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A Turbulent 2009 For European Bank Hybrids, With More Change To Come In 2010 Feb 10
Standard & Poors, Feb 2010
Abstract
The market for European bank hybrids was turbulent in 2009--a trend which in Standard & Poor's Ratings Services' opinion will continue in 2010. During 2009, secondary market prices displayed high volatility, creditworthiness deteriorated, and investors incurred losses when a range of hybrids stopped paying coupons or were subject to subpar exchange offers. Even though the majority of hybrids continue to be serviced in full, market prices imply higher risk of nonpayment across the hybrid asset class (as do our issue ratings). For European bank hybrids, 2009 provided more examples of loss absorption (such as coupon nonpayments or principal write-downs) than we saw in the previous decade as a whole. We have observed that hybrids have already absorbed losses for the...
Companies mentioned in this report are: Dresdner Bank AG,Bayerische Landesbank,Bank of Ireland,Dexia Credit Local,Allied Irish Banks PLC,Bradford & Bingley PLC,KBC Bank N.V.,Landesbank Baden-Wuerttemberg,Dexia Bank S.A.,Irish Bank Resolution Corporation Limited,Depfa Bank PLC,HSH Nordbank AG,Northern Rock PLC
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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