Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Additional Tier 1 (AT1) bonds simultaneously issued by <a href="https://www.smartkarma.com/entities/commercial-bank-of-dubai" target="_blank" data-smartkarma-citation="entities:29706:1" rel="noopener">Commercial Bank of Dubai (CBD)</a> and the <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (BNKEA)</a> present a unique opportunity to trade on the macro and micro-economic impacts of the COVID-19 economic environment in the United Arab Emirates and Hong Kong SAR, respectively.  Issued on Monday, 12 October, CBD achieved a 6% coupon while BNKEA managed 5.825%. Both banks are tier 2 entities in their home markets. From our perspective, one, if not both, of these bonds was mispriced in the primary market.Having examined Bank of East Asia’s financial fundamentals in <a href="https://www.smartkarma.com/insights/bank-of-east-asia-strategic-review-to-set-at1-value-forewarned-is-forearmed" target="_blank" data-smartkarma-citation="insights:42705" rel="noopener">Strategic Review to Set AT1 Value</a>, we contrast what we like and dislike regarding CBD with BNKEA. As BNKEA’s AT1 is now trading around the fair value which we projected in <a href="https://www.smartkarma.com/insights/bank-of-east-asia-s-new-at1-likely-coupon-and-curve-impact" target="_blank" data-smartkarma-citation="insights:44112" rel="noopener">Bank of East Asia’s New AT1 – Likely Coupon and Curve Impact</a>, we conclude with suggestions on how to trade this pair as a possible proxy on Dubai versus Hong Kong as well as how to trade CBD relative to other banks headquartered in the United Arab Emirates.Commercial Bank of Dubai – what we dislike:<ul>
<li>Commercial real estate exposure is high.</li>
<li>Legacy asset quality issues still haunt.</li>
</ul><ul><li>Capital buffer is adequate, but inflated by forbearance.</li></ul>Commercial Bank of Dubai – what we like:<ul>
<li>Distributable reserves should enable AT1 payments if capital buffers are depleted.</li>
<li>Ownership and connections suggest strong support.</li>
</ul>

Additional Tier 1 (AT1) bonds simultaneously issued by Commercial Bank of Dubai (CBD) and the Bank of East Asia (BNKEA) present a unique opportunity to trade on the macro and micro-economic impacts of the COVID-19 economic environment in the United Arab Emirates and Hong Kong SAR, respectively.  Issued on Monday, 12 October, CBD achieved a 6% coupon while BNKEA managed 5.825%. Both banks are tier 2 entities in their home markets. From our perspective, one, if not both, of these bonds was mispriced in the primary market.Having examined Bank of East Asia’s financial fundamentals in Strategic Review to Set AT1 Value, we contrast what we like and dislike regarding CBD with BNKEA. As BNKEA’s AT1 is now trading around the fair value which we projected in Bank of East Asia’s New AT1 – Likely Coupon and Curve Impact, we conclude with suggestions on how to trade this pair as a possible proxy on Dubai versus Hong Kong as well as how to trade CBD relative to other banks headquartered in the United Arab Emirates.Commercial Bank of Dubai – what we dislike:
Commercial real estate exposure is high.
Legacy asset quality issues still haunt.
Capital buffer is adequate, but inflated by forbearance.Commercial Bank of Dubai – what we like:
Distributable reserves should enable AT1 payments if capital buffers are depleted.
Ownership and connections suggest strong support.


Commercial Bank of Dubai Vs Bank of East Asia: A Tale of Two AT1s in COVID-19 Uncertainty

