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ICMA issues covered bond statement

Posted on by aldopuch

 

The International Capital Market Association (ICMA) has issued a statement to the credit rating agencies relating to the methodologies used in rating covered bonds.  The statement revolves around the volatility of covered bond ratings in particular and other ratings in general.

Acknowledging the challenge of giving a credit opinion “through the cycle” the statement does highlight the ICMA’s thinking that specific features such as central bank support and regulatory treatment should form part of the bond rating process.

Accordingly ICMA would like to “encourage rating agencies to either act faster with regard to changes in their respective rating methodology in the light of the changing regulatory landscape, or to be more cautious in terms of communication and actual rating changes in the light of changing regulation for banks as issuers of Covered Bonds.”

Based in Zurich, the ICMA “represents a broad range of capital market interests including global investment banks and smaller regional banks, as well as asset managers, exchanges, central banks, law firms and other professional advisers” and has been at the forefront of the international debt market for over 40 years.

In other market news, a recent Reuters article about the rise in China’s short term money rates included the comment that in respect of China “traders increasingly regard the seven day reverse-repo as an unofficial guidance rate for the market, following moves by the central bank they interpret as a sign of tightening control”

If you want to learn more about the latest trends in repo market you can attend a Eureka Financial course which gives delegates a chance to explore applications of repos for risk management, speculation and arbitrage purposes with a particular emphasis on the relationship between the bond repo market and derivatives such as swaps and exchange traded bond futures.

Eureka Financial offers over 100 public and in-house training courses in banking and finance, corporate finance and M&A, risk management, operations, investments, wealth management, soft skills and management. For more details visit: www.eurekafinancial.com

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