REMEMBER THE DAYS when issuance from US agencies was booming and their calendars dominated the primary markets? The excitement created by a brand name corporate announcing plans for a benchmark issue? Well those days are back – for now at least. Easily understood, corporate credit is now the order of the day, an understandable outcome of so many investors having had their fingers badly burnt on US sub-prime asset-backed securitizations and mezzanine tranches of sub-prime ABS CDOs.
So there is something of a backlash against some of the trends of recent years when nearly all the banks went looking for fixed-income alchemy, seduced by highly quantitative techniques and the associated high fees. As the market’s recent woes show, many structured transactions are so complicated that even the brightest people struggle to understand them. And that is a problem for efficient functioning markets, where transparency is everything. Participants are asking how...
