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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Chas. who wrote (40654)	10/3/2008 8:28:05 PM
From: TobagoJack	Respond to of 219784

just in in-tray Player #1 A colleague just returned from a road show in the UK. She said the people she met with were more bearish than she'd ever seen. They see the UK property market cratering, with no bottom as far as they can see into that abyss. UK property could perform as poorly as the Inland Empire...and that is saying something! Player #2 Credit Suisse note from yesterday on UK bank exposure to the LOC market (I ripped this off from chat) -- look at those default rates -- We have been writing for some time about our concerns with regard UK unsecured credit quality and its linkage with house prices. In particular, we believe 65% of UK unsecured debt is held by homeowners, and in recent years those that started to struggle with their credit card and personal loan repayments would often (55-60% of the time) withdraw equity and debt consolidate, in turn dramatically reducing monthly repayments. We therefore think that a very small proportion of UK unsecured impairment charges were from this segment. The equity withdrawal option has now been significantly eroded through falling prices and reduced credit availability. In particular, we believe a disproportionate amount of unsecured debt will be held by homeowners with high LTV ratios, making such access even harder. Such strain is demonstrated in recent IVA applications, with over 40% now coming from homeowners. As a consequence, we had forecast a 50% increase in unsecured charges into our forecasts between 2007 and 2009, against bank guidance. Today's Bank of England credit conditions survey demonstrates that the deterioration in unsecured has gathered pace over the last three months. Indeed, the proportion of banks reporting higher default rates less those reporting lower default rates increased to 36% from 10% in Q2 2008. This is higher than the banks' own expectation of a 16% increase. Loss given default rates have also increased markedly, with a net balance figure of 22% from 5% in Q2 2008 (and again ahead of expectations at 15%). We continue to believe that unsecured impairment charges will be a notable feature of this downturn. Player #3 lovely reading pound going to 1.50-60, Euro to 1.20-30 Checking w my MM desk....CP mkt has come somewhat unstuck b/c fedfunds at 50bps and people expecting a 50bps cut over the weekend so mood is grab all you can while you can 1,2 and 3 mo terms being mopped up feeling on FI side is this is temporary and will not last, but it does buy us a couple of days' breathing room Their view is too little too late on the package