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Category Archives: Credit Process & Analysis

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US Credit Rating Downgrade: Impact on financial and commodities markets

In the long term, if other rating agencies follow suit and challenge credit worthiness of the US, popular opinion suggests that the status of the dollar as the primary reserve currency will come under a fresh challenge. The actual likelihood of this happening is low and no one does a better job of presenting this argument than Professor Pettis at China Watch.

In the short run while US regulators have stated that there will be no regulatory capital impact on holding US treasuries, European and Asian regulators still have to issue an opinion on this event. The most likely reaction given what will happen on Monday is that ECB, Bank of Japan and a host of other regulators are likely to toe the line to avoid further roiling markets and increasing capital requirements for domestic banks

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US Credit Rating downgraded: Impact on commodities trading – outlook for the next week

The post market close rating cut on Friday evening should create a very volatile trading environment over the next week. While media coverage so far has downplayed the overall impact on the cost of US debt by comparing the two other extremes (Japan – lower rating, lower rates and Australia – higher rating, higher rates), the rating downgrade will have a significant impact on repo trades, the cost of funding proprietary positions and commodity markets over the next 4 – 12 weeks.

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Collateral Valuation: Credit Risk: Cost Approach for real estate

The Cost Approach is another valuation methodology for real estate. The post provides a step by step process of how the Cost approach works and presents situations where it should or should not be used. It also covers the type of data and data sources used for carrying out the analysis.

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