DOCSLIB.ORG

On the Mechanism of Cdos Behind the Current Financial Crisis and Mathematical Modeling with Lévy Distributions

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
On the Mechanism of Cdos Behind the Current Financial Crisis and Mathematical Modeling with Lévy Distributions Intelligent Information Management, 2010, 2, 149-158 doi:10.4236/iim.2010.22018 Published Online February 2010 (http://www.scirp.org/journal/iim) On the Mechanism of CDOs behind the Current Financial Crisis and Mathematical Modeling with Lévy Distributions Hongwen Du1, Jianglun Wu2, Wei Yang3 1School of Finance and Economics, Hangzhou Dianzi University, Hangzhou, China 2Department of Mathematics, Swansea University, Swansea, UK 3Department of Mathematics, Swansea University, Swansea, UK Email: [email protected], {j.l.wu,mawy}@swansea.ac.uk Abstract This paper aims to reveal the mechanism of Collateralized Debt Obligations (CDOs) and how CDOs extend the current global financial crisis. We first introduce the concept of CDOs and give a brief account of the de- velopment of CDOs. We then explicate the mechanism of CDOs within a concrete example with mortgage deals and we outline the evolution of the current financial crisis. Based on our overview of pricing CDOs in various existing random models, we propose an idea of modeling the random phenomenon with the feature of heavy tail dependence for possible implements towards a new random modeling for CDOs. Keywords: Collateralized Debt Obligations (CDOs), Cashflow CDO, Synthetic CDO, Mechanism, Financial Crisis, Pricing Models, Lévy Stable Distributions Collateralized debt obligations (CDOs) were created in lateralized Bond Obligations, or CBO), loans (Co- 1987 by bankers at Drexel Burnham Lambert Inc. Within llateralized Loan Obligations, or CLO), funds (Coll- 10 years, the CDOs had become a major force in the ateralized Fund Obligations, or CFO), mortgages credit derivatives market, in which the value of a deriva- (Collateralized Mortgage Obligations, or CMO) and oth- tive is “derived” from the value of other assets. But ers. And frequently, they source their collaterals from a unlike some fairly straightforward derivatives such as combination of two or more of these asset classes. options, calls, and Credit Default Swaps (CDSs), CDOs Collectively, these instruments are popular referred to as are not “real”, which means they are constructs, and CDOs, which are bond-like instruments whose cashflow sometime even built upon other constructs. CDOs are structures allocate interest income and principal repay- designed to satisfy different type of investors, low risk ments from a collateral pool of different debt instruments with low return and high risk with high return. to a prioritized collection of CDO securities to their In early 2007, following the burst of the bubble of investors. The most popular life of a CDO is five years. housing market in the United States, losses in the CDOs However, 7-year, 10-year, and to a less extent 3-year market started spreading. By early 2008, the CDO crisis CDOs now trade fairly actively. had morphed into what we now encountered the world- A CDO can be initiated by one or more of the wide financial crisis. CDOs are at the heart of the crisis followings: banks, non-bank financial institutions, and and even extend the crisis. asset management companies, which are referred to as the sponsors. The sponsors of a CDO create a company 1. Introduction to CDOs so-called the Special Purpose Vehicle (SPV). The SPV works as an independent entity and is usually bankruptcy remote. The sponsors can earn serving fees, adminis- Collateralized Obligations (COs) are promissory notes tration fees and hedging fees from the SPV, but otherwise backed by collaterals or securities. In the market for COs, has no claim on the cash flow of the assets in the SPV. the securities can be taken from a very wide spectrum of According to how the SPV gains credit risks, CDOs alternative financial instruments, such as bonds (Col- are classified into two kinds: cashflow CDOs and syn- Copyright © 2010 SciRes IIM 150 H. W. DU ET AL. thetic CDOs. If the SPV of a CDO owns the underlying the least risky tranche in CDOs with lowest fixed interest debt obligations (portfolio), that is, the SPV obtains the rate, followed by mezzanine tranche, junior mezzanine credit risk exposure by purchasing debt obligations (eg. tranche, and finally the first loss piece or equity tranche. bonds, residential and commercial loans), the CDO is A CDO makes payments on a sequential basis, depen- referred to as a cashflow CDO, which is the basic form ding on the seniority of tranches within the capital struc- in the CDOs market in their formative years. In contrast, ture of the CDO. The more senior the tranches investors if the SPV of a CDO does not own the debt obligations, are in, the less risky the investment and hence the less instead obtaining the credit risk exposure by selling they will be paid in interest. The way it works is fre- CDSs on the debt obligations of reference