Russia on brink of financial crisis as showdown
with West escalates - (www.telegraph.co.uk) Country's
private companies shut out of global bond markets, raising prospect that they
may need state support. Russia is at increasing risk of a full-blown financial
crisis as the West tightens sanctions and Russian meddling in Ukraine pushes
the region towards conflagration. The country’s private companies have been
shut out of global capital markets almost entirely since the crisis erupted,
causing a serious credit crunch and raising concerns that firms may not be able
to refinace debt without Russian state support. “No Eurobonds have been rolled
over for six weeks. This cannot continue for long and is becoming a massive
issue,” said an official from a major Russian bank. “Companies have to roll
over $10bn a month and nothing is moving. The markets have been remarkably
relaxed about this, given how dangerous it is. Russia’s greatest vulnerability
is the bond market,” he said.
How
Important Are Hedge Funds in a Crisis? - (SF Fed at www.frbsf.org) During
the 2007–09 financial crisis, commercial banks, hedge funds, and investment
banks suffered huge losses from investments that were exposed to housing
markets. In fact, in 2008 the International Monetary Fund estimated that these
types of institutions, along with insurance companies, had lost a combined $1.1
trillion. One of the important lessons from the crisis is that systemic
risk due to linkages between different types of institutions are significantly
underestimated in most widely used risk measures, such as value at risk.
Standard measures need to be adjusted to adequately reflect spillover effects
among different parts of the financial system. Further, designating which
financial institutions are deemed systemically important could depend on
identifying to what degree distress in one institution spills over to other
parts of the financial system.
Ukraine
troops seize airfield from pro-Russian forces - (www.usatoday.com) Ukraine's
acting president launched an "anti-terrorism operation" in the
strife-storm eastern regions Tuesday and said Ukrainian troops had
"liberated" an airport from pro-Russian forces about 120 miles from
the Russian border. The mayor of Kramatorsk, in Ukraine's Donetsk region, said
Ukrainian troops had taken control of the airfield, the Associated Press
reports. The AP reported heavy gunfire in the area. RT.com reported that four
people were killed and two injured in the takeover, but the casualty figures
could not be independently confirmed. Another Russian news service,
RIA-Novosti, quoted a representative of a pro-Russian militia as saying that at
least two protesters were wounded in the attack on the airfield.
Mexico
bank regulator, Citigroup report second fraud at Banamex - (www.reuters.com) Citigroup
and Mexico's bank regulator on Monday said they uncovered a second fraud at
Citi's local unit Banamex, as part of a wider investigation following the
discovery in February of fraudulent loans to oil services company Oceanografia.
Mexico's National Bank and Securities Commission (CNBV) said the investigation
found another company with under $30 million in fraudulent loans. Citigroup (C.N)
in February said it found $400 million in bad loans at Banamex, Mexico's No.2
bank by assets, made to Oceanografia and backed by apparently fraudulent
invoices to state-owned oil company Pemex. Citi, in the course of reviewing
over $14 billion in financing, found a second company that had also received
loans backed by Pemex receivables that had "similar issues" to
Oceanografia, Chief Financial Officer John Gerspach said on a call discussing
the bank's first-quarter results.
Russia
Pulls Debt Auction as Yields Climb After Ukraine Violence - (www.bloomberg.com) Russia canceled its second ruble bond auction in
a row and sixth in the last seven weeks as yields jumped the most in a week
yesterday after protests in eastern Ukraine turned violent. The Finance
Ministry pulled
tomorrow’s sale, citing “current market conditions” in a statement on its
website today. The yield on Russia’s ruble debt due February 2027 fell three
basis points to 9.10 percent as of 1:16 p.m. in Moscow after jumping 13 basis
points yesterday. Tensions intensified over the weekend after deadly clashes
between Ukrainian security personnel and separatists who have seized police and
government buildings across eastern Ukraine. The U.S. and Russia plan to
proceed with four-party talks in Geneva later this week. “It’s still too
expensive for them,” Yulia Safarbakova, an analyst at BCS Financial Group in
Moscow, said in e-mailed comments.
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