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Espirito Santo crisis won’t damage the markets

MADRID | The Corner | The disappointing German ZEW together with the worsening of the Portuguese lender Banco Espirito Santo (BES) crisis weighed down on the markets on Tuesday. And that about today? Indeed, the banking sector will continue to be the main player in Europe with the BES drama as backdrop, although the calmness within the peripheral bonds markets is a positive sign and indicates the limited extent of such crisis.

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NPLs: The Achilles heel of the Greek banking system

ATHENS | By Manos Giakoumis via MacroPolis | Having completed capital increases of 8.3 billion euros, which more than covered the capital needs identified by the Bank of Greece (BoG) under the baseline scenario, the single most important risk for Greek banks remains the non-performing loans (NPLs). 

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European banks sold off sharply in the past month

MADRID | By The Corner | Experts at JPMorgan think that it is largely due to positioning, regulatory concerns and profit-taking post ECB announcements in June. However, their funding costs have barely moved in the meantime and remain near historical lows. This is likely to have helped their earnings further in Q2.

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These are UBS’ rental growth forecasts for retail and office by country

MADRID | By The Corner | Real estate values are a function of cap rates (property yields) and income growth. In the tables following UBS illustrates their team’s rental growth forecasts for retail and office by country. The majority of markets are showing a modest improvement in rental growth with estimates more optimistic for San Franscisco and London office.

Espirito Santo: Flight to quality

MADRID | By J.P. Marín Arrese | The troubles faced by Banco Espirito Santo ’s main share holding group have delivered a widespread blow to financials and periphery sovereigns. A nasty reminder that Eurozone doesn’t seem so stable as everyone bet it was. Investors are flying to safety, pushing the US Treasuries and German bunds close to past records. Stock exchanges and market sentiment are bound to undertake brisk U turns, at no warning. The more so as sharp and continued rises always offer a good excuse for a sell-off. There is nothing to worry about.

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Has Espirito Santo triggered a correction of corporate debt market?

MADRID | The Corner | Although analysts see limited systemic implications for the Portuguese sovereign and the rest of the periphery, the BES vaudeville has put something bigger on the table: changes at the global corporate debt market. Spanish Popular bank and construction company ACS both postponed a planned issue of the riskiest bank debt because of “heightened volatility” in credit markets. Goldman Sachs delayed a planned inaugural issue of a new type of bond that offers investors three levels of protection on the event of default, Bloomberg reports.

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European banks raised €35 billion in CoCos in 2014

MADRID | By The Corner | European banks have strenghtened their capital ratios for the upcoming stress tests and the AQR, whose results will be known after the summer. In that sense, between July 2013 and May 2014, EZ lenders increased their base capital by €45 billion, although it wasn’t entirely by issuing shares but contingent convertible bonds (CoCos), by which they would have raised around €35 billion.

Experts divided on US rate rise

MADRID | By Francisco López | Investors are closely looking economists’ forecasts about the next rate hike in the United States. Until recently, the vast majority opted for movements in the second part of 2015. Now, after the last job creation data, some analysts believe that the rise could come as early as 1Q15.

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Analysts show highest optimism rate about Spanish Ibex 35 since 2009

MADRID | By The Corner | The ratio of earnings revisions for the Spanish Ibex 35 is above one point for the first time since December 2009, which means that there are more market watchers revising upwards their expectations about the evolution of the corporate results within the index. On average, analysts’ consensus expects a growth in the corporate earnings close to 25%. However, experts at AFI forecast 15% increases in these results, which would boost the Spanish index by 10-15% thus ending 2014 around 11,500 points.