International Monetary Fund’s Post

Private Credit is growing rapidly, with an estimated $US1.7 trillion in assets under management globally. This asset class has seen strong demand due to banks facing into tighter bank lending regulations imposed by APRA since the global financial crisis and the requirement to hold more and more capital on their balance sheets to support the loans they do write.   Read our article “Private Credit: Why Now Could Be the Right Time to be Investing” this Friday. https://lnkd.in/gcWJWpKN #privateinvestinsights #nonbanklending #australianinvestmentmanager

Tensions rise as regulators circle ballooning private credit market - Funds Europe: The effectiveness of compliance processes and regulatory reporting relies heavily on the quality of underlying data – much of which will be novel ... #regulatoryreporting #regulation #finperform

YPFS with 20 new papers on Bank Restructurings/Resolutions across 15 countries during Europe’s Sovereign Debt Crisis 🇦🇹🇧🇪🇨🇾🇩🇰🇬🇷🇭🇺🇮🇸🇮🇹🇱🇻🇱🇺🇳🇱🇵🇹🇪🇸🇨🇭🇬🇧🇪🇺 “By creating a third option beyond bail-out and bankruptcy, resolution regimes may eventually render themselves largely unnecessary in practice by creating sufficient incentives for parties to arrive at a solution outside of a formal resolution, as was the case in UBS’s acquisition of Credit Suisse” Survey: https://lnkd.in/gSAECryJ Journal of Financial Crises: https://lnkd.in/gXFhGnaf

Since the 2008 financial crisis, non-bank lending, or "private credit," has surged. By early 2024, investments in private credit have reached an impressive $1.4 trillion—about half of the total commercial and industrial bank lending. As this market grows, the landscape continues to evolve. So, what are the significant developments in 2024 for private credit markets and and the funds that develop and invest in private lending? Ronald Feiman of Meritas member Carter Ledyard & Milburn LLP (New York, New York, USA), in his recent Bloomberg Law publication, notes key developments in five areas: the legal environment, operations, fund distribution, reporting, and the business of private credit arrangers and fund managers. The members of Meritas’ M&A & Private Equity group are well versed in trending legal topics like these and proud to offer quality cross-border legal services for M&A and private equity matters globally. Read more in “Recent Developments Affecting Private Credit Funds” on Bloomberg Law: https://lnkd.in/g6MiGQvR   #MeritasGlobal #IndependentButUnited

Regulation implemented since the Global Financial Crisis has reshaped the credit default swap (CDS) market. This study explores whether the reforms have affected the price discovery process for corporate credit by altering the primacy of CDS over corporate bonds and credit ratings. I develop a model that demonstrates an increase in the relative cost of trading individual securities reduces agents' incentive to acquire information and drives them toward index products. Empirically, I find that single-name CDS incorporate less information prior to rating decreases following the introduction of post-crisis regulation that makes these instruments costlier to trade. Furthermore, CDS spreads lead corporate bond spreads more weakly after the adoption of stringent margin requirements that apply only to derivatives. Consistent with the model, the relative informational efficiency of CDS indices, which are less affected by certain post-crisis reforms, appears unchanged.

The Concept of Tier I ,II & III and Capital Adequacy Ratio plays a key role in Banks and Financial Institutions. Tier I Capital is the core capital of bank consisting of equity capital and disclosed reserves. It represents the most stable and liquid form of capital, directly available to absorb losses without disrupting operations. Tier II Capital includes supplementary reserves like subordinated debt and loan-loss provisions, providing additional support but less reliable during a crisis. Tier III Capital is used for covering market risk and consisted of short-term subordinated debt. Together, these tiers help determine a bank’s financial resilience. The Capital Adequacy Ratio (CAR) ensures banks maintain sufficient capital to cover their risk-weighted assets and survive periods of financial stress. A strong CAR reflects stability and builds confidence among stakeholders. It ensures banks are not overly leveraged while enabling regulators to monitor systemic risks effectively. #CapitalAdequacy #BankingResilience #Tier1Capital #Tier2Capital #RiskManagement #FinancialStability #BaselAccords #BankingSafety #EconomicStrength #LiquidityBuffer #Linkedin

Probability of Default(PD): A Key meausure to manage Risk PD or Probability of Default is a tool which helps to ascertain the risk of borrower failing to meet their debt obligations in a specified time period. It is majorly used for credit pricing, regulatory compliance and risk management. Importance:- 1. Pricing of financial instrumemts like bonds, loans and derivatives 2. Used by investors to assess the risk associated with their portfolios 3. Helps in calculating credit worthiness of borrowers Hence, it helps in taking sound investment decisions. #creditlending #lending #probabilityofdefault

The biggest blunder you can make in Trade Settlements and Derivative Reconciliation. I see this in Investment Banking all the time. Example: 1. Ignoring discrepancies in trade confirmations 2. Failing to update counterparty details promptly 3. Overlooking the importance of real-time reconciliations Recognize the mistakes? This is called "Mastering the Art of Trade Settlements and Derivative Reconciliation". And it's wrong. If anything, it makes your process weaker. You don't need to bring another method down to prove yours is better. Simply show why yours is effective. Stop fighting errors one at a time ↳ Start aligning systems to work in unison. There's a life lesson in mastering precision and cooperation too. In the world of Investment Banking, efficiency and accuracy are the true game-changers #InvestmentBanking #TradeSettlements #DerivativeReconciliation #EfficiencyInFinance #PrecisionAndCooperation

The private credit market is undergoing significant transformation as it seeks to integrate more deeply into public markets. These developments are drawing increased scrutiny from regulators and raising questions about transparency and liquidity. While the potential for democratizing access to private credit is significant, ensuring robust regulatory frameworks and market discipline will be key to navigating the challenges ahead. Stout collaborates with clients across all alternative asset classes, including private credit, to navigate the complexities of the portfolio valuation process while effectively managing regulatory and other risks. Learn more here: https://hubs.ly/Q02YZRfM0

What function do Financial Markets play ? A. Bringing together people with funds to lend and people who want to borrow funds B. Assuring that the swings in the business cycle are less pronounced. A. Financial markets serve as a platform for the allocation of capital by facilitating the flow of funds from savers and investors to borrowers or those who need capital (such as businesses and governments). Which of the following are short-term financial instruments? A. Stanbic shares on the Securities Exchange B. A banker’s acceptance B. A banker’s acceptance is a short-term debt instrument, typically used in international trade. It represents a promise by a bank to pay a specified amount on a future date (usually within 30 to 180 days), and is considered a short-term instrument.