•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

From Nigel Blanshard, CIO Culross Global Management Ltd: In the last two months we have witnessed a severe deterioration in credit markets. Most of you will be aware from our monthly reports, theme titles and weightings, and recent conversations that credit spread widening has been a central plank of our investment view and portfolio positioning has taken suitable advantage. But, I note that our perspective seems still to be the exception rather than the rule. Clearly in the media there is a widespread tendency to take ghoulish delight in the significant number of collapsing hedge funds and wonder how they got to be in such a state and who the unfortunate investors may be. We have been fortunate and are not in their number, but I strongly believe this is not the time for ‘rubber-necking’ at the various crash scenes when so much change is afoot. We have been spending our time trying better to understand what is going on, how to position our portfolios and what risks we may all be exposed to in our ordinary lives.

The price at which banks can raise medium term capital has become a fundamental question as their balance sheets have been crushed. Bank credit spreads are a complicated story but I have set out below a few simple facts as food for thought.

The price histories of 5Yr Credit Default Swaps (CDS) on specific bank names are a good proxy for the story of evolution of bank credit spreads in the last 3-6 months. What is striking is the way in which a few ......................

To view our full article Click here