entities, the quently referred to as a “waterfall” or cascade of cash- CDO is referred to as a synthetic CDO; the synthetic flows. We well give a specific illustration in Section 3. structure allows bank originators in the CDOs market to In perfect capital markets, CDOs would serve no pur- ensure that client relationships are not jeopardized, and pose; the costs of constructing and marketing a CDO avoids the tax-related disadvantages existing in cashflow would inhibit its creation. In practice, however, CDOs CDOs. The following graph (Figure 1) illustrates a construction of a cashflow CDO. address some important market imperfections. First, ban- After acquiring credit risks, SPV sells these credit ris- ks and certain other financial institutions have regulatory ks in tranches to investors who, in return for an agreed capital requirements that make it valuable for them to payment (usually a periodic fee), will bear the losses in securitize and sell some portion of their assets, reducing the portfolio derived from the default of the instruments the amount of (expensive) regulatory capital that they in the portfolio. Therefore, the tranches holders have the must hold. Second, individual bonds or loans may be ultimate credit risk exposure to the underlying reference illiquid, leading to a reduction in their market values. portfolio. Securitization may improve liquidity, and thereby raise Tranching, a common characteristic of all securisa- the total valuation to the issuer of the CDO structure. tions, is the structuring of the product into a number of In light of these market imperfections, at least two different classes of notes ranked by the seniority of in- classes of CDOs are popular: the balance-sheet CDO and vestor's claims on the instruments assets and cashflows. the arbitrage CDO. The balance-sheet CDO, typically in The tranches have different seniorities: senior tranche, the form of a CLO, is designed to remove loans from the Figure 1.Cashflow colateralised mortgage obligation. Copyright © 2010 SciRes IIM H. W. DU ET AL. 151 balance sheets of banks, achieving capital relief, and ssess the advantage that they call for minimal resources perhaps also increasing the valuation of the assets thr- in terms of management expertise and time and reduce ough an increase in liquidity. An arbitrage CDO, often costs involved in trading. However, when they declined underwritten by an investment bank, is designed to cap- in value, investors were unable to do anything to reverse ture some fraction of the likely difference between the that decline as credit quality began to deteriorate. There- total cost of acquiring collateral assets in the secondary fore, actively managed CDOs were rapidly gaining in market and the value received from management fees popularity. The growth of managed products, however, and the sale of the associated CDOs structure. was also helped by the growing maturity of the CDO market and by the increasing number of managers with 2. The Development of CDOs proven experience in managing credit in general and credit derivatives in particular. Although a market for CMOs—the forerunner of modern CDOs—was taking shape in the US market by the early 3. The Mechanism of CDOs 1980s, the market for CDOs is generally believed to date back to the late 1980s and the rapid revolution of CDOs In this section, we try to describe the mechanism of is very much a story of the 1990s. CDOs in a vivid, therefore not so rigorous, way. We By the late 1990s, the structure of the international simplify the collaterals as mortgages. Then the process to market for CDOs of all kinds was becoming characte- create a CDO can be seen in the following manner: rized by a number of conspicuous and interrelated trends. investment banks buy mortgages and then pool them into Firstly, issuance volume was rising exponentially, as was Mortgage Backed Securities (MBSs) with different ra- understanding and acceptance of the CDO technique. Se- tings. Financial institutions seeking new markets pur- condly, the cross-border investment flowing into CDOs chase these MBSs, pool them with other similarly rated were rising steeply. Thirdly, more and more asset classes MBSs and sometimes derivatives, and then issue new were being used as security for COs. Finally, in 1999 and securities. This process of buying mortgages, creating 2000 the concept of the COs was popularised across MBSs, and packaging these MBSs into CDOs is desi- continental Europe with strikingly high speed and, mean- gned to apportion credit risk to those parties who are while, changes to legislation and regulation were emer- willing to take it on. ging as important sources of support for new issuance in First of all, we have a CDO manager who decides to the CDOs market in Europe. create a CDO. He/She has a bottle (SPV). In order to fill In 2000 CDOs were made legal and at the same time the bottle, he/she can buy collaterals (anything he/she were prevented from being regulated, by the Commodity wants: the loans, credit card debt and student loans).
