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Portugal Moves Into Default Territory
January 16, 2012--Portugal is trading in default territory after investors offloaded the country’s bonds this week amid rising fears of contagion. Worries are mounting that the private sector and Greece will fail to agree a restructuring package for Athens’ debt, the Financial Times reported.
Many investors were also forced to sell Portuguese bonds after Standard & Poor’s downgraded the country to junk on Friday. Other funds sold Portuguese debt after Lisbon was removed from Citigroup’s European Bond Index, which these investors track, because of its fall to junk status.
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Source: GlobalInsolvency.com
New EDHEC-Risk Institute research assesses the true risks of Exchange-Traded Funds (ETFs)
January 16, 2012--New research at EDHEC-Risk Institute has addressed the question of the true risks of Exchange-Traded Funds (ETFs) in Europe in the light of issues raised by financial regulators and international organisations. According to EDHEC-Risk Institute, any discussion of the risks inherent in ETFs should go beyond merely hypothesising about potential risks, and should also take into account the empirical evidence provided by the existing academic research on ETFs, which has documented various benefits in terms of liquidity and price efficiency.
Among the conclusions of the EDHEC-Risk Institute study:
The vast majority of European ETFs are managed within the UCITS framework and as such have the same levels of security and the same risks as any UCITS fund. Highlighting the supposed risks of ETFs therefore makes little sense, and even less so in matters of retail investor protection in that ETFs represent but a fraction of the products sold to the general public in Europe and competing investment vehicles typically do not benefit from the same level of protection as that provided by the UCITS framework.
The massive marketing and media relations campaigns implemented by some ETF providers in an effort to promote counterparty-risk-based distinctions between physical and synthetic replication ETFs are misleading.
As far as counterparty risk is concerned, it makes little sense to oppose physical replication and synthetic replication products on the one hand, or draw a fine line between unfunded and funded swaps on the other. Both distinctions are largely irrelevant in practice and convey a false sense of "comparative" safety. In fact, whatever the replication techniques employed, ETFs are exposed to counterparty risk. As a matter of fact, securities lending is widely practiced by physical replication ETFs and leads to counterparty risk, just as surely as the reliance on over-the-counter derivatives by synthetic replication ETFs. Investors should pay more attention to first order issues that determine the effective mitigation of counterparty risk: the level of collateralisation, the quality of the assets performing the economic role of collateral and the ability of the fund to enforce its rights against collateral in the case of default by the counterparty.
view EDHEC Position Paper What are the Risks of European ETFs?
Source: EDHEC
Vier neue Kredit-ETFs mit Hebelwirkung gelistet
January 16, 2012--db X-trackers, die Plattform der Deutschen Bank für Exchange Traded Funds (ETFs), hat vier neue Kredit-ETFs gelistet. Diese ETFs ermöglichen ein Engagement in Kreditrisiken von Unternehmen oder können zur Absicherung bestehender Positionen in Kreditrisiken von Unternehmen, zum Beispiel Unternehmensanleihen, eingesetzt werden. Bei den neu gelisteten ETFs wurden erstmals in Europa Kreditindizes gewählt, welche eine Wertentwicklung auf täglicher Basis mit einem zweifachen Hebel abbilden.
Bereits seit 2007 bietet db X-trackers eine Palette von bisher zehn Kredit-ETFs an, bei ihnen enthält der unterliegende Index keinen Hebel. In Kredit-ETFs von db X-trackers sind derzeit mehr als 400 Millionen Euro investiert. "Bei unseren Kredit-ETFs ist die enthaltene Zinskomponente an den Tagesgeldsatz EONIA gekoppelt, somit kann sich ein Anleger alleine an der Kreditseite einer Unternehmensanleihe beteiligen, ohne auch das Zinsänderungsrisiko tragen zu müssen", sagt Thorsten Michalik, Leiter db X-trackers Deutsche Bank Exchange Traded Funds. „Des Weiteren bieten die zugrunde liegenden iTraxx® Indizes die Möglichkeit für ein Engagement in unternehmensbezogene Kreditrisiken mit einer hohen Liquidität, insbesondere im Nicht-Investment Grade Bereich“, so Michalik weiter. „Die neuen ETFs mit Hebelwirkung bieten institutionellen Anlegern dabei mehr Möglichkeiten, das Engagement zu steuern, da sie durch den in den Indizes enthaltenen Hebel den erforderlichen Kapitaleinsatz merklich reduzieren können.“
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Source: db X-trackers - Deutsche Bank Exchange Traded Funds
Letter to Commissioner Barnier, Chairman Bowles & ECOFIN Chairman Corydon regarding European Supervisory Authorities (ESAs)
January 16, 2012--Letter from ISDA and 6 other associations to Commissioner Barnier, Chairman Bowles and ECOFIN Chairman Corydon, calling for European Supervisory Authorities to be given an appropriate amount of time to draft technical standards for EU legislation.
