Banks

The US Consumer Price Index (CPI) surprised on the upside for the third month in a row. There was nowhere to hide in the release with a majority of sub categories and sub aggregates posting worse numbers than expected.

It has been an eventful few weeks in the European high yield market. After waiting a long time for a bus to come along, three have come along at once.

Quarter ends are always a useful time to take a step back and assess what the main macro drivers during the quarter were, which trades worked and which did not and to refresh macro views for the next period.

Over the course of last week, we saw several headlines around Additional Tier 1s (AT1s). First, the Dutch Finance Ministry indicated it is exploring the possibility of modifying or abolishing the asset class.

Yesterday’s US CPI report delivered a few interesting numbers but is still consistent with the Fed’s goals and timelines, which should allow it to cut rates in the context of some sort of a soft landing.

We have had a busy week on the central bank front with the Federal Reserve chair Jerome Powell’s semi-annual testimony to congress on Wednesday before Christine Lagarde took centre stage at the European Central Bank press conference yesterday. 

NN Group, the Dutch insurer, has issued its inaugural €750m Restricted Tier 1 (RT1) deal, which came with a 6.375% coupon and BBB-/BBB rating from S&P/Fitch.

Almost a year ago to the day, we were in the midst of banking sector turmoil, which started off with regional banks in the US and spilled over to Europe, eventually culminating in the forced merger between Swiss banks UBS and Credit Suisse.  

Last week's data deluge from the UK painted a mixed picture for the economy, offering insights into inflation, growth, and the possible path for interest rates.

Income has returned. After a couple of barren years, yields in high-quality bonds that were not too long ago returning just 2% or 3% are now set to bring in 7% to 8%. And this jump in yields looks to be a game changer for investors.

In this Back to Basics webinar, Aza Teeuwen (Partner, Co-Head of ABS) and Douglas Charleston, (Partner, Co-Head of ABS) provided a comprehensive understanding of the key aspects and trends within the European RMBS market.

A few weeks ago, JP Morgan skipped a call on one of its $1,000 par preference shares (“US Prefs”). The perpetual notes had a coupon of 6.75% payable until Jan’24, with a subsequent reset of 3-month SOFR + 404bps. Post the non-call, the coupon changed to 9.35% and will continue to reset every 3 months.