Load more

Recommended publications
  • THE WALL STREET JOURNAL. © 1990 Dow Jones & Company, Inc
    THE WALL STREET JOURNAL. © 1990 Dow Jones & Company, Inc. All Rights Reserved. VOL CXXII NO. 66 WESTERN EDITION WEDNESDAY, APRIL 4, 1990 RIVERSIDE, CALIFORNIA 50 C E N T S By DAVID J. JEFFERSON originally set for $25 million, was to have been more attuned to the needs of small clients than is the Wall Street firms still generally neglect the Staff Reporter of THE WALL STREET JOURNAL co-managed by Drexel Burnham Lambert Inc. Wall Street. “The regionals are closer to the middle market. “The result is that we’ve had a Wall Street’s biggest investment bankers are But Drexel's parent, Drexel Burnham Lambert businesses that are doing the transactions, not wide-open field,” Mr. Greene says of the writhing after the collapse of junk bonds and Group Inc., filed for bankruptcy-law protection only geographically but also in temperament,” regionals. megamergers, but many regional investment Feb. 13 and has said it plans to liquidate its says Richard Himelfarb, executive vice president firms are on a roll. And that’s good news for assets. of Legg Mason Wood Walker Inc., a Baltimore Improving Staffs entrepreneurs who rely on the regionals to “We were able to go back to the client and concern that does transactions in the $10 million arrange and finance acquisitions and other say we’d like to continue to perform on this,” to $100 million range. Moreover, as Wall Street lays off investment strategic deals. Allen Weintraub, Advest's president, says. The top people at regional firms routinely bankers in droves, many of the regional firms are Not long ago, Wall Street investment bankers “That’s proof that things can be done regionally, pay personal attention to clients.
    [Show full text]
  • Complaint: Goldman, Sachs & Co. and Fabrice Tourre
    UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES AND EXCHANGE COMPLAINT COMMISSION, [Securities Fraud] Plaintiff, 10-CV-___________ ( ) v. ECF CASE GOLDMAN SACHS & CO. and Jury Trial Demanded FABRICE TOURRE, Defendants. Plaintiff, the United States Securities and Exchange Commission ("Commission"), alleges as follows against the defendants named above: OVERVIEW 1. The Commission brings this securities fraud action against Goldman, Sachs & Co. (“GS&Co”) and a GS&Co employee, Fabrice Tourre (“Tourre”), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (“CDO”) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007- AC1, was tied to the performance of subprime residential mortgage-backed securities (“RMBS”) and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-AC1 contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market. 2. GS&Co marketing materials for ABACUS 2007-AC1 – including the term sheet, flip book and offering memorandum for the CDO – all represented that the reference portfolio of RMBS underlying the CDO was selected by ACA Management LLC (“ACA”), a third-party with experience analyzing credit risk in RMBS. Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. (“Paulson”), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (“CDS”) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure.
