IT MAY seem like good manners to turn on the Singlish when communicating with a countryman who can speak only the patois, but think again.
You are doing him a disservice, not a favour, because his language skills will never improve, said the chairman of the Speak Good English movement (SGEM), Mr Goh Eck Kheng.
When speakers of standard English codeswitch to a non-standard form, poor speakers will think there is no need to increase their proficiency.
Codeswitching is actually condescending, akin to talking down to someone, Mr Goh added.
He hopes to cultivate speaking good English as the norm.
'Immersing Singaporeans who cannot speak English well in this environment will give them the incentive to speak good English all the time. It's like sending them to London or New York where generally there's a good English-speaking environment.'
There are three groups being targeted: Singaporeans who can speak standard English, those who cannot but want to, and those who speak bad English but see no need to improve.
The movement wants those in the first group to be role models, and will help the second group by providing more resources.
As for the third, it hopes to change their mindsets through its public awareness campaign and with the help of standard speakers.
Ex-national debater Jonathan Pflug felt role models would not work - not because the idea is bad, but because Singaporeans will not bother when it comes to simple actions like ordering hawker food. 'When you interact with people in daily life, those interactions are just functional. I don't think people think of them as educational opportunities,' he said.
Another reason could be the homely familiarity of Singlish.
'It's comfortable, and you can express a lot of things colloquially which may not have the same impact or meaning as English,' said Mr Gaurav Keerthi, president of the local chapter of the Debating Association.
English schoolteacher Anne Lua felt speaking Singlish to speakers of bad English is not condescending, but a case of 'building rapport'.
She said: 'If I speak in proper English to hawkers, they may think I'm showing off or better than them. That may affect service and people's self-esteem.'
SHANGHAI, Aug 20 (Reuters) - China's main stock index soared more than 7 percent on Wednesday because of hopes that the government would introduce a stimulus package to boost the slowing economy and aid the stock and property markets.
Individual investors, many of whom had lost heavily during a 10-month bear market, cheered in the trading hall of a Shenyin & Wanguo Securities branch in downtown Shanghai as the index posted its biggest daily rise since April.
Vice premier Li Keqiang said on Tuesday that China needed to increase domestic spending to keep growth on track as the global economy weakened.
He did not elaborate, but Frank Gong, chief China economist at JPMorgan Chase wrote that China's leaders were considering an economic stimulus package of at least 200-400 billion yuan ($29-58 billion) and might ease monetary policy by end-2008.
"This will include tax cuts and measures to 'stabilise domestic capital markets' and support 'healthy development of the housing market'," he said.
The Shanghai Composite Index jumped 7.63 percent to close at 2,523.282 points, only marginally below its intra-day high of 2,523.469. Gaining stocks in Shanghai outnumbered losers by 935 to one, with over 170 up their 10 percent daily limits.
Turnover in Shanghai A shares expanded to 58.7 billion yuan. That was still small compared to levels seen during last year's bull run, but more than double Tuesday's 27.6 billion yuan.
"If the package materialises, it will be very positive news for the market. And before then, the market should at least consolidate rather than free-falling," said Xu Yinhui, analyst at Guotai Junan Securities.
Rumours swept the market that the stimulus package might include another cut in the stock trading tax, more restrictions on state firms' sales of stakes in listed companies, and conceivably even the creation of a "buffer fund" to buy stocks.
UNCERTAINTY
However, many fund managers and analysts said that with the contents and timing of any stimulus package unknown, it was unclear if the package would do much to halt a slowdown in economic and corporate profit growth.
So while the market has probably found at least a short-term bottom, it is not necessarily starting any kind of extended recovery, they said.
Wednesday's jump only returned the index to its early August levels, and it remains 59 percent below last October's record peak. When the stock trading tax was cut in April, the index jumped 9.29 percent in a day, but then resumed its downtrend after a week.
"Some kind of correction to the market's steep fall is reasonable, so the index may move between 2,300 and 2,600 points for a while as everybody waits to see if the positive news is confirmed," said Chen Huiqin, analyst at Huatai Securities.
