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Home » News Put Bonds Fund Europe Banks in Russia Reminder: Credit Markets By Esteban Duarte and Bryan Keogh July 22 (Bloomberg) -- Spanish, Italian and Irish banks facing the results of stress tests are relying on bonds that helped rescue Russian lenders in the wake of the country’s default 12 years ago. Banco de Sabadell SA , a Spanish commercial lender, is marketing bonds with puts, options that give investors the right to demand repayment before maturity. Western European issuers sold $3.1 billion of so-called puttable notes in July, adding to a record $14.6 billion last month, according to data compiled by Bloomberg. The cost of insuring bonds sold by banks in Spain, Italy and Ireland has risen by more than two thirds in the past six months, CMA prices for credit-default swaps show. Just as in Russia after the 1998 default, puttable bonds have become one of the only financing sources for the banks amid Europe’s sovereign debt crisis and as regulators prepared to report on the health of 91 lenders in the region. “The situation in Europe isn’t as stressed as it used to be in Russia, but it’s definitely an instrument designed for hard times,” said Romain Netter , a Paris-based dealer of medium-term notes at Natixis, which helped place 2 billion euros ($2.6 billion) of bonds with put options this year. Lower Yields While banks face the risk of having to raise money immediately should investors demand repayment, puttable debt also offers borrowers lower yields. Banco Bilbao Vizcaya Argentaria SA , Spain’s second- biggest bank, sold $580 million of one-year puttable bonds yesterday, Bloomberg data show. Put options saved Bilbao- based BBVA almost a percentage point in interest, or about 8.5 million euros a year, on the two-year floating-rate notes it sold June 24, according to Maud Debreuil- Chevroton , manager of money-market funds at Axa Investment Managers in Paris. “If the stress tests go well, investors will be happy to buy more puttables,” said Ariane Uzan , Paris-based head of medium-term notes and private placements at Societe Generale SA, which arranged an issue by the Spanish government this month. “They’re waiting for the tests to go or not go on certain credits.” Elsewhere in credit markets, the extra yield investors demand to own emerging-market corporate bonds rather than government debt declined to the lowest in two months, while credit swaps on U.S. companies fell. The Federal Deposit Insurance Corp. plans to issue securities backed by about $500 million of home mortgages acquired from failed banks. CDX Index The Markit CDX North America Investment Grade Index of credit-default swaps, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 2.71 basis points to 108.81 basis points as of 4:22 p.m. in New York, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of swaps on 125 companies with investment-grade ratings, rose 0.05 to 114.79. Morgan Stanley bonds were the most-traded U.S. corporate debt by dealers today, with 316 trades of $1 million or more, followed by Noble Corp. with 211, Bloomberg data show. Geneva-based Noble, the world’s second-largest offshore driller by fleet size, sold $1.25 billion of debt on July 21 in a three-part offering. Junk Bonds Energy Future Holdings Corp., the Dallas-based electricity producer formerly known as TXU Corp., had the most active junk bonds with 46 trades. High-yield, or junk, debt is rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s. In emerging markets, spreads tightened 12 basis points to 296 basis points, the lowest since May 17, according to JPMorgan Chase & Co. index data. The spread has ranged from as low as 229 on April 15 to as high as 359 on May 25. The FDIC will back about 85 percent of bonds created for the offering and it may not sell the deal’s junior- ranked notes, which will lose principal first amid any defaults on the underlying loans, said David Barr , an agency spokesman. The FDIC, which has closed more than 250 banks since 2008, began raising cash in the bond market for the first time since the early 1990s in March. The Washington-based agency sold $3.8 billion of guaranteed notes in three deals that month. Russian Airport Banks funding a project to upgrade and expand Pulkovo airport in St. Petersburg, Russia, will receive interest of 425 basis points to 475 basis points more than benchmark rates for the 12-year financing, according to two people with knowledge of the loan. The European Bank for Reconstruction and Development and the International Finance Corporation said July 19 they arranged the 200 million-euro loan for the so-called public-private partnership. Puttable bond sales in Western Europe have dropped since June’s record as corporate new issues declined 38 percent amid summer holidays, Bloomberg data show. European Union regulators are examining the strength of the region’s biggest banks to reassure investors. The Committee of European Banking Supervisors is due to publish some results of the stress tests tomorrow. Spanish banks have issued $9.6 billion of puttable bonds since May, 72 percent of all the debt they sold, Bloomberg data show. Sabadell Puttables Banco Sabadell , which posted a 30 percent drop in first-half profit, is offering two-year securities with put options every three months, according to two people familiar with the transaction. The biggest buyers are French money-market funds and other commercial paper investors seeking higher yields, said a spokesman, who declined to be identified citing bank policy. Intesa Sanpaolo SpA , Italy’s biggest lender by branches, sold $1.6 billion of one-year floating-rate notes on June 9, its first puttable issue, Bloomberg data show. Monica Provini, a spokeswoman for the Milan-based lender, declined to comment. Allied Irish Banks Plc , the country’s second-largest lender by market value, has sold $1.33 billion of the securities since May, Bloomberg data show. Spokesman Ronan Sheridan said the Dublin-based bank offers puttable debt in response to inquiries from investors, and that they’re “a very small part of our funding profile.” Passing Tests Allied Irish, along with the country’s largest lender Bank of Ireland Plc , will pass the stress tests, according to a person with knowledge of the matter. Credit-default swaps on 13 banks in Ireland, Spain and Italy have jumped an average 114 basis points in the past six months to 261, according to CMA. The benchmark iTraxx Europe Financial Index of contracts linked to 25 banks and insurers has increased 48 basis points to 134 in the same period. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. An increase signals a deterioration in investor perceptions of credit quality. Spain, which has the third-largest deficit in the euro region, included a put option for the first time when it tapped international investors for a 500 million-euro two- year bond sale July 7. The bonds were part of the nation’s efforts to diversify funding, said a Madrid-based spokesman, who declined to be identified citing government policy. Inserting the option saved the nation about 1.4 percentage points in yield, according to data compiled by Bloomberg. To contact the reporters on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net ; Bryan Keogh in London at bkeogh4@bloomberg.net Last Updated: July 22, 2010 19:01 EDT

