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Nr, B+b, A+l Out Of The Woods...

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http://www.bloomberg.com/apps/news?pid=20601009&sid=aHkZbYUfVEqY&refer=bond' rel="external nofollow">
Northern Rock Debt Risk Drops on Government Guarantee (Update2)
By Hamish Risk and John Glover
Sept. 18 (Bloomberg) -- Northern Rock Plc credit-default swaps dropped after U.K. Chancellor of the Exchequer Alistair Darling said the government will guarantee the bank's deposits.
Contracts on the Newcastle-based company fell 70 basis points to 150 basis points, according to JPMorgan Chase & Co. The cost of credit-default swaps falls as creditworthiness improves.
``Ultimately, retail banking becomes political and that's what's happened in the past 72 hours,'' Nigel Myer, an analyst at Dresdner Kleinwort in London, said in a telephone interview today. ``What we need now are TV pictures showing it's business as usual to reassure customers that their money is safe.''
Northern Rock depositors lined up outside branches again today to withdraw their savings, adding to the more than 2 billion pounds ($4 billion) pulled from accounts since the Bank of England offered emergency funding last week. Northern Rock relied on financial markets rather than depositors for about 73 percent of funding, compared with 53 percent at Alliance & Leicester Plc, according to data compiled by Bloomberg.
Credit-default swaps on Alliance & Leicester Plc fell 30 basis points to 95 basis points after the government announcement, according to Deutsche Bank AG. Contracts on Bradford & Bingley Plc, the housing lender based in Bingley, England, fell 35 basis points to 90 basis points, according to Deutsche Bank.
Bradford & Bingley relies on the markets for about 53 percent of its funding, Bloomberg data show.
Shares Rally
The shares of Alliance & Leicester and Bradford & Bingley rallied after plunging yesterday. Alliance & Leicester rose 27 percent to 760.5 pence as of 9:28 a.m. in London and Bradford & Bingley gained 5.4 percent to 294 pence.
Shares of Northern Rock rose 11 percent to 315 pence.
``It looks like being a painful and not necessarily smooth road to recovery for Northern Rock,'' Simon Adamson, an analyst at CreditSights Inc. in London, said in a note to clients. ``A guarantee for depositors is usually associated with more interventionist governments in continental Europe than with the supposedly market-driven U.K. authorities.''
To contact the reporters on this story: Hamish Risk in London hrisk@bloomberg.net ; John Glover in London at johnglover@bloomberg.net
Last Updated: September 18, 2007 04:31 EDT

So they are back in the lending business? Buyers for their mortgage back securities will be easier to find with this lower risk premium.

Inflation spike/sterling crisis now seem likely... :ph34r:

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BOE/FSA/Treasury/Taxpayer bankrolling 125% mortgage market both directly and indirectly now.

All of Mervyn's promises of not bankrolling bad business are not worth a pint of piss.

No matter, just an opportunity for bond buyers to rack up the future losses and cause an even greater mess, if they want it stuff it down their throsts till they choke on the stuff.

Just make damn shue NONE of your savings / investments are exposed to it.

Edited by OnlyMe

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http://www.bloomberg.com/apps/news?pid=20601009&sid=aHkZbYUfVEqY&refer=bond' rel="external nofollow">
Northern Rock Debt Risk Drops on Government Guarantee (Update2)
By Hamish Risk and John Glover
Sept. 18 (Bloomberg) -- Northern Rock Plc credit-default swaps dropped after U.K. Chancellor of the Exchequer Alistair Darling said the government will guarantee the bank's deposits.
Contracts on the Newcastle-based company fell 70 basis points to 150 basis points, according to JPMorgan Chase & Co. The cost of credit-default swaps falls as creditworthiness improves.
``Ultimately, retail banking becomes political and that's what's happened in the past 72 hours,'' Nigel Myer, an analyst at Dresdner Kleinwort in London, said in a telephone interview today. ``What we need now are TV pictures showing it's business as usual to reassure customers that their money is safe.''
Northern Rock depositors lined up outside branches again today to withdraw their savings, adding to the more than 2 billion pounds ($4 billion) pulled from accounts since the Bank of England offered emergency funding last week. Northern Rock relied on financial markets rather than depositors for about 73 percent of funding, compared with 53 percent at Alliance & Leicester Plc, according to data compiled by Bloomberg.
Credit-default swaps on Alliance & Leicester Plc fell 30 basis points to 95 basis points after the government announcement, according to Deutsche Bank AG. Contracts on Bradford & Bingley Plc, the housing lender based in Bingley, England, fell 35 basis points to 90 basis points, according to Deutsche Bank.
Bradford & Bingley relies on the markets for about 53 percent of its funding, Bloomberg data show.
Shares Rally
The shares of Alliance & Leicester and Bradford & Bingley rallied after plunging yesterday. Alliance & Leicester rose 27 percent to 760.5 pence as of 9:28 a.m. in London and Bradford & Bingley gained 5.4 percent to 294 pence.
Shares of Northern Rock rose 11 percent to 315 pence.
``It looks like being a painful and not necessarily smooth road to recovery for Northern Rock,'' Simon Adamson, an analyst at CreditSights Inc. in London, said in a note to clients. ``A guarantee for depositors is usually associated with more interventionist governments in continental Europe than with the supposedly market-driven U.K. authorities.''
To contact the reporters on this story: Hamish Risk in London hrisk@bloomberg.net ; John Glover in London at johnglover@bloomberg.net
Last Updated: September 18, 2007 04:31 EDT

So they are back in the lending business? Buyers for their mortgage back securities will be easier to find with this lower risk premium.

Inflation spike/sterling crisis now seem likely... :ph34r:

This doesn't really help them sell securities.

They have still lost 73% of their lending ability. The brand is dead.

A&L and B&B, running a less agressive model have lost 53% of their lending ability. Take away 53% of any businesses trading volume and see what happens. We will see redundancies and branch closures but these brands may survive. They still have a hell of a lot to do to save them.

Expect the number of mortgage approvals in the UK to suffer a precipitous drop, following this episode.

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This doesn't really help them sell securities.

They have still lost 73% of their lending ability. The brand is dead.

A&L and B&B, running a less agressive model have lost 53% of their lending ability. Take away 53% of any businesses trading volume and see what happens. We will see redundancies and branch closures but these brands may survive. They still have a hell of a lot to do to save them.

Expect the number of mortgage approvals in the UK to suffer a precipitous drop, following this episode.

Is the credit-default swap rate the same as is shown in the LCDX Price/Spread graph which you often reference? The quoted figures seem a lot lower than the 240 points that it's still showing,

Peter.

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Is the credit-default swap rate the same as is shown in the LCDX Price/Spread graph which you often reference? The quoted figures seem a lot lower than the 240 points that it's still showing,

Peter.

Peter, if you are talking about the Markit data, it will be from last night's close

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This doesn't really help them sell securities.

They have still lost 73% of their lending ability. The brand is dead.

A&L and B&B, running a less agressive model have lost 53% of their lending ability. Take away 53% of any businesses trading volume and see what happens. We will see redundancies and branch closures but these brands may survive. They still have a hell of a lot to do to save them.

Expect the number of mortgage approvals in the UK to suffer a precipitous drop, following this episode.

Yes, but I can see this desperate goverment, guaranteeing NR's bond sales, to keep the HPI MEW factory going. :blink:

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