Much of the market sees major technical support for the index at 2,245 points, its high for the year 2001.
BROKERAGES LEAD GAINS
Several brokerages, including CITIC Securities, the biggest listed securities firm, rose their 10 percent limits on Wednesday on hopes that a stock market recovery would boost their commission and underwriting income.
The biggest bank, Industrial & Commercial Bank of China, climbed 6.52 percent to 4.90 yuan while property giant Vanke jumped 8.43 percent to 7.46 yuan.
Industrial Bank gained 7.38 percent to 24.87 yuan after saying net profit in the first half of this year surged 80 percent, slightly better than its previous estimate of at least 70 percent growth.
Railway Erju rose 8.88 percent to 6.01 yuan after saying net profit in the first half grew 31 percent.
Hainan Airlines surged 8.82 percent to 4.07 yuan after saying it expected its first-half profit to jump more than 50 percent.
China South Locomotive, the country's biggest train maker, rose a further 4.86 percent to 3.88 yuan after gaining 7.25 percent on Tuesday and jumping 58 percent from its initial public offer price on Monday, when it listed.
Power generators underperformed, apparently on disappointment with the size of a 0.02 yuan per kilowatt hour tariff hike announced for thermal plants. Huaneng Power International, China's top electricity provider, rose only 0.81 percent to 7.50 yuan.
Sundiro shot up 10 percent to 3.83 yuan after saying senior management would buy shares in the company. ($1 = 6.85 yuan)
CDO Default Events Accelerate With New `Wave,' JPMorgan Says
By Jody Shenn
Aug. 19 (Bloomberg) -- Collateralized debt obligations experienced so-called events of defaults at a faster pace in early August, with a commercial-mortgage CDO joining the list, according to JPMorgan Chase & Co.
Seven mortgage-linked CDOs experienced default events, indicating even the senior-most classes may not be repaid in full, up from 14 for June and July, JPMorgan said in a report yesterday. Monthly additions to the $229 billion of defaults since mid-2007 peaked with 47 in February, the report said.
``Unwind fears,'' including concern that CDOs will dump their holdings, have pushed asset prices lower, the report said. Typical yields on AAA rated slices of collateralized loan obligations over the London interbank offered rate are at a record 2.25 percentage points, up 1.30 percentage point this year, the report said. Default events, which may lead to liquidations, can be triggered by downgrades on the collateral.
``We have been expecting the next wave of EODs to come with further downgrade activities on the horizon,'' the analysts in New York led by Chris Flanagan wrote.
CDOs repackage assets such as mortgage bonds, loans and derivatives into new securities with varying risks. CLOs repackage buyout loans and other high-yield corporate debt.
Currently, 19 structured-finance CDOs totaling $18.7 billion, are being liquidated, and 48 totaling $50.8 billion, have completed liquidations, the report said. Estimated recoveries for ``super-senior'' classes average 8 percent for CDOs of low-rated bonds, 33 percent for CDOs of originally high- rated bonds and 4 percent for CDOs of CDOs, the report said.
The $500 million Capmark G-Star VI CDO from 2006 was the first CDO composed of commercial-mortgage securities to experience a default event since November, the report said.
The gloomier outlook for corporate debt in the US and Europe is turning a spotlight on another banking business that exploded during the credit boom, growing from next to nothing into a trillion-dollar industry in little more than four years.
Repackaging credit derivatives to create leveraged investments was a tiny business in the early years of this decade, but between late 2003 and the middle of last year analysts estimate that between $1,000bn and $1,500bn worth of these deals were sold.
The products in question are synthetic collateralised debt obligations. Now, after a year of highly volatile credit markets and with rating agencies under pressure to tighten up their standards across complex structured products, there is growing talk about how to deal with a problem that has the potential to be very expensive.
The systemic increase in risk premiums or spreads in credit derivatives markets means that the values of synthetic CDOs could be less than 50 cents in the dollar, even if the underlying portfolio is relatively high quality, according to analysts at Lehman Brothers.