Asia’s Additional Tier 1 bonds underperformed as investors shifted into High Yield and X-over rated Senior Unsecured notes. <a href="https://www.smartkarma.com/entities/evergrande-real-estate-group-limited" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">China Evergrande Group's (3333 HK)</a> attempts to restore investor confidence disappointed and negatively impacted risk sentiment. China’s US$6 billion in issuance also likely absorbed excess US$ liquidity, despite the low yields on offer.   US high yield markets continued to outperform Asia’s, and the relative outperformance of the US versus Asia resulted in continued high yield index spread decompression. Asia’s recent index widening appears to be Evergrande driven and a reduction in this company’s financial distress could have a materially positive impact on Asia’s HY index.In rate markets, US Treasury curve steepening paused as investors digested negative stimulus, vaccine, and Covid-19 news in Europe. US Treasury Secretary Mnuchin affirmed market sentiment that a stimulus package was unlikely to be agreed before the November 3 election. The reaction was limited by expectations that a stimulus agreement will be agreed at some point before the end of the winter. Nonetheless, short-term interest rate futures fell slightly as expectations of increased near-term monetary accommodation combined with limited near-term stimulus growth to lower rising rate expectations.In US equity markets, November futures on the Chicago Board of Options Exchange Volatility Index (VIX) were unchanged week-on-week as election result outcomes continued to point to a less contentious result than anticipated a few weeks ago. Meanwhile the spot VIX Index rose 2 index points on slightly higher perceived downside risks from rising Coronavirus cases in Europe as well as setbacks in stimulus and vaccine developments.Emerging market capital inflows were essentially unchanged during the week as US dollar safe-haven strength returned to the market on weaker economic expectations in Europe and as Brexit negotiations continued to disappoint. Over the near term, the more certain the market is of an uncontested election outcome, the greater the potential for US dollar weakness on concerns that more fiscal spending will widen U.S. trade and budget deficits. More immediately, the Evergrande situation, Brexit negotiation uncertainty and Coronavirus resurgence may offset dollar weakness in safe-haven dollar flight. This may limit EM inflows.Financial institutions issued over US$16 billion in USD and Euros. Amongst Asia-headquartered banks, <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (BNKEA)</a> issued an Additional Tier 1 bond while the <a href="https://www.smartkarma.com/entities/agricultural-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1120:1" rel="noopener">Agricultural Bank of China (1288 HK)</a>, <a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank of China Ltd (H) (3988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-minsheng-banking-h" target="_blank" data-smartkarma-citation="entities:8983:1" rel="noopener">China Minsheng Bank (1988 HK)</a>, and <a href="https://www.smartkarma.com/entities/unionbank-of-the-philippines" target="_blank" data-smartkarma-citation="entities:23192:1" rel="noopener">UnionBank of the Philippines (UBP PM)</a> brought Senior Unsecured bonds of various maturities. Please see <a href="https://www.smartkarma.com/insights/bank-of-east-asia-s-new-at1-likely-coupon-and-curve-impact" target="_blank" data-smartkarma-citation="insights:44112" rel="noopener">Bank of East Asia’s New AT1 – Likely Coupon and Curve Impact</a> for our pre-issuance valuation thoughts on BNKEA's new AT1 bond.  Concurrently, China saw interest of over US$27 billion for its bonds. <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc-a723bd63-0890-486f-aaa0-3bb9ad2b95ce" target="_blank" data-smartkarma-citation="entities:21976:1" rel="noopener">HSBC Holdings (HSBA LN)</a> was left off the list of banks arranging China’s sovereign dollar debt sale for the first time since the nation returned with big annual deals in 2017, according to Bloomberg.Market Outlook Time to separate the signals from the noise for bank investors. A sweep of the Senate, House and Presidency by the Democratic Party may be met with higher long-term interest rates on spending concerns. Although stimulus may be positive for US risk assets, higher long-term rates may not be emerging market friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations. Eventual reflation is bank credit and equity positive, getting to reflation is not.

