Cardea Partners

Caveat Emptor on Swaps, Same As It Ever Was

Christopher Hunt — Thu, 26 Jan 2012 21:29:39 +0000

Op-ed from Barbara Roper, Consumer Federation of America, talking about how the CFTC’s final rules for swap dealer business conduct were softened to benefit swap dealers. Cardea Partners are independent representatives for anyone, public or private, entering into swaps and options contracts. And yes, even though such a representative is not mandated for trades with certain parties under certain conditions, the benefit of understanding what you are getting and the quantifiable savings realized with a swap advisor make having one the right choice. (Huffpost)

2012 Interest Rate Forecast – Cardea Partners

Christopher Hunt — Wed, 18 Jan 2012 16:51:08 +0000

Our annual take on where SIFMA, LIBORs, Treasury Yields, swap rates, and other market indices will head in the new year.

2012 Interest Rate Forecast – Cardea Partners

The Case Against LIBOR

Christopher Hunt — Wed, 23 Nov 2011 16:39:38 +0000

Interesting article from Bloomberg about the history and plight of LIBOR and the complaints that market participants have levied against the indices that set values for some $360 trillion face of financial assets around the world. Primary concern to me is the fact that perceived credit quality is tied to each bank’s offered rate. Should bank rate submissions be anonymous to the marketplace?

Why Cardea Partners Exists…

Christopher Hunt — Mon, 08 Aug 2011 20:18:00 +0000

An example of why we and other swap advisors are available in the marketplace to help clients manage interest rate exposures in a cost-effective manner. (NY Times)

Has LIBOR Lost Its Luster?

Rex Evans — Fri, 15 Jul 2011 16:34:33 +0000

Lackluster volume from banks to lend to each other has significatly reduced the demand for LIBOR which is the interbank lending rate. Less risky to use depositers money rather than borrow from other banks at the LIBOR rate. The question is what would be the alternative index. (WSJ)

Interest Rate Caps a Vehicle for Worst Case Scenarios

Rex Evans — Fri, 01 Apr 2011 00:41:30 +0000

An article in The Economist “Fat-tail attraction”, discusses hedging for worst case scenarios. Borrowers who are floating at historically low interest rates may want to consider buying disaster insurance in the form of an interest rate cap against the borrowing index. Interest rate caps can be used to hedge LIBOR, PRIME or SIFMA.

LIBOR manipulation by major banks?

Rex Evans — Mon, 28 Mar 2011 23:06:46 +0000

Most of us knew that at the height of the financial crises, there was something up with how LIBOR was being set. Many articles have since been published, but it appears the Fed is finally taking a closer look. Source WSJ 3-17-11

Tax-Exempt Bonds Backed by Letters of Credit

Rex Evans — Tue, 01 Feb 2011 03:18:11 +0000

Many tax-exempt bonds have 20-30 year maturities, however the credit enhancement with a letter of credit is generally for 5 years. Many bond issuers are finding their borrowing costs higher with the renewal of their letter of credit. Click here to read a WSJ article about tax-exempt bonds enhanced with a letter of credit.

Derivatives Clearing and Transparency Don’t Go Hand In Hand?

Christopher Hunt — Sun, 12 Dec 2010 14:05:55 +0000

An interesting article from the New York Times, “A Secretive Banking Elite Rules Trading in Derivatives” on the incentive for leading banks to control the over-the-counter derivatives market and the proposed clearinghouses. Cardea Partners helps our clients combat this natural disadvantage in the marketplace and reduces the unseen fees of such swaps transactions by creating transparency and competition. (NY Times, December 12, 2010)

FINCAD – Derivatives market could be worth $700 trillion by year-end

admin — Tue, 07 Dec 2010 22:09:15 +0000

The global derivatives market could expand significantly this year, a report prepared by advisory firm TABB Group says.

The company’s study, which was commissioned by the World Federation of Exchanges, estimates that $700 trillion in derivatives could be traded by the end of the year. At year-end 2009, the derivatives market was worth $615 trillion; at the middle of 2010, it contracted slightly to $583 trillion, according to TABB.

But with volatility on the rise in the currency and commodity markets – and more companies using derivatives to hedge their risk exposure – the derivatives market could be poised for significant growth.

Indeed, the Wall Street Journal quoted TABB senior analyst Paul Rowady as saying, derivatives may be used “as a key component of a broader risk-transfer mechanism for global financial firms, corporations and investment managers.”

But, the research firm cautioned, the new regulations mandated by the Dodd-Frank financial reform bill could crimp derivatives trading significantly. TABB estimates that the bill could require market participants to post up to $2.2 trillion of collateral against their derivatives trades.