The bespoke and private nature of the synthetic CDO business makes it near impossible to dig up solid figures for the asset class as a whole, but taking Lehman’s view, investors are easily sitting on unrecognised market value losses of several hundred billion dollars.
This is leading to increasing questions about whether investors – who are mostly banks, insurers and some traditional money managers – should cut their losses and sell, or unwind, such deals or whether they should try to restructure them.
However, specialist bankers in the field say there is relatively little activity tackling this problem asset for two main reasons. First, there is great uncertainty about whether rating agencies will make changes to the way they rate such deals.
Secondly, most of the banks and insurers who bought these CDOs accounted for them as hold-to-maturity assets and so will not have to take any pain until they have to judge such losses as permanent impairments.
Cutting a path through the mezzanine maze Mezzanine tranches of synthetic CDOs
Synthetic collateralised debt obligations are used to create individually tailored slices of credit risk for investors. They are based on a pool of corporate credit derivatives of individual companies.The investor buys a single slice, or tranche, of exposure to losses from the pool.
For a long time, the most popular were mezzanine tranches, named after their place in the order in which the various tranches of a CDO are exposed to losses.
The equity takes the first 3 per cent of credit losses from a portfolio then comes the mezzanine tranches, the first of which commonly covers the next 3 per cent of losses up to the 6 per cent mark. Others can also be created to cover losses up to the 12 per cent mark, beyond which come the senior, triple A rated tranches.
Restructuring options
If investors do not want to sell out either back to the bank that first sold them the deal, or to a specialist investor looking to create value through their own unwind strategies, they have two main strategies.
First, they can make substitutions in their portfolios to swap riskier credits for safer ones. This costs money, but can be paid for in a number of ways, such as reducing the overall coupon of the deal, or extending its maturity and giving up the extra yield this would have granted.
Second, they can make structural changes, such as adding subordination, or moving their tranches higher up the capital structure so that they only take losses after say 4 per cent of the portfolio has already gone.
The less investors do, the less likely their deal would have to be rerated, but the more likely it is to be almost as risky as before.
“Investors are in a quandary,” say Gaurav Tejwani and Fabien Azoulay, analysts at Lehman. “Even those who expect to hold these instruments to maturity and are less sensitive to mark-to-market movements have been struck by the poor valuations and the sense that the dislocation in marks no longer appears temporary.”
The main reason why valuations have been so hard hit is that a large proportion of the outstanding deals were structured and sold when credit conditions were at their most benign and so spreads were at historic lows.
Analysts at Dresdner Kleinwort estimate the majority of deals were done in 2006 and the first half of 2007. “Issuance in 2006 and 2007 accounted for 70 per cent of total volumes to date and was one of the factors that led to the historical credit spread tightening seen prior to the credit crunch,” says Domenico Picone, analyst at Dresdner.
In the intense hunt for higher yields during that period, deals were structured with increasing levels of leverage, longer maturities, less diversification and lower rated credit, Mr Picone adds, with financial credits being particularly favoured.
However, financial debt has been the hardest hit in the past year’s turmoil due to the exposure of banks’ and insurance companies’ to mortgage related bonds and other structured credit.
Analysts at Morgan Stanley say this is one reason why such deals have performed worse than credit broadly. “Levered exposure to certain financials and housing related credits is partly why many such mezzanine tranches [synthetic CDOs] have today underperformed the corporate credit markets broadly,” they say. Mezzanine tranches were long the most popular form of synthetic CDOs because they offered very high returns for a BBB or sometimes A rating. They are called mezzanine because of their place in the order in which the various tranches of a CDO are exposed to losses (see box).
“For banks, insurers and long-only money managers, mezzanine CDO tranches were used as a proxy to get diversified credit exposure,” says one experienced structured credit banker. “All these deals are most likely held at cost and if investors don’t want to take the hit, then they should restructure.”
The banker adds, however, that most of the restructuring strategies being touted are defensive moves that allow investors to buy themselves some protection, though not much if defaults tick up to anywhere near what credit spreads are predicting.
One problem for investors who do want to restructure is the uncertainty surrounding how deals will be rated in the future. Fitch has already reworked its system for synthetic CDOs and now has much more conservative models, which have led to a wave of downgrades.