Asia’s Additional Tier 1 bonds underperformed as investors shifted into High Yield and X-over rated Senior Unsecured notes. China Evergrande Group's (3333 HK) attempts to restore investor confidence disappointed and negatively impacted risk sentiment. China’s US$6 billion in issuance also likely absorbed excess US$ liquidity, despite the low yields on offer.   US high yield markets continued to outperform Asia’s, and the relative outperformance of the US versus Asia resulted in continued high yield index spread decompression. Asia’s recent index widening appears to be Evergrande driven and a reduction in this company’s financial distress could have a materially positive impact on Asia’s HY index.In rate markets, US Treasury curve steepening paused as investors digested negative stimulus, vaccine, and Covid-19 news in Europe. US Treasury Secretary Mnuchin affirmed market sentiment that a stimulus package was unlikely to be agreed before the November 3 election. The reaction was limited by expectations that a stimulus agreement will be agreed at some point before the end of the winter. Nonetheless, short-term interest rate futures fell slightly as expectations of increased near-term monetary accommodation combined with limited near-term stimulus growth to lower rising rate expectations.In US equity markets, November futures on the Chicago Board of Options Exchange Volatility Index (VIX) were unchanged week-on-week as election result outcomes continued to point to a less contentious result than anticipated a few weeks ago. Meanwhile the spot VIX Index rose 2 index points on slightly higher perceived downside risks from rising Coronavirus cases in Europe as well as setbacks in stimulus and vaccine developments.Emerging market capital inflows were essentially unchanged during the week as US dollar safe-haven strength returned to the market on weaker economic expectations in Europe and as Brexit negotiations continued to disappoint. Over the near term, the more certain the market is of an uncontested election outcome, the greater the potential for US dollar weakness on concerns that more fiscal spending will widen U.S. trade and budget deficits. More immediately, the Evergrande situation, Brexit negotiation uncertainty and Coronavirus resurgence may offset dollar weakness in safe-haven dollar flight. This may limit EM inflows.Financial institutions issued over US$16 billion in USD and Euros. Amongst Asia-headquartered banks, Bank of East Asia (BNKEA) issued an Additional Tier 1 bond while the Agricultural Bank of China (1288 HK), Bank of China Ltd (H) (3988 HK), China Minsheng Bank (1988 HK), and UnionBank of the Philippines (UBP PM) brought Senior Unsecured bonds of various maturities. Please see Bank of East Asia’s New AT1 – Likely Coupon and Curve Impact for our pre-issuance valuation thoughts on BNKEA's new AT1 bond.  Concurrently, China saw interest of over US$27 billion for its bonds. HSBC Holdings (HSBA LN) was left off the list of banks arranging China’s sovereign dollar debt sale for the first time since the nation returned with big annual deals in 2017, according to Bloomberg.Market Outlook Time to separate the signals from the noise for bank investors. A sweep of the Senate, House and Presidency by the Democratic Party may be met with higher long-term interest rates on spending concerns. Although stimulus may be positive for US risk assets, higher long-term rates may not be emerging market friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations. Eventual reflation is bank credit and equity positive, getting to reflation is not.

Bank Credit Weekly: Risk Pause as China Evergrande Impacts Asia Sentiment

In this, the second of several short insights in our Yes Bank Deposit Run Anniversary Series, we adjust Liquidity Coverage Ratio (LCR) assumptions regarding likely deposit flight to the reality of what occurred at <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> to derive “Yes-Stressed” resultant LCRs for each institution. We then assess this “Yes-Stressed” LCR relative to US$-denominated securities to see if this real liquidity is priced-in, from a credit perspective. We also consider the implications of it not being priced and conclude with whether it was Yes Bank’s missing LCR deposits that broke the bank.Approximately one-year ago, India-headquartered Yes Bank began to experience a silent run on its deposits. To mark this inauspicious anniversary, we undertake a series of short insights to determine if the funding and liquidity lessons from Yes Bank are being applied at India-headquartered banks. Spoiler alert: they are not.As we noted in <a href="https://www.smartkarma.com/insights/india-bank-deposit-flight-risk-lessons-from-yes-bank" target="_blank" data-smartkarma-citation="insights:37617" rel="noopener">India Bank Deposit Flight Risk: Lessons from Yes Bank</a>, India-headquartered bank funding franchises are more sensitive to potential deposit flight than displayed in their quarterly financial presentations. With an undue focus on the levels of current, savings and time deposits, the discussion neglects crucial factors which lead to a stable deposit franchise. At the same, undue reliance on Liquidity Coverage Ratios is not warranted.In our first insight on this matter, we derived the amount of stable deposits and compared this to deposit costs at each major India-headquartered bank. We then assessed these items relative to US$-denominated securities to see if they are priced-in, from a credit perspective. Please see <a href="https://www.smartkarma.com/insights/india-headquartered-banks-stable-deposits-and-costs-1-year-after-the-yes-bank-silent-run" target="_blank" data-smartkarma-citation="insights:43981" rel="noopener">India-Headquartered Banks: Stable Deposits and Costs 1-Year After the Yes Bank Silent Run</a> for more details. In follow-up insights, we intent to incorporate deposits that are not captured in LCR reports and then further stress the reported LCRs for possible Covid-19 related payment delinquencies.

