Eurobonds and project bonds: telling them apart
May 23, 2012--Advocates of spurring growth in Europe have put on the table two financial instruments -- eurobonds and project bonds -- which both entail joint borrowing but differ in detail and scale.
EUROBONDS
The creation of eurobonds has long been promoted by advocates of a more federal Europe. In short, eurozone member states would begin raise funds on debt markets by issuing so-called eurobonds, and would be collectively responsible for the interest due and for repayment of the amount borrowed.
Such joint debt, which the European Commission has repeatedly proposed, would offer several advantages.
PROJECT BONDS Project bonds, which have also been dubbed "baby eurobonds", would be bonds jointly issued by several or all eurozone states. But instead of the funds going to the national coffers for general use, they would be dedicated to a specific infrastructure project. Concrete assets would back the bonds in addition to the guarantees provided by the countries.
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Source: EUbusiness
Eurozone states admit contingency plans for Greek euro exit
May 23, 2012--Eurozone countries admitted Wednesday they are examining likely costs and possible complications arising from a potential exit for Greece, but maintain contingency planning is only prudent commonsense.
Treasury officials from the other 16 eurozone member states were told this week to "reflect" on what an exit would mean for their economies in preparation for eventual "coordination concerning what each must do on a European level," a diplomat from one eurozone country told AFP.
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Source: EUbusiness
EU leaders open 'no taboos' growth summit
May 23, 2012--European Union leaders opened Wednesday a "no taboos" summit called to work out how to spur growth in the debt-stricken eurozone.
As markets plunged and the euro hit a near two-year low on worries over Greece's eurozone future and Spain's troubled banks, leaders were to discuss the possible launch of eurobonds -- jointly pooled eurozone debt -- and a tax on financial transactions.
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Source: EUbusiness
EU leaders open eurobonds debate at 'growth' summit
May 23, 2012--Euro leaders have promised a no-holds-barred debate at an EU summit Wednesday on whether to guarantee each others' borrowings in future, seen as essential if Greece ends up exiting the single currency.
Against deepening worries over Spanish bank finances and concerns that other debt-laden countries would tumble should Greece break away, new French President Francois Hollande, a socialist, and German Chancellor Angela Merkel will discuss so-called eurobonds under moves to re-balance austerity with measures to kickstart growth.
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Source: EUbusiness
EDHEC-Risk Research Shows that Dynamic Portfolio Strategies Can Provide Solutions to Corporate Pension Fund Challenges
May 23, 2012--A new publication entitled "Dynamic Investment Strategies for Corporate Pension Funds in the Presence of Sponsor Risk," produced as part of the BNP Paribas Investment Partners research chair on asset-liability management and institutional investment management at EDHEC-Risk Institute, shows that sophisticated dynamic allocation strategies can usefully be implemented by pension funds.
One of the key findings of the paper is to show that imposing a cap on the funding ratio, in addition to a floor, has a positive impact on both pensioners and bondholders, while only having a minor negative effect on equity value.
The paper introduces novel forms of dynamic strategies that recognise that pension risk is not only driven by the funding ratio of the pension fund, but also by the financial strength or weakness of the sponsor company. These strategies aim to control sponsor risk by avoiding states of the world where the pension fund is underfunded and the sponsor is unable to make up for the gap.
Euro area investment fund statistics
May 23, 2012--In March 2012, the amount outstanding of shares/units issued by euro area investment funds other than money market funds was €407 billion higher than one quarter earlier in December 2011.
This increase was mainly due
to increases in share/unit prices.
The amount outstanding of shares/units issued by euro area investment funds other than money market funds increased to €6,069 billion in March 2012, from €5,662 billion in December
2011. Over the same period, the amount outstanding of shares/units issued by euro area money market funds decreased to €951 billion from €992 billion. These developments are partly explained by statistical
reclassifications of a number of money market funds as bond funds in the first quarter of 2012, with the
amount involved totalling about €70 billion (see notes).
Transactions1 in shares/units issued by euro area investment funds other than money market funds amounted to €95 billion in the first quarter of 2012, while transactions in shares/units
issued by money market funds amounted to €32 billion.read more
Source: ECB
Parliament adopts ambitious approach on financial transaction tax
May 23, 2012--The proposed financial transaction tax should be better designed to capture more traders and make evasion unprofitable, said the European Parliament in its opinion adopted on Wednesday. The opinion also says the tax should go ahead even if only some Member States opt for it.
The tax rates proposed by the Commission (0.1% for shares and bonds and 0.01% for derivatives) are considered suitable and pension funds should be the only sector exempted from the tax.
Parliament has been calling for a financial transaction tax (FTT), for close to two years and the Commission tabled a legislative proposal for one late in 2011. The latest Eurobarometer survey shows that 66% of Europeans favour such a tax.
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Source: European Parliament
BATS talks to rivals over European futures launch
May 22, 2012--BATS Europe is in talks with exchange rivals over a clearing deal that will allow the share trading platform to break into European futures and challenge incumbents NYSE Euronext and Deutsche Boerse.
BATS Europe, which handles about a quarter of European share trading, has approached the main exchanges about recruiting their clearing houses to back its push into futures, something it plans to do this year.
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Source: Reuters
STOXX Q2/2012 Quarterly Review
Results of the First Regular Quarterly Review to be Effective on June 18, 2012
May 22, 2012--STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced the new composition of the STOXX Benchmark and their sub- and
sector indices, among them the STOXX Europe 600 Index, STOXX Americas 600 Index and STOXX Asia/Pacific 600 Index.
As announced previously, with this review the STOXX Americas 600 Index will be renamed to STOXX North
America 600 Index as of June 18, 2012. The index is a sub-set of the STOXX Global 1800 Index, and
represents the 600 largest companies in the Americas portion of the global index. As it only covers
Canada and the United States, the index will be renamed to STOXX North America 600 Index for clarity’s
sake. The index universe of this index remains unchanged
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Source: STOXX
United Kingdom Could Ease Monetary Policy, Credit to Boost Growth
May 22, 2012 -With inflation well anchored, there is room to ease monetary policy further
Budget-neutral infrastructure spending can help economy recover
Stronger supervision of financial sector a priority
At a time of intensified global uncertainty, the United Kingdom’s approach to reducing debt levels to put the budget on a more sustainable footing has reinforced credibility, the IMF said as it wrapped up its annual check-up of the U.K. economy.
The government is implementing strong fiscal consolidation to reduce budgetary risks. The IMF said the Bank of England has been nimble in easing monetary policy to support growth. This policy mix helps rebalance the economy toward investment and external demand.
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Source: IMF
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