Saturday, May 29, 2010

European credit markets; Solution for the European debt crisis; Sov debt bond issuance

European credit markets – Treasurers at some US companies are telling money-market managers to stay
out of troubled sovereigns such as Spain. Meanwhile, some large US banks have also scaled back their
short-term lending to European banks. WSJ

Solution for the European debt crisis - Detailed in the London Telegraph: 1) a restructuring of certain
country’s debts (Greece, Portugal, Ireland); 2) bank stress tests w/capital injection options from the ECB
(like what occurred in the US); 3) the nations whose debt wasn’t restructured will see their debt guaranteed
by the ECB; 4) the G20 provides support for FX markets. London Telegraph

European high-yield debt - JPMorgan credit strategy update – JPM is becoming a lot less bearish as euro
high-yield starting to look more attractive. While they believe that the Euro Financial Stabilization mechanism
could contain sovereign stress, there are still numerous details to work out and risks around its

Sov debt bond issuance - May shaping up to be among the slowest months for issuance on record. Only
bonds that encompass gov’ts and state-run companies were able to price a bond through an investment
bank. In the last 12 months, banks have averaged more than $10.5B in new bond issues a month, the
smallest amount since July 2008. WSJ

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