Muni Bonds

Tyler Durden's picture

Greece, China, & Russia – A Plan B For Tsipras





"Greece would survive, have new powerful friends, have bargaining chips that neither Europe nor America could ignore; China would have projected the use of the Yuan right in to Europe, and Russia would have more than a toe-hold for military power right inside NATO. If I was Tsipras or Varoufakis I would be on the phone right now."

 
Tyler Durden's picture

Chinese QE Calls Officially Begin: Bond Swap "Sucks Liquidity", "Contributes To Stock Slump", Broker Claims





"Local debt issuance sucks liquidity, reduces banks’ capital to buy bonds, contributes to stock slump," Haitong Securities says. The only option, according to the firm, is outright debt monetization by the PBoC.

 
Tyler Durden's picture

This Insane Debt Chart Explains Why Chinese QE Is Inevitable





Because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.

 
Tyler Durden's picture

"Critical" Debt "Domino Chain" Threatens To Destabilize China's Financial System, SocGen Says





"As this critical domino chain of local governments in China’s credit risk situation begins to wobble, there could be significant ramifications for broad financial market stability. Such a chain reaction seems to have begun."

 
Tyler Durden's picture

Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts





While China is rather proud of the fact that it hasn't yet implemented outright QE, Beijing has now put in place a bewildering hodge-podge of hastily construed easing measures that can't seem to get out of their own way.

 
Tyler Durden's picture

China Officially Doubles Down On Multi-Trillion Yuan Debt Swap Program





China has officially doubled the quota on a critical local government bond swap program designed to help provincial authorities crawl out from beneath a debt pile that amounts to some 35% of GDP. Participating banks can pledge the newly issued muni bonds for cash, but with four policy rate cuts already on the books this year, it isn't clear that more liquidity is the answer when it comes to boosting credit creation. 

 
Tyler Durden's picture

China May Double Down On Debt Swap As ABS Issuance Stumbles





China may raise the quota on a critical debt swap plan by as much as CNY1 trillion, underscoring how important its success is both in terms of kicking the can for the country's heavily-indebted local governments and in terms of jumpstarting the credit creation machine. Meanwhile, an effort to encourage ABS issuance is sputtering amid rising NPLs.

 
Tyler Durden's picture

China Officially Launches Critical Local Government Debt Swap — But Is The PBoC Really Just Issuing Treasury Bonds?





China has pitched its local government debt swap program as a way for heavily-indebted provinces to deleverage. Now that the program is officially off the ground, what are the implications for banks and for the PBoC?

 
Tyler Durden's picture

China Creates Perpetual Leverage Machine After Dropping Debt Directive





"China is reversing course on a major effort to tackle its hefty local government debt problem, marking a setback for a priority reform aimed at getting its financial house in order," WSJ reports. The abrupt about-face by Beijing, which will now allow local governments to once again tap shadow banking conduits for high interest loans, comes as the PBoC gets set to ramp up an LTRO-like program designed to essentially monetize trillions in local government debt. The interplay between the debt swap program, Chinese-style LTROs, and the decision to drop the ban on LGFV financing could set the stage for a dramatic increase in the country's already massive debt pile.

 
Tyler Durden's picture

How China's Banks Hide Trillions In Credit Risk: Full Frontal





According to Fitch, nearly 40% of credit in China is outside bank loans, meaning that between forced roll-overs, the practice of carrying channel loans as "investments" and "receivables", inconsistent application of loan classification norms, and the dramatic increase in off balance sheet financing, the 'real' ratio of non-performing loans to total loans is likey far higher than the headline number.

 
Tyler Durden's picture

China Goes "Unconventional" In Effort To Tackle Trillions In Debt, Rescue Economy





China has officially entered the realm of "unconventional" monetary policy, joining the Fed, the ECB, the BoJ, and a whole host of other global central banks in an attempt to bring the supposedly all-mighty printing press and the unlimited balance sheet that goes with it to bear on subpar economic growth. We suspect the results will be characteristically underwhelming (at least in terms of lowering real interest rates, although in terms of boosting risk assets, the results may be outstanding) meaning it's likely only a matter of time before LTRO becomes QE in China just as it did in Europe.

 
Tyler Durden's picture

Chicago "Junking" Triggers $2.2 Billion Payment, Deepening Financial Crisis





Following an Illinois Supreme Court ruling that struck down a pension reform plan aimed at closing a $100 billion funding gap, Moody's downgrades Chicago to junk, giving the city the dubious distinction of being the only major city "in recent history" to carry such a low rating other than Detroit. Chicago now faces accelerated payments to creditors of more than $2 billion.

 
Tyler Durden's picture

Want To Know Where The Next Bear Market Is? Look Around!





If you want to know where the next bear market is, look around at the people who are enjoying unimaginable wealth. Mr. Market has a habit of correcting things over time. My guess is that you won’t be paid $200K/year to drive trucks in North Dakota for much longer. The best thing about capitalism is that everything is temporary. The last time around, people had the stock, could have sold it, and didn’t. Nothing lasts forever.

 
ilene's picture

Ignorance Can be Better than Bliss





Puerto Rico muni owners who never saw the Barron’s story or the rating firms’ downgrades are better off than those who kept up with the financial news.

 
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