Moody’s and Standard & Poor’s are much more important to the market and rate a far higher proportion of deals, according to bankers and analysts.
While they have not yet made any changes, bankers insist it remains impossible to restructure a deal to the extent it would need re-rating while all three agencies are either simply not taking on the work, or where their future ratings practices are still uncertain.
Other bankers are more sanguine about the synthetic CDO problems, however. Vaibhav Piplapure, global head of CDOs at Credit Suisse in London, says that of all structured credit assets, investment grade single tranche synthetics are among the least affected from the view of long-term credit losses and are often the smallest part of structured credit portfolios by notional value.
”The fact that most holdings are not mark-to-market means investors are much more able to put the problems in perspective because credit spreads are implying losses far greater than most expect to see in their investment grade credit portfolios,” he says.
"Most investment grade CDOs are managed and most allow various forms of portfolio rebalancing to substitute riskier credits.”
Mr Piplapure says that for banks especially the bigger picture is more important, “Banks have finally come to the realisation that they need a system-wide solution for their structured credit portfolios, which are made up mainly of dollar-based ABS [asset backed bonds], CLO and CDO assets.”
Another London-based structured credit banker says the reason there is not much restructuring yet is partly because there have been few CDO downgrades and partly because there have been almost no bond defaults. “ But we do expect a very busy fourth quarter,” he says. “As credit continues to deteriorate, people will come back from holiday with year-end concerns and that will provide a big new impetus.”
5 comments:
Don't codeswitch to Singlish, please
IT MAY seem like good manners to turn on the Singlish when communicating with a countryman who can speak only the patois, but think again.
You are doing him a disservice, not a favour, because his language skills will never improve, said the chairman of the Speak Good English movement (SGEM), Mr Goh Eck Kheng.
When speakers of standard English codeswitch to a non-standard form, poor speakers will think there is no need to increase their proficiency.
Codeswitching is actually condescending, akin to talking down to someone, Mr Goh added.
He hopes to cultivate speaking good English as the norm.
'Immersing Singaporeans who cannot speak English well in this environment will give them the incentive to speak good English all the time. It's like sending them to London or New York where generally there's a good English-speaking environment.'
There are three groups being targeted: Singaporeans who can speak standard English, those who cannot but want to, and those who speak bad English but see no need to improve.
The movement wants those in the first group to be role models, and will help the second group by providing more resources.
As for the third, it hopes to change their mindsets through its public awareness campaign and with the help of standard speakers.
Ex-national debater Jonathan Pflug felt role models would not work - not because the idea is bad, but because Singaporeans will not bother when it comes to simple actions like ordering hawker food. 'When you interact with people in daily life, those interactions are just functional. I don't think people think of them as educational opportunities,' he said.
Another reason could be the homely familiarity of Singlish.
'It's comfortable, and you can express a lot of things colloquially which may not have the same impact or meaning as English,' said Mr Gaurav Keerthi, president of the local chapter of the Debating Association.
English schoolteacher Anne Lua felt speaking Singlish to speakers of bad English is not condescending, but a case of 'building rapport'.
She said: 'If I speak in proper English to hawkers, they may think I'm showing off or better than them. That may affect service and people's self-esteem.'
China stocks soar 7.6 pct on stimulus hopes
By Claire Zhang
SHANGHAI, Aug 20 (Reuters) - China's main stock index soared more than 7 percent on Wednesday because of hopes that the government would introduce a stimulus package to boost the slowing economy and aid the stock and property markets.
Individual investors, many of whom had lost heavily during a 10-month bear market, cheered in the trading hall of a Shenyin & Wanguo Securities branch in downtown Shanghai as the index posted its biggest daily rise since April.
Vice premier Li Keqiang said on Tuesday that China needed to increase domestic spending to keep growth on track as the global economy weakened.
He did not elaborate, but Frank Gong, chief China economist at JPMorgan Chase wrote that China's leaders were considering an economic stimulus package of at least 200-400 billion yuan ($29-58 billion) and might ease monetary policy by end-2008.
