envision’s Cohen said she “unfortunately” bought preferreds issued by banks, many of which she’s sold since September. She still owns securities sold by JPMorgan Chase & Co. which she said should be “fine,” and some issued by Bank of America, which are “questionable,” she said.
“Those hybrids and preferreds are going to be the dinosaurs of the market,” Cohen said. “They’re not coming back for a long time. Everybody got bruised and battered.”
To contact the reporters on this story: Caroline Salas in New York at [email protected]; Neil Unmack in London [email protected]
Last Updated: February 3, 2009 10:50 EST
Onoff
Forumer attivo
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