In this, the second of several short insights in our Yes Bank Deposit Run Anniversary Series, we adjust Liquidity Coverage Ratio (LCR) assumptions regarding likely deposit flight to the reality of what occurred at Yes Bank (YES IN) to derive “Yes-Stressed” resultant LCRs for each institution. We then assess this “Yes-Stressed” LCR relative to US$-denominated securities to see if this real liquidity is priced-in, from a credit perspective. We also consider the implications of it not being priced and conclude with whether it was Yes Bank’s missing LCR deposits that broke the bank.Approximately one-year ago, India-headquartered Yes Bank began to experience a silent run on its deposits. To mark this inauspicious anniversary, we undertake a series of short insights to determine if the funding and liquidity lessons from Yes Bank are being applied at India-headquartered banks. Spoiler alert: they are not.As we noted in India Bank Deposit Flight Risk: Lessons from Yes Bank, India-headquartered bank funding franchises are more sensitive to potential deposit flight than displayed in their quarterly financial presentations. With an undue focus on the levels of current, savings and time deposits, the discussion neglects crucial factors which lead to a stable deposit franchise. At the same, undue reliance on Liquidity Coverage Ratios is not warranted.In our first insight on this matter, we derived the amount of stable deposits and compared this to deposit costs at each major India-headquartered bank. We then assessed these items relative to US$-denominated securities to see if they are priced-in, from a credit perspective. Please see India-Headquartered Banks: Stable Deposits and Costs 1-Year After the Yes Bank Silent Run for more details. In follow-up insights, we intent to incorporate deposits that are not captured in LCR reports and then further stress the reported LCRs for possible Covid-19 related payment delinquencies. 

India-Headquartered Banks: Yes-Stressed Deposit Flight Simulation

US high yield markets outperformed Asia’s as expectations of an eventual US stimulus package met hopes for a less contentious US election result as Joe Biden’s polling lead grew. The relative outperformance of the US versus Asia resulted in continued high yield index spread decompression. We expect this decompression to end on a buy the rumour, sell the news, trade on prospects for a Democratic Party election sweep over the next few weeks.In rate markets, US Treasury curve steepening accelerated on continued improved risk sentiment and reflation expectations. Concurrently, President Trump’s vacillation between off, then on, economic stimulus talks were met with bewilderment, if not outright health concerns.  Short-term interest rate futures spiked upwards as the news of President Trumps COVID-19 diagnosis changed election outcome projections and prospects of eventual federal stimulus pushed rate expectations even higher. In US equity markets, futures on the Chicago Board of Options Exchange Volatility Index (VIX) and spot VIX Index levels fell on lower perceived downside risks and higher expectations of a less contentious election result.Emerging market capital inflows rebounded strongly during the week as US dollar weakness returned. Over the near term, the more certain the market is of an uncontested election outcome, the greater the potential for US dollar weakness on concerns that more fiscal spending will widen U.S. trade and budget deficits.Meanwhile, Asia bank credit investors favoured a mix of high quality and higher yield Additional Tier 1 (AT1) and subordinated debt, in-line with the tepid increase in Asia’s risk sentiment. As the week closed, the Reserve Bank of India announced additional unconventional monetary policy stimulus measures aimed at improving credit transmission via the local bond market. This should benefit the more active debt capital market participants.Concurrently, only US$5.6 billion was raised by financial institutions in USD and Euros in the form of Senior HoldCo, Senior Non-preferred and AT1 bonds. Amongst Asia-headquartered banks, <a href="https://www.smartkarma.com/entities/kasikornbank-pcl" target="_blank" data-smartkarma-citation="entities:293:1" rel="noopener">Kasikornbank (KBANK TB)</a> issued an AT1 bond, following the successful placement two weeks ago by <a href="https://www.smartkarma.com/entities/bangkok-bank-public-co-ltd" target="_blank" data-smartkarma-citation="entities:213:1" rel="noopener">Bangkok Bank (BBL TB)</a>. We anticipate additional AT1 issuance by Thai-headquartered banks due to their capital stack needs. For more on this and the unique challenges of these banks, please see <a href="https://www.smartkarma.com/insights/thai-bank-capital-constraints-debt-capital-issuance-needs-and-potential-impacts" target="_blank" data-smartkarma-citation="insights:43884" rel="noopener">Thai Bank Capital Constraints and Debt Issuance Needs</a> as well as <a href="https://www.smartkarma.com/insights/thai-bank-capital-and-chronic-covid-19-sensitivity" target="_blank" data-smartkarma-citation="insights:44011" rel="noopener">Thai Bank Capital and Chronic COVID-19 Sensitivity</a>.  Looking forward, China is reported to be considering the issuance of an offshore US$-bond for the fourth straight year. The transaction could occur in the next week. Market Outlook A sweep of the Senate, House and Presidency by the Democratic Party may be met with higher long-term interest rates on spending concerns. Although stimulus may be positive for US risk assets, higher long-term rates may not be emerging market friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations.Inside: In this weekly, we elaborate on these themes as we review global credit index levels, equity volatility,  interest rates, Eurodollar futures and fund flows as well as bank bond spread moves and recent debt issuance to identify possible investment opportunities and potential pitfalls in Asia-headquartered bank bonds.