[el_sobrino]

Entre 15.25..15.3 tengo el promedio de compra en faz chonny..15000 dolares.saludos que no es mi horario para escribir,te queria contestar nada mas...mañana agarrate..AMZN marca el rumbo ..la idea mia desde el martes era 10000 para el viernes pero la suba de hoy atraso todo,pero eso nada mas lo atraso porque llegar va a llegar.

[PAC]

entonces lo importante que pases unas buenas vacaciones

[murddock]

PAC, lo mas optimista que manejo por ahora es como dije el martes. ABC como B o 2 que corrige toda la caida desde max (1225-1010) con C en curso lo cual te puede llevar hasta 1.150 como muchooo. Hasta ahi todo rebote es shorteable. Arriba de eso puede ser rotura Anal. Pero de momento no lo veo factible.

P.D: el unico tema es que la semana que viene no estoy. Por lo cual quedo atado de manos. Ojala se de y lo cuelguen de la palmera al mercado para cuando llegue lunes 2/8 poder ver que se puede dar. Pero esto ya es hacer futurologia, de aca 5 ruedas pueden pasar tantas cosas...
Suerte a los que sigan en el baila y usen STOP. Se hace mas llevadero.

[nitramus]

Despues de tanto lio con la Death Cross de SMA 50:200, al final las EMAs no se cruzaron todavia!!!!!



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[PAC]

Volumen terrible no. Si es para sera como ha sido desde MAR 09' con bajo volumen (Skynet activada). Solo en las encontras volumen.

P.d: El volumen es anecdotico. Only price pays.

que pensas si el euro se va a 1.34

[murddock]

Volumen terrible no. Si es para sera como ha sido desde MAR 09' con bajo volumen (Skynet activada). Solo en las encontras volumen.

P.d: El volumen es anecdotico. Only price pays.

[0zK]

.. este ta te ti ya me canso !!
cuando estuvo el stress test en usa, el dia antes ya se sabia de los bancos como lo habian afrontado, si aca nada mas te muestran el deutsche, es por que hay cat encerrado che .. pero de todas maneras, para donde vayan los indices, va a ser con mucho volumen y un velon terrible que no te va alcanzar el finde para fumarla ..
:

[PAC]

una miradita LONG del mercado visto en el Don juan

http://pacinversor.blogspot.com/2010/07 ... -suba.html

[PAC]

Leí que un forista habló de la culminación de la earning season y otro habló de las vacaciones de los operadores.

La estacionalidad de los índices ---> http://www.seasonalcharts.com/classics_dj_ia.html

Ver que esta web page tiene varios menúes desplegables, sub-menúes, etc.

[TonyMontana]

SPX en euros vs Stress test.

no rompio nada todavia..

habria que hacer un stress test en este foro, creo que no lo pasa nadie....

[PAC]

alguien posee datos históricosde como se comportó el mrk en fines de julio, agosto hasta la vuelta de los jonis al laburo?para mi casi siempre fue peligrosa esta época

el año pasado en julio estaba en 8000 volvieron de vacaciones subio a 10.000 hasta setiembre