Heading Higher While most benchmarks have remained low this year, Libor has climbed because of new money-market rules
Libor has risen to the highest level since 2009, even though the Fed’s benchmark has stayed constant. Given this discrepancy, it would be logical for companies to rely less on markets that are pegged to Libor and instead issue debt in fixed-rate markets that are more influenced by the fed funds rate.
But that’s not happening. In fact, companies have only accelerated their issuance of floating-rate debt. For example, new U.S. leveraged-loan sales have steadily ticked up in recent months.
1. Volatile Action in DB Last Night…Opened Down 4%…Now up over 1%.
Deutsche Bank AG Chief Executive Officer John Cryan failed to reach an agreement with the U.S. Justice Department to resolve a years-long investigation into its mortgage-bond dealings during a meeting in Washington Friday, Germany’s Bild newspaper reported. “The risks in our derivatives book are massively overestimated,” DB Chief Risk Officer Stuart Lewis said. He said 46 trillion euros in derivatives exposure at Deutsche appeared large but reflected only the notional value of the contracts, while the bank’s net exposure to derivatives was far lower, at around 41 billion euros – DB opened DOWN 4% in Frankfurt, and is now UP 1.6% on the day…