Bond Outlook February 20th
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Bond Outlook February 20th

Cannons to the left of us, cannons to the right. In this case sub-prime losses being revealed across Europe, not just the USA, and monolines in slow collapse.

Bond Outlook [by bridport & cie, February 20th 2008]

In normal times, news like the breach of Liechtenstein ’s banking secrecy to expose tax fraud at high level in Germany , and the nationalisation of a major bank in the UK would receive more attention in our Weekly. However, the ever widening wave of damage to financial markets from the US sub-prime market is really where we think it best to focus our readers’ attention. Two really big issues stand out this week: geographic widening of the crisis and monoline insurers.


Take the first. For about one week Crédit Suisse was able to bask in the glory of having been so much wiser than UBS in limiting sub-prime damage. That glory has now evaporated, along with the CHF 3.1 billion of new announced sub-prime write-downs. Every major European country has its crisis-hit bank, but did both the major universal Swiss banks have to combine their forces to tarnish the reputation of the entire Swiss banking industry? In France , Crédit Agricole is also moving towards announcing sub-prime write-offs, setting a new French record.

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