Counterparty Credit Risk 2. The Good, the Bad, the Ugly, and the Unseen
“Data and its accuracy are key to making this work,” said Robert Scanlon, referring to counterparty credit risk. Scanlon is the former Group Chief Credit Officer of Standard Chartered Bank and current Principal, Scanlon Associates. As the second of three speakers at a GARP webinar on counterparty risk held on May 20, 2014, Scanlon spoke from years of experience with risk practices. First, the good part of calculating counterparty credit risk. Scanlon said there is plenty of data already, especially for consumer/retail transactions. “You can start with a steady state assumption and get more data as time goes on. Ask […]
China: Global Leader, Threat, or Both? Part 2.
“The likelihood of conflict is low but non-negligible” when it comes to China’s perspective on Japan’s re-militarization, said Daniel Wagner, CEO of Country Risk Solutions, during the second half of his Global Association of Risk Professionals webinar on October 22, 2013. After surveying Sino-American relations in Part 1, Wagner guided the audience through an in-depth look at China’s evolving geopolitical position in Asia and Africa. Japanese Prime Minister Shinzo Abe has raised military spending, loosened constitutional constraints on military action, and given a high profile to the Senkaku Islands dispute. Sabre-rattling occurs, but Wagner doubts that China and Japan would […]
China: Global Leader, Threat, or Both? Part 1. China and US
“Hide one’s brilliance, bide one’s time” seems the most fitting aphorism for China’s global strategy, said Daniel Wagner, CEO of Country Risk Solutions. During an hour-long webinar on October 22, 2013 organized by the Global Association of Risk Professionals, Wagner guided the audience through China’s evolving geopolitical position generally, as well as its relationships with US, Asia, and Africa. China is in the ascendant mode, said Wagner, citing the increasing use of the yuan as a reserve currency, as well as its rising military power. Regaining global dominance would be “like picking up where they left off,” he said, reminding […]
Modeling Sovereign Risk. Part 2: Quantification
“The Bloomberg sovereign risk model starts by dividing countries into two types,” said Rajan Singenellore, “reserve-currency countries and non-reserve currency countries. Everything else depends on that distinction.” Singenellore is Product Manager, Risk & Valuations at Bloomberg and was the second of two speakers to address a GARP webinar audience on September 12, 2013. A reserve-currency country is one whose currency is held in significant quantities by other governments as part of their foreign exchange reserves, such as the US and the Japan. There is a pressing need for quantification in the area of sovereign credit risk, he said, citing as […]
Modeling Sovereign Risk. Part 1: Emerging Markets
“Country-specific factors such as government debt and the sovereign credit rating change slowly but global aggregates such as the risk appetite change quickly, thus leading to confusion the part of observers,” said Michael Rosenberg, Foreign Exchange Consultant, Bloomberg and author of Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination. He was the first of two speakers to address a GARP webinar audience on September 12, 2013. Much of Rosenberg’s talk focused on the sovereign credit risk of emerging markets (EM), because the accelerating flow of net private capital into EM from 1980-2014 has been unprecedented. […]
Foreign Asset Income Trusts
“Income trusts should be viewed as a story in capital markets innovation,” said Jon Northup of Goodmans LLP. He was speaking at a luncheon at the National Club in Toronto, sponsored by the Chartered Financial Analysts (CFA) Society Toronto on March 5, 2013. The introduction of SIFT (Specified Investment Flow-Through) rules by the Canadian government in October 2006, “effectively eliminated Canadian income trusts,” Northup said. There are two exceptions: (1) a trust that does not involve Canadian real estate, immovable or resource properties used in carrying on a business and (2) a trust that qualifies as a REIT (real estate […]
The Fed, Foreign Banks and Basel III: Part 1. A Long Hard Look
Foreign banking operations (FBOs) in the United States are about to face a whole new set of regulations that may dampen their enthusiasm for US-based operations, according to a February 14, 2013 webinar organized by the Global Association of Risk Professionals (GARP). “The Fed observed over time that US branches were increasingly used to fund the home office operations,” said Charles Horn, partner at Morrison Foerster, who was the first speaker at the panel. Other concerns of the Federal Reserve Board are the increased complexity of FBOs, and “the availability of home country financial resources for branch offices.” The goal, […]
Global Outlook for Crude Oil: FUD = Fear, Uncertainty, Doubt
In July 2008, Brent crude oil prices reached $148 per barrel “and we saw a lot of pushback from the market but nowadays when I mention $150, there is no pushback,” said Christian O’Neill, senior analyst at Bloomberg Industries during a GARP webinar October 11, 2012. He proceeded to walk the audience through the key factors affecting current supply and demand of this vital commodity. O’Neill’s presentation showed that oil leveraged energy and petroleum (E&P) stocks have strongly outperformed the S&P 500 in the period since March 2009. “Energy has been the beta sector of the market,” said O’Neill, because […]
Implications of the Euro Zone Crisis
When it comes to financial debt in the Euro Zone, “deleveraging has barely begun,” said Daniel Wagner, author and risk consultant. “It’s a long and winding road.” On August 7, 2012, Daniel Wagner, CEO of Country Risk Solutions, a US-based cross-border risk management consulting firm, addressed a Global Association of Risk Professionals (GARP) audience about the Eurozone crisis. Wagner, author of Political Risk Insurance Guide, and Managing Country Risk, published in 2012, spoke on a range of related topics. Wagner’s talk was far-ranging and comprehensive (78 slides in 45 minutes). He spoke about the impact of debt: in particular, the effect […]