Fiscal Aggression Could Threaten Sovereign Ratings
Sovereign credit ratings have been buoyed up for years by the belief that no matter how much governments actually borrowed, they were committed to coming close to balanced budgets as soon as was prudently possible. That commitment may now be wavering. The anti-deficit rhetoric never meant that governments abandoned their responsibility for cooling and warming […]
Referendum Harms UK More Than The Pound
The UK’s currency remains very volatile post-Brexit, but may be recovering. The country’s credit rating may suffer more permanent damage. As yet, the credit world has been cautiously negative about the June 23 referendum on quitting the European Union. Both S&P and Fitch downgraded the UK’s sovereign rating to AA (a notch below Moody’s) just […]
Oil And Gas Credit Consensus
Oil and Gas credit consensus isn’t following the price up The oil price has been trending sharply upwards for most of 2016. Even with a 10 percent dip since the June high, Brent crude is up about 50 percent since the beginning of the year. U.S natural gas prices have also recovered, although somewhat more […]
Pension Deficits Are A Growing Source Of Credit Risk
This blog discusses the scale of the global pension funding crisis and highlights the risk to Sovereign credit ratings. This week the main holders of Gilts refused to co-operate with the Bank of England. The post-Brexit QE stimulus relies on pension funds and insurance companies selling Gilts at attractively high prices and low yields; but […]
Credit Volatility And The VIX
This blog reports on the volatility of credit estimates measured by Credit Benchmark, compared with equity market volatility measured by the CBOE Volatility Index (the ‘VIX’). The two measures have recently shown a sharp divergence. This week, S&P Global Ratings reported that U.S. companies are as vulnerable to defaults and downgrades as they were leading […]
EU Stress Tests And Spanish Banks
The 2016 EU-wide stress test results covering 51 banks were published last week. Credit Benchmark data shows a clear relationship between risk and CET 1 ratios, especially under the Adverse scenario. The stress test results can be interpreted in a number of ways, but the key messages are clear. The actual capital position of these […]
Hurricanes And Credit Risk
The Southeast U.S.A. is in the middle of its annual hurricane season. In this blog, we look at the impact that a severe hurricane could have on a range of companies, depending on their credit risk and their geographic location. For the past few years, hurricanes in this area have been mild and infrequent; and […]
Ireland: Rapid Credit Upgrades And The Impact Of Brexit
Global IRB banks have been steadily upgrading the Irish Government over the past year ; and the country’s long term rating was recently upgraded by Fitch and Moody’s. This was mirrored in the upgrade of the CBC* by one notch. This improving bank view of Ireland reflects a robust trade surplus and a manageable budget […]
Australia’s Sovereign Risk: Banks Have Been Consistently Cautious
The main rating agencies have so far been unanimous in their credit opinion of the Australia Government; they have all assigned the equivalent of a AAA risk rating. However, due to the political deadlock following last weekend’s election, S&P have put Australia on Negative Outlook, while Moody’s and Fitch have warned that they are also […]
Impact Of BCBS Proposals On IRB Banks
The Basel Committee on Banking Supervision recently published wide-reaching proposals for reducing variation in Credit Risk Weighted Assets, with a call for responses by the end of June. The Credit Benchmark submission aims to quantify some of the possible positive and negative impacts of the BCBS proposals. This report is based on the monthly Ex […]