TARGET="_top">view letter
Source: ISDA
Amundi ETF 3rd largest European ETF provider by net new assets in 2011
January 16, 2012--2011 was a positive year for Amundi ETF with the extension of its range to over 100 products. The European development plan reached an important milestone in May with entry into the UK market. Amundi ETF benefited from significant growth throughout the year to finish 2011 ranked as the 3rd largest European ETF provider by net new assets with EUR 1.7bn net inflows.
Valérie Baudson, Managing Director of Amundi ETF comments: “Amundi ETF remained focused throughout the year amid challenging market conditions. The outcome was extremely satisfactory with the number of products breaking through the 100 threshold and our successful launch in the UK, one of the most important and competitive markets in Europe.”
Consistent product innovation Eight new products were added to the range in 2011 to reach a total of 102. Innovation has consistently driven product development which is illustrated by the recent listing of the first ETF in Europe to offer an exposure to the S&P 500 with daily euro/dollar currency hedging on NYSE Euronext in Paris.
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Source: Amundi
Ireland's economy in facts and figures
January 14, 2012--- Herewith a few facts and figures on Ireland, which was the second eurozone to seek a bailout, agreeing an 85-billion-euro ($111-billion) European Union-International Monetary Fund rescue package in November last year.
DATE OF ENTRY INTO THE EUROZONE: Ireland was a member of the Economic and Monetary Union when it launched on January 1, 1999, ahead of the introduction of euro notes and coins into circulation in 2002.
PUBLIC DEBT: 144 billion euros in 2010, or 92.5 percent of GDP (Source: Eurostat). Forecast to grow to 108.1 percent of GDP in 2011, 117.5 percent in 2012 (European Commission)
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Source: EUbusiness
Greece's economy in facts and figures
January 14, 2012--Basic economic figures for Greece, the epicentre of the eurozone debt crisis and the first member state to be bailed out by the European Union and the International Monetary Fund, in May 2010.
EUROZONE ENTRY: Greece joined the eurozone as its 12th member state on January 1, 2001, a year before notes and coins went into circulation. Greece had failed to meet the Maastricht Treaty criteria for eurozone membership of a public deficit of less than 3.0 percent of Gross Domestic Product and inflation at less than 2.7 percent when the Economic and Monetary Union was formally launched January 1, 1999.
PUBLIC DEBT: Greece has highest debt ratio in the bloc, owing more than 350 billion euros, and exceeds by far the eurozone limit of 60 percent of GDP. In 2010, total debt was equal to 144.9 percent of GDP, and forecast to jump to 161.7 percent in 2011. It is forecast to fall to 145.5 percent in 2012 under the budget adopted on December 7, 2011 and then be brought down to 120 percent by 2020 under a debt write-down accord with private creditors agreed in October.
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Source: EUbusiness
MFI statistics 2011: the number of monetary financial institutions in the euro area and in the EU decreases further
January 14, 2012--On 1 January 2011 the total number of monetary financial institutions (MFIs) [1] in the euro area stood at 7,865. There is a net decrease of 211 units (2.6%) in comparison with the situation a year ago.
The decline was spread across the whole of the euro area. The number of MFIs in the euro area went up by 37 units when Estonia joined the euro area on 1 January 2011. There were 9,921 MFIs in the European Union (EU) as a whole, a net decrease of 271 units.
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Source: ECB
S&P 'downgrades France one notch, spares Germany'
January 13, 2012--Standard & Poor's has decided to downgrade France's top credit rating by one notch but will spare Germany, Belgium, Luxembourg and the Netherlands, EU government sources told AFP on Friday.
"France loses its triple-A rating," one source said on condition of anonymity, adding that the credit ratings agency, one of the world's top three, has notified the governments of its decision.
"The Standard & Poor's downgrade is by one notch," to AA+, another source told AFP.
France was along with Germany, Luxembourg and the Netherlands among the six eurozone nations with a AAA rating. Sources were unable to say what S&P decided to do with the two others, Austria and Finland.
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Source: EUbusiness
S&P downgrades France, eight other euro zone nations
January 13, 2012--Standard & Poor's stripped France of its top AAA rating on Friday and carried out a mass downgrade of half the nations in the euro zone, a move that may complicate European efforts to solve a two-year old debt crisis.
Germany, the bloc's largest economy, was spared.
Nine of the 17 members of the euro area had their credit ratings cut, with Austria joining France in losing its AAA status. Those two, along with Malta, Slovakia and Slovenia had their ratings cut by one notch, while Italy, Portugal, Spain and Cyprus suffered two-notch downgrades.
S&P said it feared that initiatives European policymakers have taken to tackle the debt crisis "may be insufficient to fully address ongoing systemic stresses in the euro zone."
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Source: Todays Zaman
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