"This will include tax cuts and measures to 'stabilise domestic capital markets' and support 'healthy development of the housing market'," he said.
The Shanghai Composite Index jumped 7.63 percent to close at 2,523.282 points, only marginally below its intra-day high of 2,523.469. Gaining stocks in Shanghai outnumbered losers by 935 to one, with over 170 up their 10 percent daily limits.
Turnover in Shanghai A shares expanded to 58.7 billion yuan. That was still small compared to levels seen during last year's bull run, but more than double Tuesday's 27.6 billion yuan.
"If the package materialises, it will be very positive news for the market. And before then, the market should at least consolidate rather than free-falling," said Xu Yinhui, analyst at Guotai Junan Securities.
Rumours swept the market that the stimulus package might include another cut in the stock trading tax, more restrictions on state firms' sales of stakes in listed companies, and conceivably even the creation of a "buffer fund" to buy stocks.
UNCERTAINTY
However, many fund managers and analysts said that with the contents and timing of any stimulus package unknown, it was unclear if the package would do much to halt a slowdown in economic and corporate profit growth.
So while the market has probably found at least a short-term bottom, it is not necessarily starting any kind of extended recovery, they said.
Wednesday's jump only returned the index to its early August levels, and it remains 59 percent below last October's record peak. When the stock trading tax was cut in April, the index jumped 9.29 percent in a day, but then resumed its downtrend after a week.
"Some kind of correction to the market's steep fall is reasonable, so the index may move between 2,300 and 2,600 points for a while as everybody waits to see if the positive news is confirmed," said Chen Huiqin, analyst at Huatai Securities.
Much of the market sees major technical support for the index at 2,245 points, its high for the year 2001.
BROKERAGES LEAD GAINS
Several brokerages, including CITIC Securities, the biggest listed securities firm, rose their 10 percent limits on Wednesday on hopes that a stock market recovery would boost their commission and underwriting income.
The biggest bank, Industrial & Commercial Bank of China, climbed 6.52 percent to 4.90 yuan while property giant Vanke jumped 8.43 percent to 7.46 yuan.
Industrial Bank gained 7.38 percent to 24.87 yuan after saying net profit in the first half of this year surged 80 percent, slightly better than its previous estimate of at least 70 percent growth.
Railway Erju rose 8.88 percent to 6.01 yuan after saying net profit in the first half grew 31 percent.
Hainan Airlines surged 8.82 percent to 4.07 yuan after saying it expected its first-half profit to jump more than 50 percent.
China South Locomotive, the country's biggest train maker, rose a further 4.86 percent to 3.88 yuan after gaining 7.25 percent on Tuesday and jumping 58 percent from its initial public offer price on Monday, when it listed.
Power generators underperformed, apparently on disappointment with the size of a 0.02 yuan per kilowatt hour tariff hike announced for thermal plants. Huaneng Power International, China's top electricity provider, rose only 0.81 percent to 7.50 yuan.
Sundiro shot up 10 percent to 3.83 yuan after saying senior management would buy shares in the company. ($1 = 6.85 yuan)
CDO Default Events Accelerate With New `Wave,' JPMorgan Says
By Jody Shenn
Aug. 19 (Bloomberg) -- Collateralized debt obligations experienced so-called events of defaults at a faster pace in early August, with a commercial-mortgage CDO joining the list, according to JPMorgan Chase & Co.
Seven mortgage-linked CDOs experienced default events, indicating even the senior-most classes may not be repaid in full, up from 14 for June and July, JPMorgan said in a report yesterday. Monthly additions to the $229 billion of defaults since mid-2007 peaked with 47 in February, the report said.
``Unwind fears,'' including concern that CDOs will dump their holdings, have pushed asset prices lower, the report said. Typical yields on AAA rated slices of collateralized loan obligations over the London interbank offered rate are at a record 2.25 percentage points, up 1.30 percentage point this year, the report said. Default events, which may lead to liquidations, can be triggered by downgrades on the collateral.
``We have been expecting the next wave of EODs to come with further downgrade activities on the horizon,'' the analysts in New York led by Chris Flanagan wrote.