US high yield markets outperformed Asia’s as expectations of an eventual US stimulus package met hopes for a less contentious US election result as Joe Biden’s polling lead grew. The relative outperformance of the US versus Asia resulted in continued high yield index spread decompression. We expect this decompression to end on a buy the rumour, sell the news, trade on prospects for a Democratic Party election sweep over the next few weeks.In rate markets, US Treasury curve steepening accelerated on continued improved risk sentiment and reflation expectations. Concurrently, President Trump’s vacillation between off, then on, economic stimulus talks were met with bewilderment, if not outright health concerns.  Short-term interest rate futures spiked upwards as the news of President Trumps COVID-19 diagnosis changed election outcome projections and prospects of eventual federal stimulus pushed rate expectations even higher. In US equity markets, futures on the Chicago Board of Options Exchange Volatility Index (VIX) and spot VIX Index levels fell on lower perceived downside risks and higher expectations of a less contentious election result.Emerging market capital inflows rebounded strongly during the week as US dollar weakness returned. Over the near term, the more certain the market is of an uncontested election outcome, the greater the potential for US dollar weakness on concerns that more fiscal spending will widen U.S. trade and budget deficits.Meanwhile, Asia bank credit investors favoured a mix of high quality and higher yield Additional Tier 1 (AT1) and subordinated debt, in-line with the tepid increase in Asia’s risk sentiment. As the week closed, the Reserve Bank of India announced additional unconventional monetary policy stimulus measures aimed at improving credit transmission via the local bond market. This should benefit the more active debt capital market participants.Concurrently, only US$5.6 billion was raised by financial institutions in USD and Euros in the form of Senior HoldCo, Senior Non-preferred and AT1 bonds. Amongst Asia-headquartered banks, Kasikornbank (KBANK TB) issued an AT1 bond, following the successful placement two weeks ago by Bangkok Bank (BBL TB). We anticipate additional AT1 issuance by Thai-headquartered banks due to their capital stack needs. For more on this and the unique challenges of these banks, please see Thai Bank Capital Constraints and Debt Issuance Needs as well as Thai Bank Capital and Chronic COVID-19 Sensitivity.  Looking forward, China is reported to be considering the issuance of an offshore US$-bond for the fourth straight year. The transaction could occur in the next week. Market Outlook A sweep of the Senate, House and Presidency by the Democratic Party may be met with higher long-term interest rates on spending concerns. Although stimulus may be positive for US risk assets, higher long-term rates may not be emerging market friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations.Inside: In this weekly, we elaborate on these themes as we review global credit index levels, equity volatility,  interest rates, Eurodollar futures and fund flows as well as bank bond spread moves and recent debt issuance to identify possible investment opportunities and potential pitfalls in Asia-headquartered bank bonds.

