Hints and tips:
...Assured Guaranty provides a niche type of insurance that pays out to lenders if a borrower defaults on its loans....
...S&P cited the World Bank’s backing plus Argentina’s “unblemished record” in servicing multilateral debt....
...Or will there be mass defaults and a financial crisis?...
...A version of this article was first published by Nikkei Asia on December 1 2020. ©2020 Nikkei Inc....
...“We have seen a significant ramp-up in loans not only in special servicing but in a grace period over a short period of time,” said Sagar Parikh, a securitised products trader at asset manager TCW....
...Prominent examples include the Republic of Congo and Mozambique, “where hidden debt was contracted, taking debt to excessive levels [and] leading to defaults”....
...“To avoid default, the debt is being put on the sovereign balance sheet....
...Then, in January 2015, an “event of default” notice was sent to more than 100 MBS trusts which Ocwen was servicing, alleging improper behaviour and bringing the company to its knees....
...Debt servicing is on the up, well for corporates anyway Two diverging trends here. China, on a national level, is requiring more and more cash to service its debts....
...And it basically makes money in two ways: it receives an origination fee for creating a loan and it receives an ongoing fee for servicing the loan....
...Earnest, a San Francisco-based student loans specialist, sold itself in October to Navient, the loan-servicing company, for $155m, or about 40 per cent of its peak valuation....
...Problem is, even they are struggling to process the risk — and that’s despite being much less intensively supervised than the more established players who would usually be interested in servicing futures...
...Apparently we are all imminently sinking into a debt Ragnarok that will inevitably end with the mass default of most of the world’s biggest economies. But maybe we shouldn’t be so scared....
...After servicing fees and other costs, the loans are paying 10 per cent interest. How much do you think you will make over the two years? Let’s make two assumptions for the sake of simplicity....
...The credit cycle is beginning to turn, judging by a pick-up in defaults among the riskiest customer segments, and regulatory risk is rising....
...For instance, while Japan’s debt load is more than 200 per cent of GDP and that of Turkey is little more than 30 per cent, Japan currently spends just 1.5 per cent of its GDP servicing this debt, while Turkey...
...The question of whether Argentina is legally blocked from servicing all of its debt, or just bonds issued under US law, remains in dispute....
...Argentina threatens default in response to US Supreme Court ruling....
...Seven US-listed IPOs – including agriculture company Taggares Inc and health-technology company KineMed – were withdrawn in July, the highest number since November 2012, according to Dealogic....
...On Wednesday Citi sold $10.3bn in mortgage servicing rights as it pushes ahead with the wind-down of its bad bank....
...(Financial Times) COMMENT etc Reform or die: gold price fix under pressure (Financial Times) Abe’s third arrow is more like 1000 trial needles (Financial Times, Pilling) Japan Inc still hoarding cash...
...If a technical default triggered a similar reaction (i.e., a flight to quality), recovery could be higher, in which case the CDS payoff would be lower than expected....
...An question that then arises is if Judge Griesa’s ruling (if upheld by higher courts) could set a precedent that could allow holders of Ecuador’s 2012 and 2030 to block the servicing of performing bonds...
...Authorities in Washington are debating new mortgage servicing rules, capital requirements for banks, a rule that would require lenders to verify a borrower’s ability to repay the debt, and a requirement...
...It may be just a stepping stone to the inevitable combination of outright default, inflation, and departure from the eurozone which may unfortunately await Greece....
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