CDOs repackage assets such as mortgage bonds, loans and derivatives into new securities with varying risks. CLOs repackage buyout loans and other high-yield corporate debt.
Currently, 19 structured-finance CDOs totaling $18.7 billion, are being liquidated, and 48 totaling $50.8 billion, have completed liquidations, the report said. Estimated recoveries for ``super-senior'' classes average 8 percent for CDOs of low-rated bonds, 33 percent for CDOs of originally high- rated bonds and 4 percent for CDOs of CDOs, the report said.
The $500 million Capmark G-Star VI CDO from 2006 was the first CDO composed of commercial-mortgage securities to experience a default event since November, the report said.
Analysis: CDO values in free-fall
By Paul J Davies
18 August 2008
The gloomier outlook for corporate debt in the US and Europe is turning a spotlight on another banking business that exploded during the credit boom, growing from next to nothing into a trillion-dollar industry in little more than four years.
Repackaging credit derivatives to create leveraged investments was a tiny business in the early years of this decade, but between late 2003 and the middle of last year analysts estimate that between $1,000bn and $1,500bn worth of these deals were sold.
The products in question are synthetic collateralised debt obligations. Now, after a year of highly volatile credit markets and with rating agencies under pressure to tighten up their standards across complex structured products, there is growing talk about how to deal with a problem that has the potential to be very expensive.
The systemic increase in risk premiums or spreads in credit derivatives markets means that the values of synthetic CDOs could be less than 50 cents in the dollar, even if the underlying portfolio is relatively high quality, according to analysts at Lehman Brothers.
The bespoke and private nature of the synthetic CDO business makes it near impossible to dig up solid figures for the asset class as a whole, but taking Lehman’s view, investors are easily sitting on unrecognised market value losses of several hundred billion dollars.
This is leading to increasing questions about whether investors – who are mostly banks, insurers and some traditional money managers – should cut their losses and sell, or unwind, such deals or whether they should try to restructure them.
However, specialist bankers in the field say there is relatively little activity tackling this problem asset for two main reasons. First, there is great uncertainty about whether rating agencies will make changes to the way they rate such deals.
Secondly, most of the banks and insurers who bought these CDOs accounted for them as hold-to-maturity assets and so will not have to take any pain until they have to judge such losses as permanent impairments.
Cutting a path through the mezzanine maze
Mezzanine tranches of synthetic CDOs
Synthetic collateralised debt obligations are used to create individually tailored slices of credit risk for investors. They are based on a pool of corporate credit derivatives of individual companies.The investor buys a single slice, or tranche, of exposure to losses from the pool.
For a long time, the most popular were mezzanine tranches, named after their place in the order in which the various tranches of a CDO are exposed to losses.
The equity takes the first 3 per cent of credit losses from a portfolio then comes the mezzanine tranches, the first of which commonly covers the next 3 per cent of losses up to the 6 per cent mark. Others can also be created to cover losses up to the 12 per cent mark, beyond which come the senior, triple A rated tranches.
Restructuring options
If investors do not want to sell out either back to the bank that first sold them the deal, or to a specialist investor looking to create value through their own unwind strategies, they have two main strategies.
First, they can make substitutions in their portfolios to swap riskier credits for safer ones. This costs money, but can be paid for in a number of ways, such as reducing the overall coupon of the deal, or extending its maturity and giving up the extra yield this would have granted.
Second, they can make structural changes, such as adding subordination, or moving their tranches higher up the capital structure so that they only take losses after say 4 per cent of the portfolio has already gone.
The less investors do, the less likely their deal would have to be rerated, but the more likely it is to be almost as risky as before.
“Investors are in a quandary,” say Gaurav Tejwani and Fabien Azoulay, analysts at Lehman. “Even those who expect to hold these instruments to maturity and are less sensitive to mark-to-market movements have been struck by the poor valuations and the sense that the dislocation in marks no longer appears temporary.”
The main reason why valuations have been so hard hit is that a large proportion of the outstanding deals were structured and sold when credit conditions were at their most benign and so spreads were at historic lows.
