Does Business Rescue count as default?

What does Business Rescue mean for credit risk, ratings and cross-default? Business Rescue precludes creditors from applying for liquidation of the business. This is the removal of an existing right of lenders: “a temporary moratorium on the rights of claimants against the company or in respect of property in its possession” From what I gather […]

Capital implications of infrastructure assets for insurers under SAM

Infrastructure as an asset class is hardly a new idea. Retirement funds are attracted to the promise of higher turns, long-dated cash flows, and consistency with increasingly important ESG factors.  Insurers, unlikely retirement funds, have to hold risk-based capital against the risks inherent in their investments. This makes it more difficult to underestimate the risks […]

ERP update – delayed response to a blog reader

I reader asked why so many practitioners use high Equity Risk Premiums in their valuations and fairness opinions. In particular, he mentioned a specific assumption set he had seen including: ERP of 6.8% company specific risk premium of 4% He also commented on how haphazard the use of risk premiums can be and referenced a […]

New favourite economic term: Jedi Mind Tricks

These aren’t the droids you are looking for. Saudi Arabia’s “jedi mind tricks” as described by FT Alphaville (and more recently here) ¬†involve telling the market where they want the oil price to be. The aim is that if the market knows where Saudi Arabia wants the price to be, they might conclude that Saudi […]

Gold ain’t happening yet

Paulson and Soros still think Gold is a buy, adding to their stakes as the price declines. It’s also not very brave of me to blog about this now as gold has declined when for much of the financial crisis it was increasing in price. I’ve been watching other things. The idea that the gold […]

Hedge fund managers don’t know macro

Listen I know John Paulson made an enormous amount of money betting against the housing markets in 2007. He made some excellent calls and made a tonne of cash. As Nassim Taleb would say though, that doesn’t necessarily mean he has skill or insight. He could just have been lucky. Most people lost money in […]

Golden Stories

Gold has had a fantastic run, getting to within sight of $2,000 recently. Many see this as a clear indication of hyper inflationary pressures arising out of loose monetary policy. The informed recognise that you can’t have hyperinflation if all sensible measures of actual prices other than a particular, volatile commodity are showing very low […]