Un commento da parte di analisti del credito su Novo Banco
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Summary thoughts on the situation [/FONT]
[FONT="]We think the Novo Banco story is binary. A sale of the business in its entirety will almost certainly be good for spreads and give senior creditors some 5-10ppts upside. However, in the meantime we have the AQR, which Novo could fail if tested - and what might be the repercussions (
we have asked Novo but did not receive confirmation on whether it is being stress tested or not). The downside is potentially far greater.[/FONT]
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Retail bonds converted into deposits? [/FONT]
[FONT="]Novo Banco has proposed that retail clients holding BES zero-coupon bonds convert their investments into deposits. According to the WSJE, “Novo Banco will offer customers who decide to sell their investments in the market to convert that revenue into a deposit that offers an average 2.75% interest rate over three years, with clients being allowed to take their money after the first year. Then, it would convert 75% of the difference between their initial investment and the revenue from the sale into a deposit that offers a 4.25% interest rate over 10 years.” Given the lack of detail, it is difficult to gauge whether this scheme would be tantamount to a full indemnification. However, we believe that it aims to end what regulators have deemed to be ‘fraudulent funding'. The conversion would help Novo Banco's deposit base, which leaked in the final weeks of BES's operation.[/FONT]
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Conversion cost partially provided for [/FONT]
[FONT="]BES's Q2 14 earnings announcement disclosed that “During 2014 BES Group issued bonds at a discount which are carried on the balance sheet at an amortised cost. These bonds were purchased by retail clients through financial intermediaries and were packaged in several products, for an amount higher than the respective issuance value.” The bank booked a total of €1.25bn contingency charges, covering the loss resulting from the purchase of the securities as of 30 June 2014. The earnings release noted however that shorter term bonds had also been placed with retail clients. Given lower liquidity expectations, BES did not provide for the cost of purchasing these bonds, which represented €505m at June-end 2014.[/FONT]
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Overdose of accommodation funding [/FONT]
[FONT="]From December 2013 to April 2014, in the run-up to its final demise, BES issued €5.3bn of zero coupon instruments with maturities ranging from 2046 to 2052 (see overleaf). Given the deep discounts, these bonds only grossed up to €742m. Other zero coupon bonds were issued in 2008-2009 (€2.4bn at par for €421m in cash). At June-end, BES disclosed €11.46bn of debt securities, including zero coupon bonds. Novo Banco's pro forma balance sheet has €8bn securities.[/FONT]
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Senior bail-in made easier? [/FONT]
[FONT="]Senior bond prices have dropped, as institutional investors worry what the retail conversion could mean for them. We believe there may be some mis-understanding concerning who the conversion affected. However, we recognise the risk of senior burden sharing of some sort should the stress test answer be the wrong one![/FONT]