ASG Capital的动态

It is no secret that the European Union has held an ambition to be?seen as a sovereign issuer?since the start of its journey as a frequent and large borrower in the capital markets. This goal is now moving ever closer to reality as the stock of EU debt grows. More importantly, government bond index providers are looking to include EU bonds alongside benchmark European government bonds.

https://lnkd.in/eF4kzmCs "Interesting shifts in Europe's sovereign bond markets. With narrowing yield spreads and structural changes, the traditional core-periphery distinction may be losing relevance. The stability of peripheral countries and policy support from initiatives like the NGEU are reshaping investor perspectives. Worth keeping an eye on these trends!"

Explore the European Debt Crisis and its impact on stocks, investing, and the economy. Dive deep into the financial storm with a focus on Greece. The European Sovereign Debt Crisis, a storm brewing for years, finally unleashed its fury between 2010 and 2012. Countries like Greece, Spain, and Italy found themselves ensnared in a web of insurmountable debt, a burden too heavy to bear. The 2008 global financial crisis was the spark that ignited this powder keg, amplifying existing vulnerabilities. With no fiscal union to cushion the blow, nations were left to navigate the chaos alone, their economies faltering under the weight of rigid labor markets and inefficient tax systems. As bond yields soared, investors recoiled, demanding higher returns for the risk of lending to these beleaguered states. Austerity measures became the grim reality, slashing public services and igniting social unrest. Governments fell, replaced by technocrats, as fear and uncertainty gripped the populace. Yet, amid the turmoil, a lesson emerged: the urgent need for fiscal integration, a call to arms for a more resilient Eurozone, lest history repeat itself.

DB: Corporate Bond markets in Europe - a structural perspective. The European economy needs significant investment for innovation and competitiveness. Banks alone can’t meet these needs, so debt securities are crucial. As of Q2 2024, non-financial corporations in the EU have issued EUR 2 trillion in debt securities, with EUR 1.7 trillion in the euro area. The market has grown 6.8% annually since the financial crisis. France leads in corporate debt issuance, while Germany lags. Investment funds are the largest holders of these bonds, followed by insurance companies and pension funds. Households hold very little directly. Source: DB Research https://lnkd.in/dx_pRM35 #fixedincome #bonds #europeanbonds #corporate #allocation #investment

OATS Spread (the gap between the yields of 10-year bonds issued by France, known as OATS for obligations assimilables du Trésor, and German bunds) is back at the center of discussion. There is some underlying uncertainty on whether this is the new norm in terms of the political environment,” said Daniel Loughney, head of fixed income at Mediolanum International Funds Ltd. Still, the jury is out on what the “implications there might be for other countries, especially Italy, which have benefited from the more stable political backdrop,” he said.. With mr Draghi report coming up , the levels of debt in the EU will only rise with the neutral interest rate in the EU to be increased to 3%. Already the ECB is showing that a inflation target of 2% is dead. Instead of lowering debt in the EU the deal between Draghi and Macron is very much towards more EU funds financed by EU bonds, to dilute their national debt. In mr Draghi’s view, public and private investment in the European Union needs to be rise by an additional half a trillion euros a year ( $ 542 bn) on the digital and green transitions alone. Both his report and mr Letta’s* were ordered by the European Commission to help guide policymakers when they meet in fall to draw up the bloc’s next five-year strategic plan. The ideas coming from Draghi and mr Letta are on implementing more EU budget to set up a EU industry policy or EU defense policy. The fear one should have is this will result in a further shift to Italian / France dominance where more debt and a centralized Government with a preference for futher socialist Capitalism. The comparison is drawn with America, and the Covid-19 pandemic. Unprecedently, the 27 member states entrusted the European Commission to borrow €750 billion and to allocate the money – in large parts in the form of grants – to the European countries hardest hit. People like Luuk van Middelaar argue that in the EU with every crises the people become to expect the EU should take the initiative. Against these aspects of the EU's response to the crisis, he sets as an example the creation of a coronavirus recovery fund. The Next Generation EU which idea it was to help out countries hardest hit by Covid. However if one looks which countries have used the recovery and resilience plan it strikes that these are mainly the South-EU-states , countries with the highest national debts. The countries, which have a strict budget deficit policy, are not using the funds. The rich usage of these funds by South European countries are in fact debt relief packages provided for by the North European taxpayers, for which they are not designed. The new wave of common EU funds will mean more pooling of public financing and creating a singe market. This will put a further drag on economical growth in the EU as these funds will be used as debt reductions this as means to improve the monetary health of countries like France or Italy. #Draghi #Letta

Our latest note begins with an update of our views on sovereign debt. We then set out five potential catalysts for European equities and consider how Trump might actually be bullish for the continent. — Sovereign debt pressures are likely to remain a key theme in markets in the coming years, including in parts of Europe — But despite this and the perceived threat of Trump, we see tactical reasons for optimism for Europe — We expect European equities to outperform the US in 2025 Read the full article: https://lnkd.in/evS9rEti — Capital at risk. For professional clients in the UK only —

Fitch Ratings believes China's current government measures for local public-sector debt resolution are proactive and effective in preventing systemic risk in the short term. Fiscal revenue resilience and the availability of local financial resources and operating assets will drive debt resolution in the longer term. Please join us as Fitch’s senior analysts discuss our views on China’s local public-sector debt resolution. Register Now: https://ow.ly/av3W50RQo4H Related research: https://ow.ly/icOO50RQo4I #asiapacific #china #LGFVs #debt #economy #PublicSector

Let's talk about the French bond spread! The chart below is a crucial chart for financial markets next week and a telling one for the coming years. #France's bond #spread, the additional interest rate France has to pay above Germany, has spiked to its highest level since the 'European Debt Crisis' of 2010-2012. Years of unprecedented budget #deficits caused by many factors, including aging, social benefits, healthcare, immigration, climate goals, and poor policies, increasingly stir up worries about #debt sustainability. These budgets occur at a time of swift #polarization. In this case, the party of Marie LePen gets to decide on the already shaky government formed earlier this year. In short, some austerity- and tax-related matters will have to be taken out of the budget for it to get approved. Polarization is an expensive development as it already costs a lot of money to 'undo' the policies of the previous ruling party. The more extreme polarization gets, the more extreme and costly the 'destructive policy-making' will get. To a certain extent, current developments resemble the European Debt Crisis, just less explosive and at much lower interest rate levels. By design, the #ECB must aim its policies at the weakest link. If #Italy was 'too big to fail,' guess what the ECB must do once France gets really pressured. There is no doubt in my mind that structurally low interest rates in the Eurozone are required, and not necessarily sufficient, to keep things from falling apart. The hardening of the political climate is becoming an increasingly important factor hampering debt sustainability.