Bank Credit Weekly: Risk-On as US Election and Stimulus Outlooks Sharpen

Jump to default risk may eventually increase at Thailand-headquartered banks if COVID-19 loan relief decay becomes chronic. We would like to hope for the best, but we recommend being prepared for the worst which is that a hardcore element of COVID-19 relief may never be repaid. This is not priced in the market, and may not be for some time; however, we think it better to invest with one’s eyes wide open.Given the size of COVID-19 assistance granted by banks in Thailand, loss given default amongst the COVID-19 loan relief cohort need only be a fraction of the total receiving relief in order for Thai bank capital buffers to be depleted. At the same time, losses on currently reported nonperforming assets (NPAs) need to be substantial to impact current capital levels. However, currently reported NPA ratios offer no line of sight on possible future COVID-19 related losses which could impact optional capital distributions, such as dividends and Additional Tier 1 coupons.Although there may be a considerable amount of time available for Thai banks to ‘earn’ their way out of this crisis, a slowdown or downturn in the Thai or global economy could result in a material increase in the number of failed loan restructurings and a corresponding increase in losses. In the intervening time-period, bank performance measures are unlikely to reflect the real economic strength of Thai-headquartered financial institutions due to the accounting treatment of COVID-19 assistance provided. As a result, Thai bank classifications and provisioning may be less stringent than those applicable to banks in the US and other countries. Meanwhile, Thai banks face both a net profit and a capital buffer test towards determining their ability to make optional capital distribution payments. Please see the companion report to this insight, <a href="https://www.smartkarma.com/insights/thai-bank-capital-constraints-debt-capital-issuance-needs-and-potential-impacts" target="_blank" data-smartkarma-citation="insights:43884" rel="noopener">Thai Bank Capital Constraints</a>, for details regarding currently constraining capital buffer levels. In this note, we focus on the sensitivity of each banks’ constraining capital buffer to borrowers receiving COVID-19 loan relief.

Jump to default risk may eventually increase at Thailand-headquartered banks if COVID-19 loan relief decay becomes chronic. We would like to hope for the best, but we recommend being prepared for the worst which is that a hardcore element of COVID-19 relief may never be repaid. This is not priced in the market, and may not be for some time; however, we think it better to invest with one’s eyes wide open.Given the size of COVID-19 assistance granted by banks in Thailand, loss given default amongst the COVID-19 loan relief cohort need only be a fraction of the total receiving relief in order for Thai bank capital buffers to be depleted. At the same time, losses on currently reported nonperforming assets (NPAs) need to be substantial to impact current capital levels. However, currently reported NPA ratios offer no line of sight on possible future COVID-19 related losses which could impact optional capital distributions, such as dividends and Additional Tier 1 coupons.Although there may be a considerable amount of time available for Thai banks to ‘earn’ their way out of this crisis, a slowdown or downturn in the Thai or global economy could result in a material increase in the number of failed loan restructurings and a corresponding increase in losses. In the intervening time-period, bank performance measures are unlikely to reflect the real economic strength of Thai-headquartered financial institutions due to the accounting treatment of COVID-19 assistance provided. As a result, Thai bank classifications and provisioning may be less stringent than those applicable to banks in the US and other countries. Meanwhile, Thai banks face both a net profit and a capital buffer test towards determining their ability to make optional capital distribution payments. Please see the companion report to this insight, Thai Bank Capital Constraints, for details regarding currently constraining capital buffer levels. In this note, we focus on the sensitivity of each banks’ constraining capital buffer to borrowers receiving COVID-19 loan relief.  

Thai Bank Capital and Chronic COVID-19 Sensitivity

Singapore

iShares Barclays USD Asia High Yield Bond Index ETF is an exchange-traded fund incorporated in Singapore. The Fund seeks to track the performance of the Bloomberg Barclays Capital USD Asia High Yield Bond Index.

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Asia High Yield Bond Index (AHYG SP)

Commercial Bank of Dubai Vs Bank of East Asia: A Tale of Two AT1s in COVID-19 Uncertainty

AT1 bonds simultaneously issued by Commercial Bank of Dubai and the Bank of East Asia present an opportunity to trade the COVID-19 economic impacts...

Hank Calenti, CFA

Bank Credit Weekly: Risk Pause as China Evergrande Impacts Asia Sentiment

A must-read on US$-risk sentiment derived from high yield and equity markets, interest rates, dollar levels, capital flows and issuance to frame...

Hank Calenti, CFA

India-Headquartered Banks: Yes-Stressed Deposit Flight Simulation

In this 2'nd insight in our Yes Bank Deposit Run Anniversary Series, we apply Yes Bank deposit flight rates to derive “Yes-Stressed” LCRs at India...

Hank Calenti, CFA

Bank Credit Weekly: Risk-On as US Election and Stimulus Outlooks Sharpen

A concise must-read on US$-risk sentiment derived from equity markets, rates, issuance, dollar levels and capital flows to frame near term Asia...

Hank Calenti, CFA

Thai Bank Capital and Chronic COVID-19 Sensitivity

Jump to default risk may eventually increase at Thailand-headquartered banks if COVID-19 loan relief decay becomes chronic. We would like to hope...

Hank Calenti, CFA

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