    [Show full text]
  • Drexel Burnham Lambert Archival Finding Aid
    MUSEUM OF AMERICAN FINANCE Drexel Burnham Lambert Archival Finding Aid Museum of American Finance 11/17/2014 Notable Subjects: Drexel Burnham Lambert, I.W. Burnham II, Frederick Joseph, Robert E. Linton, Michael Milken, investment banking, high yield bonds, junk bonds, bankruptcy. Historical Significance Drexel Burnham Lambert was a prominent Wall Street investment bank forced into bankruptcy in 1990. It was founded as a small brokerage firm, Burnham and Company, in 1935 by I.W. “Tubby” Burnham. In 1973 Burnham and Company merged with Drexel Firestone to form Drexel Burnham, and in 1976 it merged with the American arm of the Belgian firm George Bruxelles Lambert and was renamed Drexel Burnham Lambert. By the mid 1980’s DBL was ranked among Wall Street’s top investment banks, employing over 10,000 people. Its success was fueled by its creation of a market for first-issue junk bonds, allowing low-credit companies to raise capital by issuing bonds rather than having to offer their stock. In 1986 DBL came under investigation by the U.S. Securities and Exchange Commission involving insider trading and other illegal trading practices. Under extreme pressure from the government and a subsequent decline in DBL’s business, the company filed for bankruptcy in February of 1990. Scope and Content: The Drexel Burnham Lambert collection at the Museum of American Finance consists of internal company memoranda and correspondence; financial statements of the firm; consolidated income statements; info about profit sharing; info about health care and retirement benefits for employees; DBL Exposure, issues of a publication for employees; settlement with the SEC; Chapter 11 bankruptcy material; DBL Liquidating Trust material; journals and newspaper articles about DBL; DBL objects including banners, t-shirts, buttons, etc.
    [Show full text]
  • 307439 Ferdig Master Thesis
    Master's Thesis Using Derivatives And Structured Products To Enhance Investment Performance In A Low-Yielding Environment - COPENHAGEN BUSINESS SCHOOL - MSc Finance And Investments Maria Gjelsvik Berg P˚al-AndreasIversen Supervisor: Søren Plesner Date Of Submission: 28.04.2017 Characters (Ink. Space): 189.349 Pages: 114 ABSTRACT This paper provides an investigation of retail investors' possibility to enhance their investment performance in a low-yielding environment by using derivatives. The current low-yielding financial market makes safe investments in traditional vehicles, such as money market funds and safe bonds, close to zero- or even negative-yielding. Some retail investors are therefore in need of alternative investment vehicles that can enhance their performance. By conducting Monte Carlo simulations and difference in mean testing, we test for enhancement in performance for investors using option strategies, relative to investors investing in the S&P 500 index. This paper contributes to previous papers by emphasizing the downside risk and asymmetry in return distributions to a larger extent. We find several option strategies to outperform the benchmark, implying that performance enhancement is achievable by trading derivatives. The result is however strongly dependent on the investors' ability to choose the right option strategy, both in terms of correctly anticipated market movements and the net premium received or paid to enter the strategy. 1 Contents Chapter 1 - Introduction4 Problem Statement................................6 Methodology...................................7 Limitations....................................7 Literature Review.................................8 Structure..................................... 12 Chapter 2 - Theory 14 Low-Yielding Environment............................ 14 How Are People Affected By A Low-Yield Environment?........ 16 Low-Yield Environment's Impact On The Stock Market........
    [Show full text]
  • The Behaviour of Small Investors in the Hong Kong Derivatives Markets
    Tai-Yuen Hon / Journal of Risk and Financial Management 5(2012) 59-77 The Behaviour of Small Investors in the Hong Kong Derivatives Markets: A factor analysis Tai-Yuen Hona a Department of Economics and Finance, Hong Kong Shue Yan University ABSTRACT This paper investigates the behaviour of small investors in Hong Kong’s derivatives markets. The study period covers the global economic crisis of 2011- 2012, and we focus on small investors’ behaviour during and after the crisis. We attempt to identify and analyse the key factors that capture their behaviour in derivatives markets in Hong Kong. The data were collected from 524 respondents via a questionnaire survey. Exploratory factor analysis was employed to analyse the data, and some interesting findings were obtained. Our study enhances our understanding of behavioural finance in the setting of an Asian financial centre, namely Hong Kong. KEYWORDS: Behavioural finance, factor analysis, small investors, derivatives markets. 1. INTRODUCTION The global economic crisis has generated tremendous impacts on financial markets and affected many small investors throughout the world. In particular, these investors feared that some European countries, including the PIIGS countries (i.e., Portugal, Ireland, Italy, Greece, and Spain), would encounter great difficulty in meeting their financial obligations and repaying their sovereign debts, and some even believed that these countries would default on their debts either partially or completely. In response to the crisis, they are likely to change their investment behaviour. Corresponding author: Tai-Yuen Hon, Department of Economics and Finance, Hong Kong Shue Yan University, Braemar Hill, North Point, Hong Kong. Tel: (852) 25707110; Fax: (852) 2806 8044 59 Tai-Yuen Hon / Journal of Risk and Financial Management 5(2012) 59-77 Hong Kong is a small open economy.
