Tenancy-in-Common

How to make your loan more effective

Posted by admin on January 8th, 2010 | Comments Off

112would be better buyers of the bond and buyers of protection to maturity to lock in the positive carry.

Factors that widen the basis (positive basis):

  • Strong demand from protection buyers such as banks or hedge funds
  • Bonds can usually be funded in the repo market at or around Libor.
  • If the bond becomes special the investor holds a repo market option that makes the bond more attractive than the CDS and tends to widen the basis (short positions in bonds cannot be locked in for years because of a nonexisting repo market).
  • Deteriorating credit quality and increasing spreads/basis volatility or equity volatility (CDS = high beta instrument).
  • Assets trading below par, that is an investor who pays $80 for $100 face value has less credit exposure than a protection seller at par. Therefore, the protection seller would demand a higher premium (spread) than the bond.
  • Convertible bond issuance may lead to hedging credit risk to unlock “cheap” equity volatility.
  • The cheapest to deliver option is a structural factor, which tends to widen the basis (protection buyer is able to deliver any qualifying loan/bond).

The default basis can also be viewed as a risk indicator. In general, the sale of default protection should be more attractive than purchasing a bond when the basis is high relative to the equity volatility of the firm and vice versa.

. . . .

The best online credit decisions

Posted by admin on October 20th, 2009 | Comments Off

The best online sales decisions blend past experience and existing resources with the dynamism and invention of the internet. One useful principle is to use the flexibility of the internet, effectively testing new decisions and ideas. The technology and culture of the internet enable one approach to be tested for a short period before making improvements.

Ten things determine the success of online business activities, some or all of which are useful to consider when deciding how to develop online sales:

  • Content
  • Communication
  • Customer care
  • Community and culture
  • Convenience and ease
  • Connectivity (connecting with other sites as well as with users)
  • Cost and profitability
  • Customisation
  • Capability (dynamic, responsive and flexible)
  • Competitiveness

Each of these exerts a significant influence on the success of online activities. Some are more important than others, depending on the organisation’s stage of development, brand strength and competitive position. Some are always important, such as capability and convenience, whereas others can assume a greater significance at a particular time (competitiveness, although always in the background, may assume a sudden and striking relevance).

. . . . . . . . . . . . .