APP: The Sequel

Cinemagoers could be forgiven for feeling a degree of fatigue in the face of Hollywood’s obsession with remakes, reboots and sequels, and financial market participants likewise.

Was CRD IV actually worth the wait? And do we really need another Basel?

ECB Luminale 2016 Flickr

But like its Avengers namesake, “Infinity QE”, as more than one critic has dubbed the ECB’s stance, is perhaps inevitable — and equally certain to deliver a powerful performance. Sure, there are those who complain of diminishing returns, but give the market what it wants! And while renewed bond buying may come after the departure of the franchise’s leading man, Europe is following (Captain) Marvel’s lead in casting Christine Lagarde in the starring role.

Not allowing the ECB to steal the limelight — think Star-Lord and Thor — the Fed delivered its first rate cut in a decade in a post-credits, stop the press scene for Bank+Insurance Hybrid Capital.

In this edition of BIHC, we look at the story so far and ask what can be expected from the premier of QE2.

Meanwhile, capital needs and structures continue to face their latest iterations around the globe.

Hitting screens across the Atlantic was the Australian version of TLAC, as Westpac sold a blockbuster US$2.25bn Tier 2 to meet ALAC needs. BIHC went behind the scenes with the bank’s funding team to discuss how they are responding to the latest APRA requirements.

Changes to S&P Global’s insurance criteria come against the backdrop of the sector’s most famous sequel, Solvency 2. With hybrid methodology changes at the same time affecting insurers most, S&P insurance sector lead Dennis Sugrue has an interesting tale to tell.

One Disney Pixar sequel that looks unlikely to reach production is WALL-E 2. However, the bond markets are at least acting to help save the planet from humanity’s excesses, as part of what Matthew Dong Seok Gim, head of Kookmin Bank’s treasury team, sees as a megatrend that must be followed. While the Korean issuer chose to make its AT1 debut under a sustainability banner, the senior non-preferred segment has seen several issuers return with green bonds and Standard Chartered take the ESG show into new markets with a debut sustainability bond.

Neil Day, Managing Editor

Photo: ECB Luminale 2016; Credit: ECB/Flickr