    [Show full text]
  • Glass-Steagall: Lest We Forget
    Florida State University Law Review Volume 11 Issue 1 Article 5 Spring 1983 Glass-Steagall: Lest We Forget Lawrence F. Orbe III Follow this and additional works at: https://ir.law.fsu.edu/lr Part of the Banking and Finance Law Commons Recommended Citation Lawrence F. Orbe III, Glass-Steagall: Lest We Forget, 11 Fla. St. U. L. Rev. 163 (1983) . https://ir.law.fsu.edu/lr/vol11/iss1/5 This Comment is brought to you for free and open access by Scholarship Repository. It has been accepted for inclusion in Florida State University Law Review by an authorized editor of Scholarship Repository. For more information, please contact [email protected]. COMMENTS GLASS-STEAGALL: LEST WE FORGET* LAWRENCE F. ORBE III I. INTRODUCTION In response to the Great Depression, federal legislation was en- acted to separate commercial and investment banking. However, the gradual sophistication of the banking industry and the creation of a plethora of new financial services offered by banking institu- tions have blurred this statutorily mandated division. This com- ment will trace the history of this legislation and delineate the principle actors responsible for its formulation. Next, an analogy * For earlier discussions of the Banking Act of 1933 (Glass-Steagall Act) and related issues, see Beatty, What are the Legal Limits to the Expansion of National Bank Services? 86 BANKING L.J. 3 (1969); Beatty, The Incidental Powers of National Banks, 4 NAT'L BANKING REv. 263 (1967); Chase, The Emerging Financial Conglomerate: Liberalization of the Bank Holding Company Act, 60 GEO. L.J. 1225 (1972); Clark and Saunders, Glass- Steagall Revised: The Impact on Banks, Capital Markets, and the Small Investor, 97 BANKING L.J.
    [Show full text]
  • Global Derivatives Market
    GLOBAL DERIVATIVES MARKET Aleksandra Stankovska European University – Republic of Macedonia, Skopje, email: aleksandra. [email protected] DOI: 10.1515/seeur-2017-0006 Abstract Globalization of financial markets led to the enormous growth of volume and diversification of financial transactions. Financial derivatives were the basic elements of this growth. Derivatives play a useful and important role in hedging and risk management, but they also pose several dangers to the stability of financial markets and thereby the overall economy. Derivatives are used to hedge and speculate the risk associated with commerce and finance. When used to hedge risks, derivative instruments transfer the risks from the hedgers, who are unwilling to bear the risks, to parties better able or more willing to bear them. In this regard, derivatives help allocate risks efficiently between different individuals and groups in the economy. Investors can also use derivatives to speculate and to engage in arbitrage activity. Speculators are traders who want to take a position in the market; they are betting that the price of the underlying asset or commodity will move in a particular direction over the life of the contract. In addition to risk management, derivatives play a very useful economic role in price discovery and arbitrage. Financial derivatives trading are based on leverage techniques, earning enormous profits with small amount of money. Key words: financial derivatives, leverage, risk management, hedge, speculation, organized exchange, over- the counter market. 81 Introduction Derivatives are financial contracts that are designed to create market price exposure to changes in an underlying commodity, asset or event. In general they do not involve the exchange or transfer of principal or title (Randall, 2001).
