Comment EM and The Cover

The Single Resolution Board made a messy situation messier with its handling of the Brexit bond debacle.

Thomas Gottstein, CEO of Credit Suisse, has called the Greensill crisis ‘an asset management problem’. But it will have far-reaching consequences and raises questions over the integrated model that it and other banks deploy, writes David Rothnie

As emerging market IPOs continue to draw investors into countries many have never invested before, Turkey remains an obvious absentee. The country could be an EM equity giant but political decisions by its government continue to hinder Turkish businesses.

Banks shouldn’t get their hopes up for radical changes to the capital buffer system.

International investors are set to get their first chance to buy a carbon neutrality bond from China, with China Development Bank preparing for a deal this week. This is encouraging, and shows the country is serious about using capital markets to propel its carbon goals. But the government’s credibility will remain in doubt unless it makes changes elsewhere too.

There are more risks than rewards for banks in the primary market right now.

The rise in US Treasury yields in reaction to the government's $1.9tr stimulus package has prompted a shift in equity markets away from highly valued tech stocks that may do less well if interest rates rise as a result of higher inflation. But if the switch means investor portfolios reflect the wider economy, that is a positive development.

The London listing review, out this week, has been hailed as a vital chance for the City to straighten its slipping crown as Europe’s top financial centre.

UK chancellor of the exchequer Rishi Sunak is preparing to unveil his latest budget on Wednesday. Leaks point to a package of tax hikes and spending cuts. But a repeat of the discredited model that the Conservative Party, of which he is a member, embraced to tackle the 2008-2009 financial crisis would miss a huge opportunity to finance growth just when borrowing costs are as low as they will ever be. Austerity will prove a false economy that drives investment elsewhere.

In 1954 Ennio Flaiano, an Italian screenwriter best-known for being one of the writers on Federico Fellini's 'La Dolce Vita', wrote 'A Martian in Rome', a satirical short story about an alien who lands his spacecraft in the Eternal City, sending it into a frenzy. Mario Draghi's arrival in Rome as Italy's prime minister just over a week ago saw a man, just as alien-looking to Italian politics as any Martian, take a seat at its very centre. His arrival has been just as sensational so far for the country and its capital markets but how effective will he be in the long-term?

The thinking that the additional tier one (AT1) market should go back to trading through its pre-pandemic valuations holds big risks.

Italy lost €45bn of orders from its 10 year bond issue this week when it tightened the spread to 4bp inside initial price thoughts. It was a close echo of when investors pulled €75bn of bids for Spain’s 10 year in January.