Analysts at Dresdner Kleinwort estimate the majority of deals were done in 2006 and the first half of 2007. “Issuance in 2006 and 2007 accounted for 70 per cent of total volumes to date and was one of the factors that led to the historical credit spread tightening seen prior to the credit crunch,” says Domenico Picone, analyst at Dresdner.
In the intense hunt for higher yields during that period, deals were structured with increasing levels of leverage, longer maturities, less diversification and lower rated credit, Mr Picone adds, with financial credits being particularly favoured.
However, financial debt has been the hardest hit in the past year’s turmoil due to the exposure of banks’ and insurance companies’ to mortgage related bonds and other structured credit.
Analysts at Morgan Stanley say this is one reason why such deals have performed worse than credit broadly. “Levered exposure to certain financials and housing related credits is partly why many such mezzanine tranches [synthetic CDOs] have today underperformed the corporate credit markets broadly,” they say. Mezzanine tranches were long the most popular form of synthetic CDOs because they offered very high returns for a BBB or sometimes A rating. They are called mezzanine because of their place in the order in which the various tranches of a CDO are exposed to losses (see box).
“For banks, insurers and long-only money managers, mezzanine CDO tranches were used as a proxy to get diversified credit exposure,” says one experienced structured credit banker. “All these deals are most likely held at cost and if investors don’t want to take the hit, then they should restructure.”
The banker adds, however, that most of the restructuring strategies being touted are defensive moves that allow investors to buy themselves some protection, though not much if defaults tick up to anywhere near what credit spreads are predicting.
One problem for investors who do want to restructure is the uncertainty surrounding how deals will be rated in the future. Fitch has already reworked its system for synthetic CDOs and now has much more conservative models, which have led to a wave of downgrades.
Moody’s and Standard & Poor’s are much more important to the market and rate a far higher proportion of deals, according to bankers and analysts.
While they have not yet made any changes, bankers insist it remains impossible to restructure a deal to the extent it would need re-rating while all three agencies are either simply not taking on the work, or where their future ratings practices are still uncertain.
Other bankers are more sanguine about the synthetic CDO problems, however. Vaibhav Piplapure, global head of CDOs at Credit Suisse in London, says that of all structured credit assets, investment grade single tranche synthetics are among the least affected from the view of long-term credit losses and are often the smallest part of structured credit portfolios by notional value.
”The fact that most holdings are not mark-to-market means investors are much more able to put the problems in perspective because credit spreads are implying losses far greater than most expect to see in their investment grade credit portfolios,” he says.
"Most investment grade CDOs are managed and most allow various forms of portfolio rebalancing to substitute riskier credits.”
Mr Piplapure says that for banks especially the bigger picture is more important, “Banks have finally come to the realisation that they need a system-wide solution for their structured credit portfolios, which are made up mainly of dollar-based ABS [asset backed bonds], CLO and CDO assets.”
Another London-based structured credit banker says the reason there is not much restructuring yet is partly because there have been few CDO downgrades and partly because there have been almost no bond defaults. “ But we do expect a very busy fourth quarter,” he says. “As credit continues to deteriorate, people will come back from holiday with year-end concerns and that will provide a big new impetus.”
盼三年 - 陈百强
若你愿耐心等多一天
定会令历史因此改编
情人或许不必光阴虚渡
漫漫长又三年
又见面万千说话尽怀念
但只字未讲瑟缩嘴唇边
柔情蜜意一到分开之后
留下来更多凄怨
又相见 还心愿
痴恋生生世世难断
迟一天 盼三年
更痛失再续前缘
让你甜蜜的倚于身边
让美丽回忆于今天重演
遗留下了一些开心的片段
离别时加添温暖
(Music)
又见面万千说话尽怀念
但只字未讲瑟缩嘴唇边
柔情蜜意一到分开之后
留下来更多凄怨
又相见 还心愿
痴恋生生世世难断
迟一天 盼三年
更痛失再续前缘
让你甜蜜的倚于身边
让美丽回忆于今天重演
遗留下了一些开心的片段
离别时加添温暖
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