    [Show full text]
  • Derivatives Market Structure 2020
    Q1Month 2020 2015 Cover Headline Here (Title Case)Derivatives Market CoverStructure subhead here (sentence 2020case) I In partnership with DATA | ANALYTICS | INSIGHTS CONTENTS 2 Executive Summary 3 Methodology Executive Summary 3 Introduction 4 Capital, Libor and UMR The global derivatives market has undergone tremendous change over the past decade and, by most measures, has come out more 6 Market Structure: Potential for robust and efficient than ever. Increased transparency, more central Change clearing and vastly improved technology for trading, clearing and risk- 9 Understanding Derivatives End Users managing everything from futures to swaps to options has created 11 The Client to Clearer Relationship an environment in which nearly 80% of the market participants in this study believe liquidity in 2020 will only continue to improve. 13 The Sell-Side Perspective 16 Looking Forward To understand more deeply where we’ve been and where the derivatives market is headed, Greenwich Associates conducted a study in partnership with FIA, an association that represents banks, brokers, exchanges, and other firms in the global derivatives markets. The study gathered insights from nearly 200 derivatives market participants—traders, brokers, investors, clearing firms, exchanges, and clearinghouses—examining derivatives product usage, how they manage their counterparty relationships, their expectations for regulatory change, and more. The results painted a picture of an industry with the appetite and Managing Director opportunity for growth, but also one with challenges many are eager Kevin McPartland is to see overcome. The approaching Libor transition, continued rollout the Head of Research of uncleared margin rules, ongoing concern about capital requirements, for Market Structure and Technology at and a renewed focus on clearinghouse “skin in the game” are on the the Firm.
    [Show full text]
  • Basics of Equity Derivatives
    BASICS OF EQUITY DERIVATIVES CONTENTS 1. Introduction to Derivatives 1 - 9 2. Market Index 10 - 17 3. Futures and Options 18 - 33 4. Trading, Clearing and Settlement 34 - 62 5. Regulatory Framework 63 - 71 6. Annexure I – Sample Questions 72 - 79 7. Annexure II – Options – Arithmetical Problems 80 - 85 8. Annexure III – Margins – Arithmetical Problems 86 - 92 9. Annexure IV – Futures – Arithmetical Problems 93 - 98 10. Annexure V – Answers to Sample Questions 99 - 101 11. Annexure VI – Answers to Options – Arithmetical Problems 102 - 104 12. Annexure VI I– Answers to Margins – Arithmetical Problems 105 - 106 13. Annexure VII – Answers to Futures – Arithmetical Problems 107 - 110 1 CHAPTER I - INTRODUCTION TO DERIVATIVES The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking- in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors. 1.1 DERIVATIVES DEFINED Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner.
    [Show full text]
  • Inflation Derivatives: Introduction One of the Latest Developments in Derivatives Markets Are Inflation- Linked Derivatives, Or, Simply, Inflation Derivatives
    Inflation-indexed Derivatives Inflation derivatives: introduction One of the latest developments in derivatives markets are inflation- linked derivatives, or, simply, inflation derivatives. The first examples were introduced into the market in 2001. They arose out of the desire of investors for real, inflation-linked returns and hedging rather than nominal returns. Although index-linked bonds are available for those wishing to have such returns, as we’ve observed in other asset classes, inflation derivatives can be tailor- made to suit specific requirements. Volume growth has been rapid during 2003, as shown in Figure 9.4 for the European market. 4000 3000 2000 1000 0 Jul 01 Jul 02 Jul 03 Jan 02 Jan 03 Sep 01 Sep 02 Mar 02 Mar 03 Nov 01 Nov 02 May 01 May 02 May 03 Figure 9.4 Inflation derivatives volumes, 2001-2003 Source: ICAP The UK market, which features a well-developed index-linked cash market, has seen the largest volume of business in inflation derivatives. They have been used by market-makers to hedge inflation-indexed bonds, as well as by corporates who wish to match future liabilities. For instance, the retail company Boots plc added to its portfolio of inflation-linked bonds when it wished to better match its future liabilities in employees’ salaries, which were assumed to rise with inflation. Hence, it entered into a series of 1 Inflation-indexed Derivatives inflation derivatives with Barclays Capital, in which it received a floating-rate, inflation-linked interest rate and paid nominal fixed- rate interest rate. The swaps ranged in maturity from 18 to 28 years, with a total notional amount of £300 million.
