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Are Banks Selling Risk--Or Holding It? Aug 07
Standard & Poors, Aug 2007
Abstract
The past five or six years have witnessed a seismic shift in the terrain of the capital markets that has, in theory, pushed banks in the U.S. farther down the path of being intermediaries of credit than holders of credit. The industry first embarked on this route in the 1970s, which witnessed the ascendance of the CP and public securities markets that eventually superseded bank lending. What is different today are the private pools of hedge fund money available to make loans or hold the risky pieces of the CDOs that buy loans. These nontraditional buyers now purchase 70% of leveraged loans, whereas historically this debt would have been distributed within the banking system. Many might naturally surmise that as...
Companies mentioned in this report are: Bank of New York Mellon Corp.,Bank of America Corp.,Lehman Brothers Holdings Inc.,JPMorgan Chase & Co.,Citigroup Inc.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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