26 September 2018 FT — Articles to Read

26 September 2018


Question: According to MSN:Lifestyle, how do you repair a broken relationship with your parents?


Argentina crisis deepens as bank chief quits after 3 months in post – Pg. 1

–          Argentina has been at the centre of a broadening sell-off in emerging markets, with investors becoming worried that governments and companies in the developing world will be unable to pay billions in dollar-denominated debts as the US currency rallies

–          Argentina has been the most aggressive emerging market in seeking to stop a run on its currency, which has lost half its value this year,…

–          Although the IMF provides emergency support for countries facing market attacks, it frowns on using reserves to shore up currencies, which can quickly burn through bailout cash

–          The yield on Argentina’s benchmark century bond, a measure of risk, rose more than 20bps to 9.33% yesterday…


Finance – Pg. 9

–          Secondary deals can often be more vulnerable when conditions change, either because they have higher debt levels or because more money has already been taken out of the business by previous owners

–          Secondary deals often increase the incentives for private equity owners to load more debt on to a business


Banks and insurers slow to switch on as nightfall approaches for Libor – Pg. 21

–          UK financial authorities have given a clear message to banks and insurers: we are not kidding about the death of Libor, and you must be ready (Prof Note: When I was pursuing my MS Finance I considered a Ph.D.  I remember thinking, “What would I do my dissertation on?  It has all be written.”  I could not have been more WRONG!)

–          About $170tn of derivative contracts depend on the benchmark rate….

–          Authorities appear to have run out of patience with these unco-ordinated approaches

–          Regulators’ urgency has been driven not just by the manipulation scandal that has landed traders in prison, but also by the evolution of markets after the financial crisis

–          Libor measures the cost of unsecured borrowing between banks for a specific period, usually over one, three or six months.  It remains embedded in everything from mortgages to banks’ regulatory capital, with more than $370tn of deals tied to it, …

–          To aid the daily calculation of Libor, banks have to submit estimates that rely on “expert judgment” rather than real activity

–          The amount of contracts that reference Libor, but mature after 2021, meanwhile, continues to grow (Prof Note: ???)

–          Without Libor, thousands of contracts lose the reference rate that forms the basis of their value

–          For all its faults, Libor allowed borrowers to know their cost of fund for a period of their choice.  As banks transition, they may have two books – one for Libor business, one for alternative rates


Answer: (1) Try to start the dialogue with warmth; (2) Avoid hot button issues – at first; (3) Don’t be afraid to seek professional help