    [Show full text]
  • One of Wall Street's Most Recognized Experts Joins Trinity Financial Board
    Peter Grandich, Managing Member 219B Morris Avenue, Spring Lake, NJ 07762 [email protected] DATE: February 1, 2016 CONTACT: Peter Grandich 732-642-3992 [email protected] One of Wall Street’s Most Recognized Experts Joins Trinity Financial Board SPRING LAKE, NJ - Trinity Financial Sports & Entertainment Management Company, a division of Peter Grandich & Company, announced today that Guy Adami has joined the firm’s Corporate Advisory Board. “While he may not score points on the gridiron, in my opinion Guy Adami is one of the very few Wall Street experts who scores a touchdown whenever he speaks,” said Peter Grandich, founder and managing member of Trinity Financial. “In a sea full of highly biased and more-wrong- than-right investment advice, Guy Adami is a refreshing breeze of prudent, humble investment insight. I urge our clientele to make Guy’s commentary apart of their research.” Grandich explains that the purpose of Trinity Financial Advisory Board is to provide guidance to the firm’s unique niche clientele. Through their own life experiences, faith-filled advisory board members can help guide athletes and entertainers through many of the challenges that celebrity can often bring. Adami adds, “I’m truly honored that Peter Grandich feels I can assist his clientele. I’ve been a long-time admirer of Peter’s work and consider him a close, personal friend.” About Guy Adami: Guy is an original member of CNBC’s Fast Money. He is currently the Director of Advisor Advocacy at Private Advisor Group in Morristown, New Jersey. Private Advisor Group is comprised of a network of nearly 500 advisors with assets approaching $16B.
    [Show full text]
  • 2008 U.S. CDO Outlook and 2007 Review: Issuance Down in 2007 Triggered by Subprime Mortgages Meltdown; Lower Overall Issuance Expected in 2008
    STRUCTURED FINANCE Special Report 2008 U.S. CDO Outlook and 2007 Review: Issuance Down in 2007 Triggered by Subprime Mortgages Meltdown; Lower Overall Issuance Expected in 2008 AUTHOR: CONTENTS: Jian Hu 1. Summary Senior Vice President (212) 553-7855 2. U.S. CDO Issuance Fell for the First Time since 2002 [email protected] 3. While Slightly Down in Volume, SF CDOs and CLOs Continued to Dominate U.S. CDO Issuance in 2007 CO-AUTHOR:1 4. Strong First and Second Quarters Offset Declines in the Suzanna Sava Assistant Vice President - Third and Fourth Quarters of 2007 Analyst 5. Unprecedented SF CDO Downgrades in 2007 Shatter (212) 553-1621 [email protected] Historical Record 6. Overall U.S. Financial Market Conditions Remain Difficult CONTACTS: 7. Generally Slower Issuance and More Negative Rating Yuri Yoshizawa Activity Are Expected Heading into 2008 Group Managing Director (212) 553-1939 [email protected] 1. SUMMARY Yvonne Fu Team Managing Director (212) 553-7732 2008 OUTLOOK [email protected] To increase transparency on the macroeconomic and financial framework William May that underpins its risk assessments, Moody's has published a baseline Team Managing Director outlook for the global economy, as well as three potential economic risk (212) 553-3868 [email protected] scenarios. These economic scenarios are intended to help Moody's ana- lysts formulate the outlooks for their specific markets using a consistent WEBSITE: set of assumptions that envisage various stressed economic and financial www.moodys.com conditions. The baseline outlook is inspired by major international organizations' eco- nomic outlooks.
    [Show full text]